Layoffs at Loop

Based on information obtained by Coverager, Loop Insurance made cuts last month.

The startup, which closed a $21 million Series A round last September, laid off around 15 employees, or about 20% of its workforce. The layoffs impacted the marketing and data science teams.

In May, Loop co-founder and co-CEO John Henry shared a post on LinkedIn on how the company is navigating the VC downturn. The first point that was discussed is customer acquisition and how Loop is diversifying its acquisition channels. “The days of unlimited, ultra-efficient FB Ads acquisition is over,” Henry wrote. “Cost is up nearly 2x from 2019, & cash is tight. We’ve been experimenting a lot w/ smaller, novel channels.” Based on information we received, Facebook was Loop’s main customer acquisition channel, which contributed to high acquisition costs and ultimately, slow growth – the company had around 1,000 car insurance policies in force at the end of the first half of this year, despite the “30,000 people waiting to be insured by Loop.”

Another point that was mentioned in the post was challenging assumptions. “We found we were operating on auto-pilot in a few areas without any real intentionality that represented sizable burn,” Henry shared. Loop’s burn rate prior to the layoffs stood at about $800k a month, and in June, leadership shared with employees that it had around $20 million in the bank – a combination of the Series A money and an $8 million debt note.

The MGA, which is available in Texas and celebrated its 1-year anniversary of selling its first policy this month, is putting state expansion plans on the back burner as it looks to improve its tech stack – just recently the company introduced an autopay feature to policyholders.

At the end of his post, Henry writes that he’s not sure how long this cycle will persist, “but surely – there’s no bad time to grow a good business.” Loop has several aspects to improve before it can be considered a good business, and it needs to do so quickly because this cycle may be less forgiving.

We reached out to Loop for a comment.