German Fintech Company Monedo Files for Bankruptcy


Monedo, formerly known as Kreditech, has filed for bankruptcy because of the challenges posed by the COVID-19 pandemic. The pioneer fintech company in Germany was not able to go far with the “Fake it till you make it” principle.

September 14, 2020 | AtoZ Markets – 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 the 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 ‘preliminary bankruptcy’ at a German court last week.

Established in 2012, the fintech company was offering microcredit loans to customers all around Europe and also outside. However, it could not offer its services to German customers. The startup harvested publicly available data to evaluate the risks of approaching potential customers, which 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.

Plausible reasons why Monedo slipped into bankruptcy

Monedo started to leave the top start-up group of Germany a few years ago. No matter how things will continue after the bankruptcy filing, it still is a turning point. The main thing is, once the target German fintech company, Monedo is about to go bankrupt. As experts are saying, one of the biggest reasons for it is the coronavirus pandemic. But, there still are some reasons other than the pandemic that caused this situation.

Moreover, the number 20,000 was something that was attributed to the company from the very beginning. It has always been used because of the start-up’s scoring algorithm included this many data points to decide the creditworthiness of potential debtors.

The founders of the company, Sebastian Diemer and Alexander Graubner-Müllernumber presented the number 20,000 very proudly while presenting the company during a conference. The point is that the number was something that got in the way of the future development of the company.

The startup created unreachable expectations, and this resulted in a very challenging situation.

The biggest problem, however, was that this company never got its so-called miracle technology on the level where it could turn it into a highly profitable business, which was dreamed by the investors and founders of Monedo. Because of such huge aspirations, the company could not keep up the pace. Everything ended up creating a very scary situation.

Read also: List of Companies Announcing Bankruptcy Due to Coronavirus in Europe

Will Monedo recover from the Insolvency?

The company sadly was not able to build a functioning organization with noticeable business, especially in Spain and Poland. Also, donors continued to invest millions, although they actually reduced the company valuation to basically zero.

Thanks to the external management set up in 2018, the company was able to become more professional and it got the chance for a new start. With this opportunity, the company now called Monedo finally wanted to break away from a very risky sub-prime business. Sadly, Monedo was powerless against the external crisis. As a result, it could not do anything against the legally permitted repayment delays in Spain and Poland.

The company played a huge role in the fintech world of Germany. However, it seems to be very hard to imagine it coming back with the same power as it did the first time around.

What do you think of Monedo’s bankruptcy? Let us know in the comment section below.

    Share Your Opinion, Write a Comment