After initially blaming an internal administrative error for the failure to pay its North American employees for nearly a month, Dallas-based logistics tech startup Slync.io stated Thursday that its “inability to timely liquidate funds” is the real reason for its ongoing payroll nightmare.
“The company’s recent payroll issues resulted from the company’s inability to timely liquidate funds from an otherwise attractive investment vehicle in order to make recent payroll and not from any funding shortfall,” said Jaime Reints, vice president of marketing at Slync.io, in a statement to FreightWaves. “As a result of the company’s failure to make payroll, our payroll processor terminated its relationship with the company, further complicating our efforts to restore payroll.”
Slync.io maintains that it “has always been and remains a financially viable company.”
Logistics startup valued at $240M
Over the past two years, Slync.io has raised over $70 million, including a $60 million Series B funding round led by venture firm Goldman Sachs Growth, ACME Ventures, 235 Capital Partners, Correlation Ventures and other existing investors, which closed in February 2021.
Slync.io, a logistics visibility platform that works with shippers, 3PLs and carriers, was co-founded in 2017 by Chris Kirchner, who serves as chairman and CEO, along with Rajan Patel, the startup’s chief product officer, and Varun Dodla, its co-chief technology officer.
According to Pitchbook, the tech company has raised nearly $80 million since its inception and has nearly 100 employees.
Incorporated in Delaware, the San Francisco-based startup, valued at $240 million, moved its headquarters to the Dallas-Fort Worth area in September 2020 but has remote employees throughout North America as well as in Hong Kong and Germany.
When first contacted by FreightWaves about employees not being paid, Kirchner called the reports “false.” A source familiar with the ongoing payroll situation, who didn’t want to be named for fear of retaliation, said a number of employees had recently quit or were fired, which Kirchner also initially denied.
However, Reints confirmed late Wednesday that Slync.io did, in fact, fire some of its staff, though she added that the employee cuts were unrelated to the company’s financial health.
“While we have terminated employment of some members of the Slync team, those terminations were not related to any financial issues, as the company’s financial condition remains strong,” Reints said.
Although it’s unclear how many employees were affected by the monthlong payroll problem, Reints said the funds needed to pay employees have been liquidated and Slync has found a new payroll processor.
“The process of ensuring our employees receive all payroll to which they are entitled is very dynamic, making it difficult to provide any accurate information at any given moment in time,” Reints said.
The company is working to bring its payroll up to date after “encountering the unfortunate and unexpected liquidity and logistical issues,” Reints said.
Slync.io CEO Kirchner said the process of paying impacted employees is already underway and will be “remedied in the coming days.”
When contacted by FreightWaves, a number of Slync.io employees declined to comment about whether they have received any of the back pay they are owed by the tech startup.
Besides receiving $70 million in funding since the start of the COVID-19 pandemic in March 2020, Slync.io also obtained more than $390,000 in funds through the U.S. Small Business Administration’s Paycheck Protection Program (PPP).
According to Slync’s PPP loan application, which was approved by Silicon Valley Bank, the funds were used to save 20 jobs.
Forgivable loans through the PPP, administered by the Small Business Administration, started out with $350 billion in the CARES Act signed by former President Donald Trump in late March 2020 and were reupped in April 2020 with an additional $320 billion. The third round of funding, $284 billion in forgivable PPP loans through the SBA, opened up to lenders in January 2021.
In an interview with FreightWaves after the $60 million Series B raise, Kirchner said the company planned to ramp up hiring and planned to add up to 130 employees by the end of 2021.
However, that didn’t happen, according to a source familiar with the payroll situation at Slync. The company did add nearly 30 employees — from 70 in 2021 to nearly 100 total as of May. The source said it’s unclear how many remain at the company after the recent firings and rumors of more leaving the company for not being paid.
Slync.io behind in sports sponsorship payment
More than a year after the Dallas Stars, a professional hockey team, announced Slync.io as its official logistics partner, the company has failed to fulfill its arranged payments and is several months behind on its sponsorship deal, owing the Stars around $800,000, The Athletic first reported.
Slync.io’s Reints declined to comment on the company’s contractual relationship with the Stars over claims the logistics company hasn’t paid the NHL team in months.
“All of our contracts are confidential and we can’t comment on public speculation,” she said.
As of publication, the Dallas Stars’ media team had not responded to FreightWaves’ request for comment on whether Slync.io was current on its sponsorship payments to the NHL team.
In January, Norwegian golfer Viktor Hovland won the 2022 Slync.io Dubai Desert Classic, four months after the tech company was named by the European Tour as its new title sponsor. The prize money for the event was $8 million.
Tech CEO withdraws English soccer team bid
Further fueling concerns about the tech startup’s financial health was Kirchner’s mid-June withdrawal of his bid to personally buy Derby County, an English soccer team, two months after he was named the preferred bidder, according to Reuters. The news outlet reported that Kirchner failed to meet the English Football League’s June 10 deadline to complete the purchase.
Reints declined to comment on Kirchner’s failed bid to buy the team.
“Any personal assets of Mr. Kirchner isn’t of relevance to Slync,” she said.
This is a developing story.
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Disclosure: Slync.io was named to FreightWaves’ 2022 FreightTech 100 list in November.