CXA Group, the Singapore-based corporate healthcare insurance startup backed by Facebook co-founder Eduardo Saverin, has laid off dozens of employees, former and current staff tell Tech in Asia.
One employee Tech in Asia spoke to says that there are plans to lay off “close to 40 people” across engineering, product development and marketing departments as part of cost-cutting measures. A number of employees have already been axed last week.
CXA Group CEO Rosaline Chow Koo confirmed the layoffs in a written email to Tech in Asia, but said only 12 people were affected. “To right size our team, we cut 12 employees in Singapore out of a total of 319 employees regionally to maintain healthy growth and making on-going investments,” Koo says.
The startup currently has 148 employees in Singapore.
Almost the entire product team is gone, an employee who is serving out his notice says.
Several senior staff members Tech in Asia spoke to say that investors had previously raised concerns over revenue growth and the startup’s burn rate.
Founded by Koo in 2013, CXA disrupts the corporate insurance space by providing customized health benefits to employees. Unlike typical corporate insurance plans that offer a one-size-fits-all solution for all staff, users of CXA’s platform can shop for a range of wellness and health services by drawing down existing insurance policies provided by their employer. Purchases are made via an e-wallet that reflects account balances in real time.
In March 2019, the company raised US$25 million from investors including HSBC, Singtel Innov8, and MDI Ventures. Koo told The Business Times at the time that the startup “may not need additional funding” since CXA was expected to break even in 2020.
However, Koo changed her tune in September with an announcement of her intentions to raise a further US$50 million at a valuation of US$250 million. “We’re going back out only because we’ve signed very long-term contracts to actually be white-labeled by these firms globally,” she said.
Revenue for the company in 2018 was S$18 million (US$12.9 million), a figure that was expected to double in 2019. Koo says that revenues for the company grew 50% in 2019, and that the company remains on track to become profitable “despite operational challenges presented by the Covid-19 outbreak.”
The fundraising effort has so far been futile, with several potential investors pulling out, employees with an understanding of the matter say. It’s unclear why these deals are falling through.
Tech in Asia understands that teams have now been trimmed to a minimum, with the remaining operational staff just enough to sustain operations and “run the show,” one employee says.
On at least one team, all business development executives have been let go, and other sales staff have been offered commission-based salary plans and have had their salaries cut in half. “There is no negotiation – you either take it or quit,” says a former executive familiar with the matter.
Current and former CXA staff Tech in Asia spoke to say that firing is commonplace in the startup, where there have been instances of entire departments being let go and replaced – sometimes without reason. Previous exercises, however, have been more isolated, affecting one or a few employees at a time.
According to its website, CXA serves 766,000 employees and counts Fortune 500 companies among its 600 clients worldwide. The platform focuses on preventive healthcare and early detection of diseases rather than on disease treatment alone, and claims that it can help companies save on medical expenditure. The startup also has offices in Hong Kong, Shanghai, Beijing, and Jakarta.
Update (March 3, 12:40 pm): Updated to reflect responses from CXA Group CEO Rosaline Chow Koo.
Currency converted from SGD to USD: S$1 = US$0.72.