While digital banking software startup Synapse experienced strong and steady growth since its 2014 launch, the company has faced difficulties over the course of this past year.
The San Francisco-based company enables other FinTechs—including digital bank Dave and investment company YieldStreet—to quickly launch features like mobile checking and savings accounts. Last year, Synapse raised $33 million in venture funding in a round led by Andreessen Horowitz, with participation from existing investors Trinity Ventures and Core Innovation. The startup has raised $50 million to date.
At the time, Synapse reported that it had close to 3 million users in the U.S. and was looking to expand into Canada and Europe, with plans to launch payments and deposit/debit card insurance, lending, and investment products.
But while Synapse found success with investors and consumers, its CEO came under fire for his management style. A report in Forbes detailed a hostile work environment in which Sankaet Pathak’s short fuse led him to fire and rehire employees. In addition, he was accused of repeatedly throwing tantrums. Late last year, the company was hit with a lawsuit from three former employees for gender and age discrimination. However, there have been reports that Pathak’s behavior has improved, and that he has started delegating more tasks, setting up a tiered management structure.
There are more changes ahead for the company. Multiple reports revealed that Synapse has laid off 63 people, or nearly 50 percent of its full-time staff, and that there are plans to move its existing workforce to Texas.
In an email, Pathak said the layoffs only affected roughly 30 percent of his staff, but it was pointed out that he might also have included the company’s temporary contract workers in the numbers of those who weren’t let go. He wrote in a letter obtained by Forbes that “Because of the effects on business of emergency efforts being imposed to slow down the COVID-19 outbreak, Synapse Financial Technologies, Inc. (Synapse) must lay off employees working at our San Francisco facility.”
The memo explained that 11 departments were affected, including “Account Management, Engineering, Machine Learning, Customer Success, Sales, Compliance, Facilities, Design, Operations, Finance, and Recruiting.”