Canopy founder and CEO Kurt Avarell stepped down Thursday as the tax software company laid off 73 employees, after cutbacks earlier this year.
Chief revenue officer Jordan Ray will become interim CEO. In March, Canopy laid off approximately 100 employees, or around a third of its full-time workforce, according to a spokesperson.
Prior to the layoffs, the company had been expanding rapidly. Avarell left a career as a Wall Street tax attorney to launch the company, which used to be called Canopy Tax, from his basement in 2014. Canopy created cloud-based software for tax practice management, along with software for tax transcripts. tax notices, and tax resolution management, and has been developing a professional tax preparation system. It moved into larger headquarters in Lehi, Utah, in January after receiving a grant from the governor’s economic development office, and announced plans to double the size of its workforce over the next four years. Then it was forced to retrench.
“Today, Canopy announced to our staff that our founder Kurt Avarell is transitioning to the next phase of his entrepreneurial career,” Ray said in a statement Thursday. “His vision of empowering accountants to work more effectively drives the team each day, and will continue to do so. I am assuming the interim CEO role as we finalize exciting leadership updates. We also shared news of a shift in product direction that resulted in the difficult decision to lay off approximately 73 of our employees. We are deeply thankful to our employees and alumni for their contributions. While a transition like this is never easy, it is a positive step ahead for Canopy as we work to create a sustainable growth path for the long term. We look forward to sharing news on our leadership team and product roadmap in the near future.”
In 2017, the company announced a $20 million Series B financing led by Pelion Venture Partners, with participation from existing investors New Enterprise Associates, EPIC Ventures and Deep Fork Capital, after an earlier round of $10 million. Then last year, it announced another $30 million in financing, led by New Enterprise Associates, with participation from Wells Fargo Strategic Capital, Pelion Ventures, University Growth Fundand EPIC Ventures, for a total of $60 million.
One of its main VC funders expressed confidence in the company’s future. “Workforce shifts are a difficult yet common inflection point in a startup’s journey as they grow and scale,” stated Chad Packard, a partner at Pelion. “We’re confident in the plan Canopy’s leadership team has laid out to create sustainable success for the long term. As digital transformation takes hold in accounting, we believe Canopy is well-positioned to lead this charge, and we will continue to collaborate with Canopy’s leadership and board in this mission.”