Aussie start-up 5B Solar sacks 25 per cent of staff

The company revealed it had to make the “tough” changes to its workforce after various disruptions, but also announced it had raised $30m in funding.

An Australian company focused on solar power projects has sacked 25 per cent of its workforce.

The start-up, called 5B Solar, which boasts backing from former Primer Minister Malcolm Turnbull and wealthy climate crusader Simon Holmes a Court, revealed it had made dozens of employees redundant two weeks ago.

Yet, it also announced on Friday that it has just completed a capital raise that it kicked off in August last year, which would inject $30 million into the business. It also plans to raise another $20 million.

Co founder and chief executive officer at 5B Solar Chris McGrath blamed “challenges” that hit the business on “multiple different fronts” for the staff cuts, including supply chain and logistics disruptions brought on by the pandemic, as well as the soaring cost of materials.

The company, which has developed pre-mounted solar panels to be deployed quickly, has been also been hit by lengthy project delays and skyrocketing costs.

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The SA Water solar farm at Happy Valley was a 5B project, deployed in 2021 over 12 weeks. Picture: Supplied.

This has included a shortage of materials and a spike in prices partly brought on the invasion of Ukraine, “chaos” in the shipping industry and issues manufacturing equipment causing a blow out in costs, forcing the company to pull back from projects on the ground.

Mr McGrath added trade restrictions between the US and China was also making it difficult to import key products, while doing anything “physically in the world was far more expensive”,

These “short term headwinds” made a restructure of the company necessary, Mr McGrath added, meaning almost 50 staff were let go from the operational side of the business, which had seen 59 projects completed around the world.

The 5B Maverick solar power technology is successfully in use in the cyclone prone Top End township of Borroloola.

Instead the company would be focusing on its technology and products rather than projects in the short term, he added, as the company continues its mission of fighting climate change.

“The way that I see it is the fundamental demand for what we are developing remains very strong as does the validation of what needs to be done in this huge growing solar market as it continues to evolve,” he told news.com.au.

“However the today demand on actually using that technology to build projects is both seeing those headwinds compresseing demand and the need to build the operational side of the business to translate the product on to ground into projects has been reduced.

“Those affected by the redundancies included project managers, supply chain co-ordinators and business operations who were part of back of house systems and processes to support the larger business.”

5B Solar had also predicted it would be further along in its growth so had hired more people for a business it thought would be substantially bigger by now.

Mr McGrath added he was “confident” no more cuts would be made to its workforce, although he acknowledged the business was not yet profitable.

One of the company’s projects in South Australia. Picture: Supplied

Mr McGrath, who helped to found the company in 2013, said the redundancies were a “tough decision” but were crucial to ensuring the business was sustainable and not “just being blown around by the winds of economic conditions”.

The $30 million funding injection would be used to help its local and international market expansion which already includes the United States, Latin America, Europe and India, aid its supply and delivery chain development and support its tech and product road map, according to the company.

“As a young business, we have never enjoyed more than 12 months of runway so we have always needed to be very responsible with our funding requirements, as opposed to now we have enough time to achieve our transformation outcomes,” he added.

“For that reason we are really confident that whilst the changes were tough to make, we made a hard decision earlier and a reset to make sure we have a really sustainable and enduring strategy for the next two years and beyond.”

The company was confident no more cuts would be made. Picture: Supplied

Last month, buy now, pay later provider BizPay, which has offices in Sydney, was a another company to make a heavy round of cuts.

It made 30 per cent of its workforce redundant blaming market conditions, yet, the company was in the process of trying to raise $25 million in funding and had partially completed it.

But Mr McGrath added the company hadn’t been battered by plummeting investor confidence around tech companies and their valuations, with many including Australian giant Atlassian experiencing massive drops on the share market, as the 5B Solar also had a heavy hardware infrastructure arm.

Send, an Australian company that promised to deliver groceries in under 15 minutes collapsed last month putting the jobs of 300 staff in Sydney and Melbourne at risk.

5B is not the first firm to make staff cuts this year. Picture: Supplied.

Its founder Rob Adams also blamed world factors for contributing to the company’s demise.

“There were a number of circumstances globally that had made it fundamentally harder to raise the necessary capital to scale the business, ranging from the war in Ukraine, harshening global economies and wide spread scrutiny among investors regarding the levels of capital intensity associated with the business model,” he told news.com.au.

Australian investment firm REMI Capital went under last week too with a whopping debt of $70 million and 450 investors impacted, with administrators conducting urgent financial investigations to find out where they money has gone.

Originally published as Aussie start-up 5B Solar sacks 25 per cent of staff