Birchal cuts staff as part of 30% expense reduction

Equity crowdfunding platform Birchal has recently engaged in a round of redundancies as part of a 30% reduction in expenses across the company. The cost-cutting also saw the removal of contractors and a cut in executive salaries.

In a recent monthly update, Birchal revealed to shareholders that the platform “significantly underperformed” in its expectations and budget for funding volume in the first six months of the calendar year.

Despite reporting a 34% increase in total funding volume in H1 FY24 compared to H1 FY23, Birchal saw a slower start to the new year.

“Unfortunately, average funding volume has not recovered and like wider parts of the financial system we have not been completely exempt from tough macro-economic conditions,” a Birchal spokesperson said to SmartCompany.

“Given the material softening of funding volume, and in an effort to return to breakeven and reduce our reliance on external capital injections, we recently took the difficult but necessary decision to reduce our expenses by approximately 30%.”

According to the company, the staff reductions were made predominantly across the marketing and product teams. It’s unclear exactly how many staff were let go from the business.

“Unfortunately a handful of roles were impacted by the changes. It was a difficult decision, driven by the current state of the broader capital markets and funding volumes,” the spokesperson said.

“Our cost reduction plan has been carefully structured to preserve our ability to support Australian founders and early-stage growth businesses. We will continue to work on diversification of revenue initiatives with the team.”

The news follows the release of Birchal’s annual Funded report this week, which reported a 16% increase in companies using equity crowdfunding platforms from FY23. This saw $64.5 million raised from 35,000 investments. Birchal hosted 66 of the 99 campaigns and raised $46.5 million from 27,000 investors.

The report noted that while there were more deals across equity crowdfunding platforms this financial year, the raise sizes were smaller.

“Acting swiftly and decisively leaves Birchal in a position of strength to maintain its leadership position in the market and continue to be a core pillar of the CSF industry. It will also provide more flexibility to ramp back up in a considered way when signals change,” the spokesperson said.

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