Upstart to Lay Off 365 Employees

February 1, 2023

Upstart is laying off 365 employees due to reduced demand for lending.

The artificial intelligence (AI) lending platform said in a Tuesday (Jan. 31) filing with the Securities and Exchange Commission (SEC) that the cuts will amount to about 20% of its current workforce.

“On January 31, 2023, in response to the challenging macro environment where many lenders and credit investors have significantly reduced or paused loan originations, Upstart Holdings, Inc. (“Upstart”) implemented a plan of reorganization (the “January 2023 Plan”),” the firm said in the filing. “The January 2023 Plan is designed to reduce operating costs, streamline operations and return Upstart to profitability.”

Upstart also plans to suspend the development of its small business loan product “until macroeconomic conditions improve,” according to the filing.

This news comes about three months after Upstart eliminated 140 positions — or about 7% of its staff at the time — due to a challenging economy that is in turn reducing loan volumes.

As PYMNTS reported at the time, those cuts were a response to a macro climate that scarcely could have been predicted a year earlier. The fact that mortgage rates had reached multi-decade highs did no favors to platforms that promised to disrupt the housing industry, and particularly how the financing of buying and selling is done.

During Upstart’s most recent earnings call in November, the firm reported that the rising interest rates and slowing economy had seen its tally of new loans cut in half.

“Higher interest rates and significantly elevated risk in the economy means we’re approving about 40% fewer applicants than we would have a year ago,” Upstart Co-founder and CEO Dave Girouard said during the Nov. 9 earnings call.

The latest round of cuts also comes about three weeks after digital marketplace bank LendingClub eliminated 225 jobs — or about 14% of its workforce — due to the “historic pace” of rate hikes made by the Federal Reserve.

“We remain committed to championing the financial success of our customers while generating long-term profitable growth amid an increasingly challenging economic environment,” LendingClub CEO Scott Sanborn said Jan. 12. “We have proactively implemented various measures to make this happen, including the very difficult decision to reorganize and reduce our workforce.”

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