Toronto - Wealthsimple laid off 13 percent of its workforce as the financial services company joined a large number of global tech firms facing massive market volatility.

In a message sent to employees of the Toronto-based company on Wednesday, CEO Michael Katchen said that 159 out of 1262 people working at Wealthsimple will leave the company as part of this step.

These cuts were part of the repercussions months after the market rebound and unprecedented wealth growth amid the Covid-19 pandemic.

The company was valued at $5 billion and raised $750 million from a star-studded list of investors including rapper Drake and actors Ryan Reynolds and Michael J. Fox, with money flowing into the tech sector during the health crisis.

Katchen wrote to the workers: "Of course, volatility works both ways, and we are now seeing the other side of it as pandemic market conditions fade."

"Many of our clients are experiencing a period of market uncertainty like they have never seen before."

The changing conditions mean that the company will now focus more on core businesses, such as investing and banking, and products believed to enhance financial innovation, like those in the crypto industry.

Katchen added that Wealthsimple will reduce its investments in other areas like taxes, merchant services, and restructuring dedicated to hiring, marketing, customer service, and research.

He said in his message: "Today will be tough - no sugarcoating it. But our mission is more important today than ever."

The cuts at Wealthsimple jobs come as global tech companies prepare for a market correction and possible recession as tech stock prices have fallen and some shares have dropped 50 percent from their COVID-19 highs.

Netflix, Klarna, Cameo, and Bolt are among those who have already laid off workers, although many other companies have instituted hiring freezes.

Meanwhile, tech incubators - including Toronto’s DMZ and Communitech in Waterloo - advise startups to bolster their cash reserves, prepare for reduced investments from venture capitalists, and focus on revenue-generating sectors of their business.

It is noteworthy that Wealthsimple was founded in 2014 by Katchen and is primarily owned by Power Corp.

Editing: Dima Abu Khair