Real estate startup Properly laid off about half of its workforce just months after raising $36 million in new venture capital.
CEO Anshul Ruparell announced the layoff of 71 people in a public blog post after holding a town hall meeting with staff on November 15.
Mr Ruparell called the move an “excruciating but necessary decision” in an email response to questions from The Globe. In his blog post, he wrote, “We are truly sorry to take this step, and I take responsibility for the choices that brought us here. … Conditions have deteriorated much faster than expected and we cannot predict when the market will recover.
The type of laid-off workers runs the gamut from software developers, recruiters, data scientists, pricing analysts, real estate sales managers and mortgage advisers to some executives in charge of growth marketing and client experience. Even Mr Ruparell’s own executive assistant was on the chopping block and a former employee announced on LinkedIn that she had been fired on her birthday.
Properly has a number of supports in place to help former employees find new roles.
“I would be shocked if people internally didn’t see this coming, or maybe not…because of the magnitude,” said Cam McWatt, who worked as a recruiter for Properly from September 2021 to July 2022 and saw the business explode before he was fired in a group that included about 10 other workers.
“Since I was there, we’ve doubled the business; I joined at 70 and left at 140 [employees],” he said. “A few months into the year there was a big downturn, but at the time we were still hiring. Then, in the early spring, we recognized that things were starting to pick up. change… hiring slowed down, decisions took longer to make.
On August 8, Properly announced that it had raised an additional $35 million from several of the same investors – including Bain Capital and Intact Ventures (the VC arm of Canadian insurer Intact Insurance) – who had injected $44 million. in the company in July, 2021.
According to some former employees, the company internally told workers that this new funding would extend Properly’s operational “runway” for up to three years and that no further layoffs would be required. That said, when it announced the funding, Properly management warned it would pause its expansion into new Canadian markets as real estate activity slowed.
“We are currently experiencing one of the largest corrections in Canadian housing market history,” Mr. Ruparell wrote in his layoff announcement.
According to McWatt, there were signs before the downturn that the company was struggling to find its footing. “The roadmap would change quickly, we would always explore new opportunities,” he said.
Among these was a partnership with Canadian home improvement television duo Jonathan and Drew Scott, known as The Property Brothers (which may have led to some branding confusion, given that Properly did not never offered renovation services).
Properly started life in 2018 in Calgary as a so-called “iBuyer” company – like US-based OpenDoor, which used data to buy undervalued properties to flip and resell them – but pivoted to the model of buying hybrid in the face of a weak local real estate market.
Among the company’s finances is a $100 million credit facility from Silicon Valley Bank to support what was the company’s key market offering – called sales insurance – that would allow customers to tap into the equity in their home to make a real estate purchase with a guarantee that Properly would buy their original home at a prescribed price if another buyer couldn’t be found.
As real estate markets across Canada slowed in 2022 due to rising interest rates, some of Properly’s former employees (who declined to speak officially) say real estate salespeople working with the company have started to minimize or omit any mention of sales guarantees at all. Mr Ruparell declined to answer questions about whether Properly had been forced to use his own funds to buy homes in 2022, although in 2021 he claimed that had yet to happen.
Properly and Mr. Ruparell declined to comment on the future of the sales assurance program, or whether the company pivots again to a new business model.
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