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Blockchain-based trading platform We.Trade laid off around half of its workforce due to financial difficulties the company is facing. A recent report claimed that the source of its financial woes is that the firm did not receive funding from several of its member banks and one external investor.
According to GlobalTradeReview, We.Trade informed more than a dozen employees in June that “they were being made redundant as their roles were unsustainable.” The publication cited unnamed parties who are familiar with the situation as its sources adding that the redundancies mainly affected the blockchain platform’s product-focused and commercial operations.
We.Trade is owned and funded by several high profile banks and financial institutions that include Deutsche Bank, UBS, Société Générale, HSBC, Santander, UniCredit, Rabobank, CaixaBank, KBC, Erste Group, and Nordea. IBM also bought a 7 percent stake in the firm just less than a month ago, a move that the company said would help its global expansion, according to Cointelegraph.
However, the job losses come just weeks after technology giant IBM took a 7% stake in the company, forming what we.trade called an enhanced collaboration.
We.Trade’s financial issues started when the funding it raised from its shareholder banks this year was much lower than anticipated. This, in turn, prompted the other investors not to reinvest in recent funding rounds, according to sources familiar with the company’s situation.
Adding to its woes is the expected funding from Euler Hermes, believed to be worth between €2-3 million, did not push through. The Paris-based credit insurance company did not comment on why it backed out on the planned capital injection.
With limited funding, We.Trade decided to reduce its operating costs by decreasing its workforce as it continues to seek other sources of funding. “As an early-stage company, it is critical that we remain agile and manage our resource needs as effectively as possible – in order to ensure the continued resilience of the company,” David McLoughlin, the company’s head of commercialization, explained.
“Our resourcing requirements change over time, and given the level of maturity that the we.trade platform has reached we have been able to optimize these resource requirements,” McLoughlin added. “It is in this context that these changes have been made in our technical and product areas.”
While some of its shareholders opted not to reinvest in recent rounds, he pointed out that a significant number continued to reinvest in the firm. “In relation to investment, we have been very pleased with the recent re-investment by many of our existing shareholders, and as reported recently we are delighted that IBM has joined we.trade as a shareholder,” he said.
