CXA Group lays off dozens of Singapore staff in cost-cutting effort

CXA Group, the Singapore-based corporate healthcare insurance startup backed by Facebook co-founder Eduardo Saverin, has laid off dozens of employees, former and current staff tell Tech in Asia.

One employee Tech in Asia spoke to says that there are plans to lay off “close to 40 people” across engineering, product development and marketing departments as part of cost-cutting measures. A number of employees have already been axed last week.

CXA Group CEO Rosaline Chow Koo confirmed the layoffs in a written email to Tech in Asia, but said only 12 people were affected. “To right size our team, we cut 12 employees in Singapore out of a total of 319 employees regionally to maintain healthy growth and making on-going investments,” Koo says.

The startup currently has 148 employees in Singapore.

Photo credit: CXA Group

Almost the entire product team is gone, an employee who is serving out his notice says.

Several senior staff members Tech in Asia spoke to say that investors had previously raised concerns over revenue growth and the startup’s burn rate.

Founded by Koo in 2013, CXA disrupts the corporate insurance space by providing customized health benefits to employees. Unlike typical corporate insurance plans that offer a one-size-fits-all solution for all staff, users of CXA’s platform can shop for a range of wellness and health services by drawing down existing insurance policies provided by their employer. Purchases are made via an e-wallet that reflects account balances in real time.

In March 2019, the company raised US$25 million from investors including HSBC, Singtel Innov8, and MDI Ventures. Koo told The Business Times at the time that the startup “may not need additional funding” since CXA was expected to break even in 2020.

However, Koo changed her tune in September with an announcement of her intentions to raise a further US$50 million at a valuation of US$250 million. “We’re going back out only because we’ve signed very long-term contracts to actually be white-labeled by these firms globally,” she said.

Revenue for the company in 2018 was S$18 million (US$12.9 million), a figure that was expected to double in 2019. Koo says that revenues for the company grew 50% in 2019, and that the company remains on track to become profitable “despite operational challenges presented by the Covid-19 outbreak.”

Rosaline Chow Koo, founder and CEO of CXA Group / Photo credit: CXA

The fundraising effort has so far been futile, with several potential investors pulling out, employees with an understanding of the matter say. It’s unclear why these deals are falling through.