A Greater Cincinnati startup that hit a hot streak in 2021 has eliminated more than two dozen positions as the economic downturn continues to take a toll on tech companies nationwide. The cuts represent roughly 20% of its workforce.
Coterie, a Blue Ash-based insurtech, laid off around 30 employees this week, its co-founder and CEO David McFarland said in a posting. He blamed macroenvironment changes for the decision. The jobs ranged from software engineers to communications positions, according to postings on LinkedIn by those impacted.
McFarland said the company is offering every departing employee severance benefits and outplacement services to help with the transition. The company will continue to navigate the downturn with caution, he added.
“While we continue to hit our goals, onboard new partners and are releasing a new update to our dashboard in just a few weeks, we can’t assume that former assumptions are going to hold true in this new environment,” he wrote. “We’re proceeding prudently, thinking about the long-term and narrowing priorities. This comes at a significant cost.”
Cincinnati — at least thus far — has been largely isolated from the broader-reaching tech crunch that’s prompting cost-cutting measures and layoffs. Interest rates, inflation and stock market struggles have resulted in pullbacks across the country.
Chicago-based Cameo, the celebrity shout-out app, cut 25% of its staff earlier this month; and Miami “unicorn” Reef Technology recently laid off 700, or 5% of its global workforce, blaming the current state of the economy. In the first three months of the year, U.S. venture funding has also dropped 8%, according to PitchBook.
John McIlwraith, a local co-founder of Indianapolis-based Allos Ventures, which counts Coterie as a portfolio company, said VCs are advising their startups to take a hard look at expenses and cash burn, and to consider ways to extend their runway as financing rounds might prove more difficult.
Valuations are also expected to be lower on a relative basis, he said.
"The good news is companies that are solving significant sources of pain for their customers will likely continue to experience solid to strong growth,” McIlwraith told me. “And we are seeing that across our portfolio.”
Coterie is coming off a red-hot 2021. It raised an $11.5 million Series A-1 in February, then a $50 million Series B in October. It moved its headquarters to a larger space in Blue Ash, and received tax credits from state to create nearly a dozen new jobs in the region.
Coterie’s digital platform works by delivering insurance solutions to small businesses, contractors and gig workers. Its agent portal allows for the instant quoting and issuing of policies as well as a 100% digital underwriting process.
Coterie initially focused on non-traditional channels, teaming up with platforms like Intuit Quickbooks and Thryv to deliver business insurance. It has since expanded with solutions for independent agents and brokers, allowing them to more seamlessly sell and service small business insurance.
