LONDON — Startup digital bank Tandem has cut its headcount by around 30 people after seeing £29 million ($37.3 million) in funding fall through earlier this year.
A source told Business Insider that Tandem has reduced its staffing levels from around 110 to close to 80. The headcount reduction includes both redundancies and contractors who have not been renewed.
The cutbacks follow the collapse of a significant funding round earlier this year. Tandem announced last December that it had secured a £35 million investment from department store House of Fraser. However, House of Fraser is owned by China’s Sanpower and a crackdown from Beijing on capital flight led to the investment falling through after Tandem had received just £6 million of the £35 million.
Tandem said at the time that it would look to restructure its business “to ensure a tight focus on delivering its customer vision and bringing its products to the market as quickly as possible.”
Ricky Knox, the cofounder of Tandem, told Business Insider: “We actually had quite a few contractors in the room and we now have almost none. That made sense because when you’re going into your digital build to make sure you’ve got enough people to get the product out there you need to add some extra heads in.”
The headcount cut follows a round of redundancies earlier in the year, prior to the funding fall through. BI reported in March that Tandem had let around 10 staff go, bringing headcount at the time down to around 110.
Knox told BI: “I think these businesses should be running with a 50-100 person staff base and pre-Christmas we’d gone over that.
“We’ve restructured the team, moving from build to operate. We’ve been mainly a tech dev house for the last few years and through this year we’ve been building up and adding actually operational personnel. There’s been quite a bit of shift over the course of the last 6 months. It’s definitely not a one-way street.
Tandem is in “advanced” funding talks to secure investment to cover the shortfall left by House of Fraser, Knox said, although he wouldn’t elaborate further on who might invest or the timeline for closure.
Asked if Tandem would be expanding its staff after the investment was secured, Knox said: “Will we need to add some more people with a few specialist skills? For sure. But are we planning to expand this team and be 250 people in a year’s time? No, that’s not our objective at all. My dream would be that we keep under 100 forever but that’s not going to happen.”
Tandem, founded in 2014, is one of a number of app-only banks set up in Britain in recent years. Others include Monzo, Atom, and Starling. Tandem has raised over £25 million to date from investors including eBay founder Pierre Omidyar.
The collapse of the House of Fraser funding led Tandem to delay the launch of its savings product but Knox told BI the company is still going ahead with the launch of its credit card product, which is set to debut within months. He added that House of Fraser is still keen to cooperate with Tandem in offering financial products to the department store’s customers.