Startups

After 20 months of trying to raise funds, insurance startup Loop cuts staff

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Carey Anne Nadeau and John Henry, the co-founders of Loop.
Image Credits: Loop

Loop, the car insurance company co-founded by Harlem Capital co-founder John Henry, has laid off staff as the company struggles with fundraising. 

Henry took to Instagram to post the email his co-founder Carey Nadeau sent to impacted staff on June 16th. Nadeu also posted the letter to LinkedIn. It stated that this was the “absolute last resort” for the company after it had been unsuccessful in raising additional capital after 20 months of trying. “Our last opportunity,” Nadeau wrote, “had an investor pull out at the very final hour, and we just fell short.” 

The email continued, saying the company decided to reduce its headcount as it seeks to operate through its financial difficulties. It’s unclear how many people were impacted. However, according to a LinkedIn post by a former employee, the cuts impacted people who were insurance agents, as well as people in customer care, data analytics, marketing, software engineering and product.

Henry did not immediately respond to our request for comment. 

Henry co-founded Loop with Nadeau in 2020 shortly after stepping down from his role as a venture partner at his firm Harlem Capital, according to his LinkedIn profile. As TechCrunch previously reported, Loop sought to serve as an alternative insurance model for pricing insurance that didn’t rely as heavily on structurally biased metrics like credit scores and education used by legacy models. 

The company launched out of stealth mode in 2021, raising a $3.25 million seed led by Freestyle VC, with participation from Backstage Capital and Uprising Ventures. Loop then went on to raise a $21 million Series A, the company said, led by Foundry Group and 01A (former Twitter CEO Dick Costolo and COO Adam Bain’s fund). In 2023 it raised an $8 million extension round, according to PitchBook.

Loop’s fundraising troubles are not unique to Black-founded companies. TechCrunch reported last year that Black founders raised less than 1% of all venture capital funding, a number that has continued to dwindle as the promises to back more Black founders made after the murder of George Floyd have diminished in recent years. 2024 continues to be a difficult fundraising year across the board. Outside of select areas, like AI, 2024 has seen some of the slowest funding rates since 2018, Crunchbase reported.

In his Instagram post, Henry wrote that the situation was “unexpected,” but the company was going to operate through it. Other Black founders rushed to empathize and express their support for Loop on Instagram.

“It’s tough out here right now,” Melissa Butler, founder of The Lip Bar, wrote. “Thank you for sharing your journey with us.” 

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