Layoffs at Caribou
Based on information obtained by Coverager, fintech startup Caribou has made cuts during late August and October. We reached out to the company to inquire about the number of impacted employees, but we did not receive an answer. According to our sources, around 45 people were let go in October and about 20 people lost their jobs in August. Based on LinkedIn data, the company’s employee count went from 407 in July to 361 in December.
Founded in 2016, Caribou, formerly MotoRefi, allows consumers to refinance their existing car loans. It raised $189 million and its latest financing round – $115 million Series C – was announced in May and included participation from CMFG Ventures. The startup, which also offers an insurance comparison service through a partnership with Bindable, is struggling on several fronts.
Like many middlemen, Caribou is currently dealing with product challenges as some lenders have put restrictions in place. But aside from this new challenge, Caribou has been struggling to get customer acquisition right. Auto refinancing is something that isn’t top of mind for the average consumer, which is why generating awareness is crucial, especially for a digital player.
Caribou’s major distribution partner is Credit Karma, which has the relevant data and reach to generate awareness but things aren’t going well. For starters, the volume Credit Karma generates for Caribou isn’t enough now that it achieved a unicorn status. Another challenge is Credit Karma’s dynamic prioritization of products – often, the Intuit-owned company would place more focus on other offers such as consumer credit cards. This is why Caribou also utilizes performance marketing, but the cost is high considering the margins of a middleman looking to save people money on car loans.
We’re told that after placing some marketing restrictions, Caribou was able to breakeven on customer acquisition from a marketing spend perspective. Of course, this doesn’t take into account payroll and other expenses the startup has. Since volume won’t solve this problem, Caribou is looking to increase revenue per user, which is why the insurance offering was launched. We were also told that Caribou did some work around possibly becoming a lender.