Loop, the auto insurer co-founded by Harlem Capital co-founder John Henry, has laid off staff as the company struggles to raise capital.
Henry took to Instagram to post the email co-founder Carey Nadeau sent to affected staff on June 16. Nadeu also posted the letter on LinkedIn. He said this was the “absolute last resort” for the company after it had been unsuccessful in raising additional capital after 20 months of trying. “Our last chance,” Nadeau wrote, “had an investor pull out at the last hour, and we just failed.”
The email continued, saying the company has decided to reduce its workforce as it tries to work through its financial difficulties. It is unclear how many people were affected. However, according to a LinkedIn post by a former employee, the cuts affected people who were insurance agents, as well as people in customer service, data analytics, marketing, software and product engineering.
Henry did not immediately respond to our request for comment.
Henry co-founded Loop with Nadeau in 2020, shortly after leaving his role as a venture partner at his firm Harlem Capital, according to his LinkedIn profile. As TechCrunch previously reported, Loop sought to serve as an alternative insurance model for pricing insurance that wasn’t as heavily reliant on structurally biased metrics like credit scores and education used by legacy models.
The company launched out of stealth in 2021, raising $3.25 million led by Freestyle VC, with participation from Backstage Capital and Uprising Ventures. Loop then went on to raise a $21 million Series A, the company said, led by Foundry Group and 01A (former Twitter CEO Dick Costolo and COO Adam Bain’s fund). It raised an $8 million expansion round in 2023, according to PitchBook.
Loop’s fundraising woes are not unique to Black-founded companies. TechCrunch reported last year that Black founders raised less than 1% of all venture capital funding, a number that has continued to decline as pledges to support more Black founders made after the killing of George Floyd have dwindled in recent years. 2024 continues to be a tough fundraising year across the board. Outside of select areas such as artificial intelligence, 2024 has seen some of the lowest funding rates since 2018; Crunchbase reported.
In his Instagram post, Henry wrote that the situation was “unexpected” but the company was going to work through it. Other Black founders were quick to empathize and express their support for Loop on Instagram.
“It’s tough out here right now,” Melissa Butler, its founder The Lip Bar, He wrote. “Thank you for sharing your journey with us.”
