Loop, the auto insurance company co-founded by Harlem Capital co-founder John Henry, has laid off employees as it struggles to raise capital.
Henry posted on Instagram an email co-founder Carey Nadeau sent to affected employees on June 16. Nadeau also posted the letter on her LinkedIn. She said this was an “absolute last resort” for the company after it failed to raise additional capital after 20 months of trying. “Our last chance was for the investors to pull out at the last hour, and we fell short,” Nadeau wrote.
The email goes on to say that the company has decided to reduce headcount to overcome financial difficulties. It is unclear how many people have been affected. But the cuts affected people in insurance agents, customer care, data analytics, marketing, software engineers and product, according to a post on LinkedIn by a former employee.
Henry did not immediately respond to our request for comment.
According to his LinkedIn, Henry co-founded Loop with Nadeau in 2020 shortly after stepping down from his venture partner role at his firm, Harlem Capital. As TechCrunch previously reported, Loop sought to serve as an alternative insurance model for insurance pricing that doesn't rely heavily on structurally biased metrics like credit scores and education used in legacy models.
The company came out of stealth mode in 2021 and raised a $3.25 million seed round led by Freestyle VC, with participation from Backstage Capital and Uising Ventures. Loop then raised $21 million in Series A funding, led by Foundry Group and 01A (the fund of former Twitter CEO Dick Costolo and COO Adam Bain), the company said. It raised an expansion round of $8 million in 2023, according to Pitchbook.
Loop's funding problems aren't limited to the company Black founded. TechCrunch reported that Black founders raised less than 1% of all venture capital funding last year, a figure that has continued to decline as promises to support more Black founders have diminished in recent years following the killing of George Floyd. 2024 continues to be a difficult fundraising year overall. Crunchbase found that, excluding some areas, such as AI, 2024 will see the slowest pace of fundraising since 2018.
Henry wrote in his Instagram post, “It was an unexpected situation, but the company tried to overcome it.” Other black entrepreneurs also rushed to express their sympathy and support for Loop through Instagram.
“This is a tough place to be right now,” wrote Melissa Butler, founder of The Lip Bar. “Thank you for sharing your journey with us.”
