Start-up Welkin Health downsized three days before PPP loan


Start-up Welkin Health downsized three days before PPP loan

A software startup backed by venture capitalist Josh Kushner laid off about a third of its staff just three days before landing coronavirus relief funds to help the company save jobs, The Post has learned.

San Francisco-based Welkin Health laid off 10 of its roughly 30 employees on April 24 as the COVID-19 crisis sapped sales, according to three sources with knowledge of the matter.

Three days later, the healthcare software provider was approved for at least $ 1 million from the paycheck protection program, according to federal data – a forgivable loan meant to help small businesses keep their paychecks. employees or to rehire laid-off workers.

The April layoffs left Welkin with around 20 employees, sources said – although the company told the Small Business Administration it has 30 employees, the data shows.

The cuts Welkin made before knowing if she had access to the money to save jobs go against the spirit of the $ 659 billion program created to protect workers during a historic economic crisis, said government watch dog Liz Hempowicz.

“The goal was not for businesses to continue to exist on paper or in a bank account,” Hempowicz, director of public policy for the non-partisan Government Oversight Project, told The Post. “This is how people stayed employed during this time of great economic instability.

“The practical effect here is that there is less money in this program to go to the small businesses that still have these employees working there,” she said.

Welkin has raised some $ 29 million from investors with sizable pockets in recent years, most notably from Thrive Capital – a venture capital fund run by Kushner, model Karlie Kloss’ husband and House advisor younger brother. Blanche Jared Kushner.

As The Post previously reported, Thrive urged portfolio companies, including Welkin, to stay away from the PPP program aimed at “the smallest and most vulnerable businesses in our communities.”

“These loans are less obvious to the startup with a multitude of institutional investors and several years of cash in the bank, seeking to expand the trail,” Thrive wrote in an April 7 email to startups who sought advice from the funds on PPP funds. .

But Welkin defied Thrive’s advice and blamed the April layoffs on the pandemic drying up its sales pipeline, sources said.

Now sources say the layoffs could force the Silicon Valley company to repay part of the loan instead of having it canceled.

Companies that receive PPP money are supposed to spend 60% of it on payroll costs so that the federal government converts the loan into a grant.

It might be difficult for Welkin to cross that bar, Hempowicz said, because it is “impossible” to pay the people who have been removed.

And while PPP recipients have until December 31 to rehire or replace laid-off workers and receive a full loan forgiveness, Welkin appears to have made no progress.

Several staff members have resigned since the layoffs, leaving the company with around 15 current employees, sources said. Welkin’s website only had one job posting on Friday. Want to get more loan offers? Check out bridgepayday.com

In response to information from The Post, Welkin CEO Michelle Pampin said the company made the loan “after careful legal review to confirm our eligibility, as well as our review of the program’s intention to support small. companies “.

Pampin also said many data points and statements presented by The Post were “inaccurate” but did not elaborate.

Welkin also laid off about a dozen people a month before the COVID layoffs on March 6 after losing its biggest customer in February to a competitor, according to two sources.

At the time of the March cuts, Welkin’s vice president of finance, Joe Oest, told the remaining staff members that the company had about “18 months of track” and that there would be no more. layoffs ahead, the sources said.

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