Varo has laid off 75 employees as part of an effort, the neobank said, to move toward profitability.
CEO Colin Walsh wrote in a blog post Tuesday that the company "must make some difficult decisions to ensure that Varo has sufficient capital to execute on our strategy and path to profitability." The cuts represent a little less than 10% of the company's staff, according to head count estimates on LinkedIn.
Varo, which provides online checking and saving accounts along with other services, was the first consumer neobank to secure a national banking license with the Office of the Comptroller of the Currency.
After the fintech sector saw record investment totals in 2021, the appetite from venture capitalists to bet on fintech firms has cooled considerably this year. Varo joins a list of fintechs to conduct layoffs in recent months that includes Klarna, Bolt and Robinhood.
Varo in September raised a $510 million series E round at a $2.5 billion valuation.
First-quarter filings with banking regulators showed Varo was burning through its capital quickly and risked running out of money by the end of the year, as first detailed in the Fintech Business Weekly newsletter. Walsh told Banking Dive that "we remain very well capitalized and have sufficient capital to reach profitability, without having to raise additional capital."
The company, founded seven years ago, is establishing a new business unit called Varo Tech, according to Walsh's announcement. The department will "bring together the technology, design, data and product functions under a single umbrella" to increase speed and reduce costs, Walsh said.
The company, through a spokesperson, declined to share further detail on what jobs are being cut through the layoffs.