Santa Monica-based car leasing startup Fair Financial Corp. has fallen on hard times.
Founder and Chief Executive Scott Painter resigned Oct. 30, following the news Oct. 28 that the company laid off 40% of its workforce, including its former Chief Financial Officer (and Scott’s brother) Tyler Painter.
The vacant chief executive role will be filled by Adam Hieber, an operating partner at Fair investor and Japanese tech conglomerate Softbank Group Corp.
Both Fair and SoftBank did not return requests for comment regarding a restructuring or how many employees would be affected by the layoffs.
In December, Fair reported having 350 employees.
In a memo originally obtained and published by TechCrunch on Oct. 24 and viewed by the Business Journal, Scott Painter wrote, “As part of the process of achieving profitability, we’re reducing our headcount across the business,” adding, “While these are the decisions that every entrepreneur dreads making, these are important for us to be able to safeguard the future of the business we’ve all worked so hard to build.”
Fair is valued at over $1.2 billion and backed by $500 million in equity investments from SoftBank. The company’s local investors include Santa Monica-based Upfront Ventures and Marina del Rey-based Moonshots Capital, Fair has grown rapidly since its 2016 launch and has accumulated “just under $2 billion in debt and equity funding,” a spokesperson said.
Fair also has acquired a portfolio of tenuous auto startups. In January 2018, Fair bought Uber’s floundering Xchange Leasing business for an undisclosed sum and also purchased the intellectual property assets of rental car delivery service Skurt Inc., based in West Adams. In September, Fair acquired Ford Motor Co.’s San Francisco-based vehicle leasing company Canvas for an undisclosed sum.
Part of Fair’s fiscal woes is its core business model of procuring new and used cars for its subscribers to lease. While it opened three credit lines between July — including $100 million from Ally Financial Inc. in August and $500 million in September from Mizuho Bank — the majority of Fair’s cash is dedicated to acquiring cars.
Fair also has credit lines from Credit Suisse, Goldman Sachs & Co. and Silicon Valley Bank.
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