Manchester-based FinTech OpenMoney Limited is set to cut around 50 jobs after the business was put into a Company Voluntary Arrangement (CVA).
The FinTech ran into financial difficulties after co-founder and lead investor, Duncan Cameron, decided to stop to putting any more money into the loss-making business at the end of March.
Accounts filed at Companies House show the FinTech lost £9.3m before taxation in 2021 against revenues of £593k, compared to £7.6m and £582k respectively in 2020.
One of the first things turnaround specialists Will Mallard and Patrick Leahy did when they bought the business for a nominal sum was put OpenMoney Limited into a Company Voluntary Arrangement (CVA) and embark on a major restructure.
Now BusinessCloud understands that around 50 jobs are set to be lost while the new owners focus their attention on the two subsidiary businesses – OpenMoney Adviser Services and WorkLife by OpenMoney.
At its height OpenMoney employed up to 92 people but after the redundancies the workforce will be about 30 strong.
A company spokesman said: “A statutory consultation process has been initiated with employees, who will elect representatives to manage the way through an uncertain situation.
“A process on the proposed business restructuring is progressing with creditor input.
“Several of the leadership team remain on sick leave since the day or so of the sale.
“The other businesses are doing well. The Open Money Advisory business has begun active discussions to acquire IFA firms as part of its expansion. Its regulated online mortgage brokerage is a key part of the growth plan.
“The WorkLife employee benefits and financial well-being business similarly is set to grow with a key partnership being negotiated and sales teams being deployed with new offering.”
OpenMoney was launched in 2015 by Duncan Cameron, co-founder of MoneySuperMarket, and Anthony Morrow to make financial advice accessible and affordable to everyone.
An insider told BusinessCloud that eyebrows were raised at the hefty salaries paid to some senior managers and the decision to move everyone to a 4.5-day working week at a time when they were trying to find a buyer.
OpenMoney grew customer numbers to around 20,000 and had £145m of assets under management – but the business continued to burn cash at an alarming rate.
Cameron invested an estimated £30m+ of his fortune in the startup before deciding enough was enough at the end of March.
The decision triggered a frantic search for buyers before Mallard and Leahy, who run a financial wellness company called Elva, bought everything for a nominal sum.
As part of the deal Cameron wrote-off loans that he was owed by the business, which ran into the millions.
In a statement issued at the time, Mallard and Leahy said: “The proposed restructure, while difficult because of the impact on those members of staff whose roles will be made redundant, is essential if the business is to fulfil its potential for stellar growth.
“It is important to stress that there is no impact to clients as a result of the proposed changes.”