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Craigslist Competitor VarageSale Lays Off About One-Third of Staff

Is a shakeout coming in the classifieds app space?

Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Three months ago, the classifieds app VarageSale began testing a credit-card payment feature that was free for users, but a money-loser for the company. That point was noteworthy because VarageSale doesn’t generate any revenue of its own. Turns out you can only live on venture funding for so long.

The Toronto-based company, which has raised more than $34 million from Sequoia Capital and others, has laid off about one-third of its staff, according to a source. CEO Carl Mercier didn’t immediately respond to a request for comment.

In a statement to the Canadian startup news site BetaKit, Mercier called the cuts an “effort to streamline our operations.”

“This decision was incredibly difficult, and we can’t thank these amazing people enough for their contribution,” the statement read. “The result is ultimately what we believe we had to do to continue building toward our vision.” He said the company had laid off 26 employees.

The four-year-old startup is one of several competitors engaged in a high-cost battle to try to become the next Craigslist, one that is more visually appealing and made specifically for mobile phones. Most of these startups are not generating any revenue of significance, instead banking heavily on venture money to advertise their way to the top of app store rankings. Three out of the top five shopping apps for the iPhone in the U.S. are in this space. VarageSale, on the other hand, currently ranks No. 100.

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