Varo Bank lays off 75 employees

Varo Bank, the first neobank to be given a bank charter in the U.S., announced Wednesday it is laying off 75 employees as it faces a cash crunch.

Why it matters: Based on recent financial filings, Varo could face constraints if it doesn’t quickly reduce costs and start to turn its financial fortunes around.

Context: Varo raised $510 million last September but has quickly burned through that cash.

• According to financial filings, the company lost $84 million in the first quarter and had around $263 million on hand at that time.

Before these layoffs, Varo had already seen its headcount drastically reduced.

• According to filings, Varo's employee count fell by 65 people — or 8% of its workforce — in the first quarter, which the company attributed to natural attrition.

Of note: Along with the cost-cutting, the company is reorganizing to establish a new business unit that will place the company's tech, product, design, and data functions under one umbrella.

Editor’s note: This article has been corrected to clarify that Varo could face constraints from its lower cash position, but the company is not insolvent.