RenoRun founders: “The business climate we are operating in has fundamentally changed.”
Montréal-based building material delivery startup RenoRun laid off 210 employees this morning—the company’s second round of layoffs in the past three months—as it looks to weather rocky macroeconomic and venture capital market conditions.
The latest cuts impact 43 percent of RenoRun’s 484-person team. These layoffs, which were first reported by The Globe and Mail and confirmed by BetaKit, impacted employees across the organization and RenoRun’s geographic footprint, as well as several company executives.
RenoRun’s founders attributed the staff cuts to a need “to plan for the worst and reduce expenses” amid tough economic conditions.
During more favourable economic conditions, RenoRun raised $181 million CAD in Series B funding late last year to fuel its growth across North America. But things have shifted, and today’s layoffs come shortly after BetaKit reported in August that RenoRun had cut 12 percent of its team and put those geographic expansion plans on hold, joining a growing list of tech firms to adopt similar measures amid a challenging market environment.
Speaking with BetaKit at the time, RenoRun co-founder and CEO Eamonn O’Rourke attributed the move to a “perfect storm” of tough economic factors, pointing to the broader market downturn, “incredibly unpredictable” fundraising environment, and uncertainty surrounding consumer spending amid rising inflation and a prospective recession.
RenoRun, which was founded in 2016, offers an Instacart-like e-commerce platform for building materials like lumber, drywall, hardware, doors, and paint. The company delivers these materials from local hardware stores and its own network of warehouses to residential construction job sites within two hours. RenoRun describes itself as “the most efficient way of getting last-minute construction materials delivered to construction job sites.” To date, the startup has raised a total of over $207 million from a list of backers that includes Tiger Global, Investissement Québec, BDC Capital, Real Ventures, ScaleUp Ventures, and Inovia Capital.
A RenoRun spokesperson declined a request from BetaKit for an interview with O’Rourke regarding the company’s latest round of layoffs. In a letter shared with BetaKit that was sent to RenoRun employees earlier today, the startup’s founders attributed RenoRun’s most recent staff cuts to a need “to plan for the worst and reduce expenses” amid challenging economic conditions.
“Over the last several months, you have heard us share that the business climate we are operating in has fundamentally changed,” states the letter, which was penned by O’Rourke and his spouse, RenoRun co-founder and VP of culture Joelle Chartrand.
For the time being, the founders wrote that RenoRun plans to “focus on serving its base of core customers and doing so profitably,” as the startup looks to “maximize the runway that our last round of funding affords us and … build a solid foundation on which to scale the business when recovery inevitably happens.”
Difficult market conditions, fuelled by geopolitical tensions and rising interest rates in the face of mounting inflation have led many other high-growth tech firms across Canada and around the world to make similar staff reductions in 2022. According to layoff tracking website Layoffs.fyi, 714 startups globally have cut a combined 94,268 employees so far this year.
The industry RenoRun serves is heavily impacted by consumer demand for new residential construction and renovation projects. Consumer confidence has dropped to near-record lows amid rising inflation, which has impacted the price of building materials, further impacting a sector that has already had to contend with materials shortages during COVID-19.
Amid this environment, O’Rourke told BetaKit in August that RenoRun had paused its geographic expansion plans and elected to focus on the existing cities that it serves: Montréal, Toronto, Boston, Chicago, Philadelphia, and Washington.
Speaking to the company’s previous round of layoffs, RenoRun’s founders wrote in the letter that, “while our last reduction in force was necessary, it was not sufficient in reducing the cost structure to the extent needed.” Following these cuts, RenoRun, which had about 600 employees earlier this summer, now has 274.
Feature image courtesy RenoRun.