Business

Scooters startup Grow fires half of its staff and reduces operation in Brazil

Grow fired because of the financial impacts that coronavirus brought, increasing the startup revenue problems

Scooter rider in São Paulo. Photo: Shutterstock
  • Sources close to the matter revealed to Mobile Time the new round of layoffs that was confirmed by the company on Monday;
  • Grow warned its workers that it has no cash to pay the 40% termination fine.

Grow Mobility, a startup that was born from the merger of the Mexican Grin, of renting electric scooters, with the Brazilian Yellow, of shared bicycles, in early 2019, is now promoting a 50% layoff of its staff in Brazil, according to Mobile Time.

Sources close to the matter revealed to Mobile Time the new round of layoffs that was confirmed by the company on Monday. The company said that the drop in its revenue was caused by the decrease in travel due to the coronavirus pandemic.

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According to Grow, the layoffs only affected Brazil. In a statement sent to Mobile Time, Grow said that “the instability of the economic scenario caused by the pandemic brought the emergence of the difficult decision that resulted in the shutdown of a large part of the operational and corporate team in Brazil”, it said. According to Grow, “it was a difficult decision, made despite the excellent performance that the professionals had been presenting in the company’s daily routine, but it was the possible decision in this moment of pandemic, uncertainty and strong economic crisis”.

Although it says it will maintain its operation with a focus on restructuring and offering new business models in scooter and bicycle rentals, with the Grin4U subscription service, people familiar to the matter told Mobile Time that the company will continue with 30 employees “just to finish the operation”. Grow warned its workers that it has no cash to pay the 40% termination fine, as Brazilian legislation mandates to employees who were fired.

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The company informed that “it goes through a very delicate cash situation, but it is studying all possible ways of paying the labor charges of the dismissed employees”. It didn’t confirm the payment of the fine. The company said it will maintain employee health insurance for six months, offer basic food baskets, letters of recommendation and help and assistance for them to find new jobs.

Grow was passing through financial difficulties even before the pandemic. This year, the startup closed operation in 14 Brazilian cities and started to focus only on Rio de Janeiro, São Paulo and Curitiba. It also closed direct bike rental and focused only on scooter rentals.

Recently, the startup was sold to the entrepreneur Felipe Henríquez, co-founder of Mountain Nazca group.