Trouble at LenddoEFL: Staff departures, culture clashes, and a contentious hire

Cracks have been forming at LenddoEFL, a startup regarded as a success story in the Philippines and an industry pioneer in Southeast Asia for using non-traditional data for credit scoring.

Attempts at restructuring operations are taking its toll on the Singapore-headquartered firm, which had assessed more than 7 million profiles and enabled over US$2 billion in lending in 20-plus countries as of 2018.

Photo credit: Finovate

A multimillion-dollar term sheet that was on the table in 2019 seems to have fallen through, says a source familiar with the situation, worsening a cash crunch that has resulted in staff departures across global teams, in addition to pending payments to vendors.

That’s just one among the many other challenges facing LenddoEFL, which initially extended loans to individuals by using algorithms that assessed creditworthiness. It tried to become a software-as-a-service (SaaS) company by selling its credit-scoring product, but the transformation hasn’t been easy.

Employees seem to have borne the brunt of the company’s restructuring efforts, with some going unpaid for months and others being terminated without notice. Former staff that Tech in Asia spoke to also bemoaned the lack of communication about operational health and a contentious management hire.

Speaking to Tech in Asia, LenddoEFL chief executive Paolo Montessori confirmed that while there had been staff exits, turnover has been “less than 10%” overall. The startup has been going through a restructuring effort in the past 12 months as it works towards becoming a “serious growth company.”

The layoffs

In April, LenddoEFL’s team of engineers in the Philippines – over 20 of them, which were hired through business process outsourcing company (BPO) Infinit-O – were made redundant as the partnership between both companies ceased, ex-employees affected by the move tell Tech in Asia. Some staff from its data science team were also affected.

“There was literally zero notice period,” says an ex-employee who requested confidentiality.

There is nothing extraordinary about that. It’s a company growing up.

Online postings show that the company continues to hire for roles in finance and engineering, and its current headcount stands at 62.

In the Philippines, it’s common for multinational companies to recruit local personnel through BPO companies, which effectively serve as third-party providers. In effect, employees hired through Infinit-O don’t fall under LenddoEFL’s official headcount. “[Infinit-O] is our employer on paper. They pay our salaries, they provide us with government-mandated bonuses and benefits, [and] they file our taxes,” a former employee explains.

Tech in Asia understands that LenddoEFL employees in international offices have also been retrenched. As it consolidated global operations, the startup replaced its finance administration team in Latin America with staff in its corporate headquarters in Singapore.

The changes come amid a push towards bringing the startup to a positive cash position, which it’s expecting to achieve within the next year. As a result, this has called for “some difficult decisions to be made,” Montessori says.

A constant pivot

Culture clash

A scaling problem

A contentious hire

Running dry

A communication vacuum