Mortgage fintech Tomo has cut nearly a third of its workforce and is scaling back plans to expand into new markets.
Tomo CEO and co-founder Greg Schwartz said: “The recent shift in the mortgage and venture capital markets due to the rapid increase in interest rates has impacted Tomo’s business plans and led us to make changes to our near-term strategy.”
He said: “As part of these measures, we have reduced the size of Tomo’s workforce by almost a third. This was a last resort, but ultimately something we felt was necessary to maintain a strong foundation.”
Tomo, which announced a $40 million Series A funding round in March, more than doubled its valuation to $640 million.
The company currently provides loans in Colorado, Connecticut, Florida, Georgia, North Carolina, Michigan, Ohio, Texas, and Washington.
According to the Nationwide Multistate Licensing System, Tomo Mortgage is also licensed in Illinois, Maryland, Oregon, Tennessee and Washington, D.C. But plans to open for business in those markets appear to be on hold.
Schwartz added: “We will also dial back our market expansion plans and will focus specifically on building a tech-enabled mortgage process that delivers faster, less costly and less stressful experiences for homebuyers and the real estate agents that serve them,” within the company’s existing footprint,
Schwartz more details and thanked employees who were let go in a LinkedIn post.
He said: “This is difficult for any company, but especially one like ours built around the idea of service to others, to say nothing of the difficulty our impacted teammates are now facing,”.
“The reason we are taking such strong measures is to ensure Tomo has enough of a runway for the business to succeed in its mission.
“While we explicitly don’t offer to refinance mortgages because of the risky boom and bust cycle, we’ve still been impacted by the rapid rise in interest rates that has reduced purchase mortgage margins.
Tomo Mortgage matches homebuyers with partner real estate agents through its sister company, Tomo Brokerage. Tomo Mortgage LLC and Tomo Brokerage Inc. are owned by parent company Tomo Networks Inc.
Tomo announced its expansion into Florida, Connecticut, and Colorado in January, as well as the addition of jumbo mortgages of up to $3 million to its product offering.
Tomo said it had a presence in more than a third of U.S. markets when it announced its expansion into Georgia and North Carolina two weeks ago.
More than a dozen Keller Mortgage employees posted notices on LinkedIn last week that they’d been laid off, with some describing the cuts as “huge.”
What is Tomo?
Tomo Networks is a fintech startup that improves the homebuying experience by pairing a smarter and faster mortgage process with the best real estate agents
Where it is headquartered? Tomo is headquartered in Austin, Texas.
How many staff does it have? It currently has 200 employees.
What is its annual revenue? $51 Million