The Covid-19 pandemic is to blame for SkySlope Inc. not reaching its local growth target, the Sacramento software company’s CEO said, in a statement to the Business Journal.
On Nov. 16, the California Competes program clawed back most of the $3 million in tax credits it offered the company in 2018. The tax credits had been contingent on SkySlope's progress toward tripling its local headcount, to 320 full-time employees, and investing millions of dollars in its growth in the region.
2022 was the last year for SkySlope to claim the award, and the state has now taken back the unclaimed amount — $2.4 million, all the money the company could have earned since 2020.
In a statement, SkySlope CEO Tyler Smith said Covid-19 prevented SkySlope from meeting the in-state hiring milestones necessary to claim the tax credits.
"Like many businesses, the pandemic significantly impacted our operations. It necessitated a shift in our hiring strategy, focusing more on remote opportunities to ensure the well-being and productivity of our team,” the statement said. “This decision, while critical for our growth and adaptation during an unprecedented global crisis, meant that we were no longer in alignment with certain aspects of the (California Competes Tax Credit) criteria."
More than 90% of SkySlope's workforce worked remotely this year, according to the company. Nearly 40% of its employees are based outside of the Sacramento region.
Smith said SkySlope has been in communication with the CalCompetes program for more than a year, in anticipation of not fulfilling the agreement. The unclaimed tax credits awarded by the CalCompetes program are recaptured so the money can be used for awards to other companies.
“We are proud of our Sacramento roots and remain committed to fostering growth and innovation in our community,” Smith said. “However, our decision to prioritize the needs of our employees and our business model during the pandemic was essential and something we stand firmly behind."
The company develops transaction management software for real estate brokers. Smith, who was a real estate agent at the time, launched the company out of his bedroom in 2010. Five years later, it had 60 employees. In 2017, Fortune 500 title insurance company Fidelity National Financial Inc. (NYSE: FNF) purchased a majority share of SkySlope. At the beginning of 2020, it had 200 employees, after outgrowing a series of office spaces, and was poised to keep growing.
But the pandemic brought in a sudden decline in real estate sales, and SkySlope had laid off 25% of its staff by April 2020. Today, the company has around 190 employees.
