Amid downturn, e-commerce slowdown, Rewind targets breakeven.
Ottawa-based Rewind has adjusted its fundraising plans and laid off about 27 percent of its employees after seeing lower-than-anticipated growth, BetaKit has learned.
Rewind, which helps companies on platforms like Shopify protect and secure their data, first announced the cuts in a March 22 blog post to the software startup’s website.
“Our growth has a fairly high correlation to [Shopify’s] level of growth.”
– Mike Potter, Rewind
Rewind co-founder and CEO Mike Potter confirmed the layoffs in an interview with BetaKit, noting that 37 members of Rewind’s approximately 135-person staff were impacted. “It really just came down to, we’re spending money at a rate that’s not commensurate with the level of growth that we’re seeing,” said Potter.
Rewind, which derives the majority of its revenue from Shopify merchants, saw demand for its backup tech boom amid the pandemic-fuelled rise of Shopify and e-commerce. As Potter put it, COVID-19 was “a once-in-a-generation-type event” in terms of accelerating Rewind’s business.
But according to Potter, Rewind—like Shopify—has seen its growth slow as the pandemic and demand for online shopping has waned. In response, Rewind has shed more than a quarter of its staff and revised its fundraising plans, as it looks to become cash flow breakeven in the near future.
Founded in 2015 by Potter and CTO James Ciesielski, Rewind enables over 100,000 e-commerce, SaaS, and accounting customers across over 100 countries to backup, restore, and copy their data. The startup, which began by focusing on Shopify, now supports a range of other platforms, from GitHub to Jira, Confluence, Trello, Big Commerce, and QuickBooks. Shopify still accounts for the majority of Rewind’s business.
As demand for Rewind rose during the pandemic, the company had a busy 2021, announcing $19 million CAD in Series A financing in January, its acquisition of Berlin-based GitHub backup service BackHub a month later, followed by an $83 million Series B round that September, as it ramped up for growth. Rewind’s investors include Insight Partners, Bessemer Venture Partners, FundFire, Inovia Capital, Ridge Ventures, Union Ventures, ScaleUp Ventures, and Atlassian Ventures.
Shopify has seen its growth slow amid the market downturn and a broader e-commerce slowdown—and this has impacted Rewind’s business. As Potter noted, though many Shopify merchants are still doing well, growth of new Shopify merchants is slowing, and some are churning as economic conditions have worsened.
“Our growth has a fairly high correlation to [Shopify’s] level of growth,” said Potter. “As they add more merchants, we also add more merchants. As they’ve seen a slowdown, we’ve also seen a slowdown in growth.”
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Rewind has been working to diversify its business beyond Shopify and e-commerce for some time now, expanding to SaaS and accounting platforms. As Potter noted, the firm is going after these markets right now but is also seeing lower-than-anticipated growth in them, which he believes is attributable, at least in part, to the current macroeconomic landscape.
After market conditions began to deteriorate last year, Rewind adjusted its plans. As first reported by The Globe and Mail and confirmed by BetaKit, in mid-2022, Rewind laid off five of its six recruiters and a handful of other employees, scaled back its hiring goals, and delayed its next funding round.
The CEO claimed that Rewind has “no immediate plans” to raise more capital with “the majority” of its Series B round still in the bank. “We’re running the business in a way that doesn’t require any additional funding.”
Rewind’s latest cuts are geared towards this goal. Per the CEO, Rewind spent some time building out tech that enables it to back up any SaaS application. Now, with that tech mostly built, Potter noted that the majority of these layoffs were focused on the research and development and product side of Rewind.
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With these layoffs, Rewind is just one of a number of Canadian tech companies to cut staff amid this challenging market environment. As BetaKit reported, Calgary-based software startup Symend recently reduced the size of its team by 25 percent and Toronto accounting software firm FreshBooks shed 10 percent of its staff.
These companies, plus Wave Financial, Avidbots, and EnPowered, contribute towards what is stacking up to be an especially tough year for tech layoffs. Per Layoffs.fyi, 522 tech companies globally have cut over 153,000 employees since the beginning of January. This amount puts tech layoffs in 2023 on pace to surpass all of 2022 in about a third of the time.
With its latest cuts, which Potter says mark a return to Rewind’s roots, the CEO believes Rewind is in a good position to navigate the market downturn.
“We’ve always run [Rewind] in a way that’s been extremely efficient,” said Potter. “I’d say we’ve gotten away from that core value in the last couple of years as we’ve raised our Series B round, and that’s really what we’re getting back to.”
Feature image courtesy Rewind.
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