Monedo, a well known German fintech startup, could not recover from the impact of Coronavirus on its business and filed for bankruptcy last week.
As reported by local news outlet Manager Magazin, the startup has appointed Dr. Christoph Morgen, a lawyer at the Hamburg law firm Brinkmann & Partner, to handle the proceedings of the insolvency. The company applied for a “preliminary bankruptcy” at a German court last week.
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Previously known as Kreditech, the fintech was established in 2012 and was offering microcredit loans to customers all around Europe and also outside. It, however, could not offer its services to German customers. The startup harvested publicly available data for evaluating the risks of approaching potential customers that is illegal in Germany.
With Spain and Poland being its largest customer base, the startup was struggling to find a viable business model despite its meteoric rise in the industry. Earlier this year, it rebranded itself and also changed its strategy to focus on the algorithm to grant loans.
However, that did not work out, and adding the impact of stalling economy due to COVID-19, it could not survive.
A heavily backed fintech
Monedo is heavily backed by popular tech investors, including billionaire Peter Thiel, bank investor JC Flowers, and media giant Naspers. According to Crunchbase, the startup raised over $519 million over the years.
Notably, the valuation of the fintech went down from €200 million (around $237 million) to zero after it was revealed that the company handed out credits to private individuals in India and Russia that turned into default.
“I plan to continue operations and have already started talks with possible financiers,” Morgen told Sifted. “It is my goal to bring the investor process, which was started before the insolvency application and which according to the Monedo management looks promising, to a successful conclusion.”
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