Loop, the car insurance startup co-founded by John Henry of Harlem Capital, has initiated layoffs as it grapples with challenges in securing additional funding.
On June 16th, Henry shared on Instagram an email sent by his co-founder Carey Nadeau to affected staff. Nadeau also posted the letter on LinkedIn, describing the layoffs as a regrettable last resort for the company, which has been unsuccessful in raising capital despite efforts spanning 20 months. According to Nadeau, their latest fundraising opportunity fell through at the final stage, leaving Loop short of necessary funds.
The email explained that the company had to reduce its workforce to navigate through financial difficulties. While the exact number of employees affected remains unclear, a former employee mentioned in a LinkedIn post that layoffs included roles in insurance agents, customer care, data analytics, marketing, software engineering, and product development.
John Henry did not respond immediately to requests for comment.
Loop was founded by Henry and Nadeau in 2020, shortly after Henry’s tenure as a venture partner at Harlem Capital. The startup aimed to revolutionize insurance pricing by minimizing reliance on biased metrics such as credit scores and education, prevalent in traditional insurance models.
After emerging from stealth mode in 2021, Loop secured a $3.25 million seed round led by Freestyle VC, with contributions from Backstage Capital and Uprising Ventures. Subsequently, it raised a $21 million Series A round led by Foundry Group and 01A (founded by former Twitter executives Dick Costolo and Adam Bain). In 2023, Loop raised an additional $8 million in an extension round, according to PitchBook data.
Loop’s fundraising challenges reflect broader struggles faced by Black-founded startups in securing venture capital. Reports indicate that Black founders received less than 1% of total venture capital funding, with funding rates in 2024 notably sluggish outside of specific sectors like AI, according to Crunchbase.
In his Instagram post, Henry acknowledged the unexpected setback but affirmed Loop’s determination to persevere. Other Black founders rallied on Instagram, expressing solidarity and support for Loop during this challenging period.
“It’s tough out here right now,” commented Melissa Butler, founder of The Lip Bar. “Thank you for sharing your journey with us.”
[inline_related_posts title=”You Might Be Interested In” title_align=”left” style=”list” number=”6″ align=”none” ids=”2625,2554,2552″ by=”categories” orderby=”rand” order=”DESC” hide_thumb=”no” thumb_right=”no” views=”no” date=”yes” grid_columns=”2″ post_type=”” tax=””]
