Loop, the auto insurance company co-founded by Harlem Capital co-founder John Henry, has laid off employees as the company struggles to raise funds.
Henry posted on Instagram the email his co-founder Carey Nadeau sent on June 16 to affected employees. Nadeu also published letter to LinkedIn. He said it was an “absolute last resort” for the company after it failed to raise additional capital after 20 months of trying. “Our last chance,” Nadeau wrote, “resulted in an investor pulling out at the last minute and we simply fell short.”
The email went on to say that the company had decided to downsize in order to survive financial difficulties. It is unclear how many people were affected. However, according to post on LinkedIn by a former worker, the cuts affected individuals who were insurance agents, in addition to those involved in customer support, data analytics, marketing, software engineering and products.
Henry didn’t immediately respond to our request for comment.
According to his LinkedIn profile, Henry co-founded Loop with Nadeau in 2020, shortly after leaving his position as enterprise partner at his firm Harlem Capital. As TechCrunch previously reported, Loop sought to function an alternative insurance model for insurance pricing that may not rely as heavily on structural metrics, similar to credit scores and education, used in older models.
The company emerged from stealth mode in 2021, raising $3.25 million in capital led by Freestyle VC with participation from Backstage Capital and Uprising Ventures. Loop then raised $21 million in Series A funding, the company said, led by Foundry Group and 01A (former Twitter CEO Dick Costolo and fund COO Adam Bain). It raised an $8 million extension round in 2023, according to PitchBook.
Loop’s fundraising problems aren’t unique to Black-founded firms. Last 12 months, TechCrunch reported that Black founders raised lower than 1% of all enterprise capital funding, a number that continues to decline as pledges to support more Black founders made in the wake of George Floyd’s murder in recent years diminish. 2024 continues to be a difficult 12 months for fundraising. Outside of chosen areas similar to artificial intelligence, 2024 saw some of the slowest funding rates since 2018, Reported on Crunbase.
In his Instagram post, Henry wrote that the situation was “unexpected” but that the company was going to get through it. Fellow Black founders rushed to empathize and express their support for Loop on Instagram.
“It’s tough out here right now” – Melissa Butler, founder Lip strip, he wrote. “Thank you for sharing your journey with us.”