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we.trade, a blockchain-based platform for open account trade, has cut around half of its workforce after struggling to secure funding from several of its member banks and one external investor, GTR has learnt.

More than a dozen employees were informed on June 11 they were being made redundant as their roles were unsustainable, according to several sources familiar with the situation. The redundancies are mainly across its commercial and product-focused operations.

we.trade has generally been funded by its shareholder banks, a pool of institutions that includes CaixaBank, Deutsche Bank, Erste Group, HSBC, KBC, Nordea, Rabobank, Santander, Société Générale, UBS and UniCredit.

However, the job losses come just weeks after technology giant IBM took a 7% stake in the company, forming what we.trade called an enhanced collaboration.

Sources say problems arose when funding raised from some shareholder banks during 2020 proved lower than expected, with many opting not to reinvest in recent rounds.

At the same time, a potentially significant injection of funding from Euler Hermes – believed to be in the region of €2-3mn – did not materialise. Euler Hermes declined to comment when contacted by GTR.

With funds running short, the decision was taken early last week to continue operating with reduced numbers, with a view to seeking additional funding from shareholders and licensees.

David McLoughlin, head of commercialisation at we.trade, says flexibility and attention to cost structures are important for any young business.

“As an early-stage company, it is critical that we remain agile and manage our resource needs as effectively as possible – in order to ensure the continued resilience of the company,” he tells GTR.

“Our resourcing requirements change over time, and given the level of maturity that the we.trade platform has reached we have been able to optimise these resource requirements.

“It is in this context that these changes have been made in our technical and product areas.”

McLoughlin acknowledges that some banks opted not to reinvest for a variety of reasons, but points out that a significant number did.

“In relation to investment, we have been very pleased with the recent re-investment by many of our existing shareholders, and as reported recently we are delighted that IBM has joined we.trade as a shareholder,” he says.

Initially built by IBM, the we.trade platform is powered by Hyperledger Fabric and predominantly focuses on managing, tracking and protecting open account trade transactions between European SMEs.

It was registered as a standalone legal entity in 2018, and officially started facilitating real-world commercial transactions in March 2019.

Representatives for IBM did not respond when contacted by GTR.

Asked whether a slowdown in funding could be caused by the Covid-19 pandemic, McLoughlin says it is in fact acting as a “catalyst” for digitisation.

For instance, containment measures such as nationwide lockdowns meant we.trade encountered difficulties in moving paper documents by courier. In response, McLoughlin says many banks accelerated efforts to move towards using electronic documents instead.

“With Covid-19, the digitisation of trade and trade finance is now no longer a luxury, but a must,” he says.