Banking-as-a-service platform Synapse laid off 40% of its workforce, or 86 employees, on Monday, October 2.
Synapse’s platform helps other startups offer deposit, payment and credit products by acting as a middleman between its clients and their banking partners. The layoffs followed a note from CEO Sankaet Pathak on Friday, September 29, informing employees that one of the company’s largest customers, business banking platform Mercury, would not be renewing their contract and is instead working directly with its banking partner Evolve Bank and Trust.
“Unfortunately, this past week Evolve took shocking and disappointing actions, contradictory to our discussions and inconsistent with our contractual obligations,” Pathak wrote in a Slack message to the company seen by Forbes.
On Monday, employees affected by the layoff received an email notifying them that due to the startup’s change in circumstance, Synapse would be conducting layoffs. According to the email, employees are not receiving severance payments, and two of the company’s investors, CoreVC and a16z, have offered to place employees in positions at other portfolio companies.
“We deeply regret saying goodbye to incredibly talented and dedicated members of the Synapse team,” a Synapse spokesperson said in an emailed statement. “However, we have a strong group in place to manage all of our operations and support our customers going forward.”
This is the company’s second round of layoffs this year. In June, Synapse let go of 18% of its staff noting that tough macroeconomic conditions were affecting clients and impacting its anticipated growth. In June 2020, Synapse laid off 63 employees, half of its full-time staff at the time. The company’s last known fund raise was a $33 million series B round led by Andreessen Horowitz in June 2019.