The fintechs that went out of business in 2022
We said goodbye to a number of fintech startups in 2022, amid wider uncertainty and a return to lower funding levels from venture capital investors compared to the previous year.
No doubt 2022 will go down as one of the most challenging years in terms of economic uncertainty, prompted by Vladimir Putin’s brutal Russian invasion of Ukraine.
Layoffs in the fintech world shocked an industry that had become used to ever-expanding ranks of workers and volumes of funding from venture capital whose growth was only matched by a surging rise in the valuations placed on these companies.
It became all too common to value pre-product businesses in the tens of millions of pounds or higher. Those with products but revenues far from attaining a sustainable level, in the billions in some cases.
Perhaps it is no surprise then that amid the economic turmoil and overheating market, a number of firms shut up shop.
In this article, we take a look at the fintech and crypto companies that went out of business.
Online checkout provider Fast was one of the first high-profile fintech casualties in 2022 in April.
Founded by Domm Holland and Allison Barr Allen, the company failed to see revenue traction which was in the six figures, according to TechCrunch against a monthly burn rate (how much it was spending) of up to $10m per month.
“Sometimes trailblazers don’t make it all the way to the mountain top. But even in those situations, they pave a way that all others will follow,” said Holland.
“Fast has done that with bringing one-click and headless checkout into the mainstream. Buying online has been forever changed by the incredible team at Fast. The dedication, brilliance and spirit of this remarkable team is unparalleled and will forever be the legacy of Fast.”
German neobank Nuri announced in August that it was to close and file for insolvency.
Weakness in the crypto markets was likely a factor for Nuri’s closing. Originally named Bitwala when it launched in 2015 to make Bitcoin “spendable”, Nuri had grown to offer euro current accounts alongside crypto wallets and vaults for currencies.
Nuri, like many other startups, had already let go of staff in order to try and maintain ‘run way’. This first occurred in June when the company said 20 per cent of its c.220 Berlin-based staff had been laid off.
“We are confident that the insolvency proceedings offer the best basis in the company’s current situation for developing a viable long-term restructuring concept,” CEO Kristina Walcker-Mayer said in a statement at the time.
Founded in 2018 by Jonathan Thompson, its CEO, David Broadbent (chief financial officer) and Nancy Butler (commercial director), the bank offered middle market loans to SMEs with a particular focus on businesses outside London and the south east of England.
Bank North secured its banking license in 2021(when it also rebranded from ‘B-North’). All seemed to be going well, taking on a competitive but still arguably underserved segment of the market.
It offered loans up to £5m as well as development finance, bridge funding and short-term funding loans.
Ultimately though, the company struggled to close a £50m series B funding round at a valuation of £106m having begun funding at the start of 2022.
Last and certainly not least we turn to FTX.
It will be a long time until the dust settles on what went on at Sam Bankman-Fried’s FTX and how it came to collapse into bankruptcy in November of 2022.
Few, however, disagree that it looks likely to go down in history as one of the worst corporate fraud cases in modern history.
The company was only founded three years ago but reached an eye-watering valuation of $32bn.
Bankman-Fried was lauded as one of the greatest fintech entrepreneurs in the world. His statements on ‘effective altruism’ and pledge to give away his fortune also seemed to be setting him up to be one of the biggest philanthropists of the future.
The reality, it appears was, very different. His ‘other business Alameda Research was reported to have borrowed $10bn worth of client assets from FTX, which went against rules governing the custody of funds on the FTX platform.
With a financial fallout expected to last for several years, at present, there are between $1-2bn missing and unaccounted for, according to Reuters.
Bankman-Fried is set to be deported from his Bahamas base to the US, while his two closet associates Carolyn Ellison, the former CEO of Alameda Research, and Gary Wang, Bankman-Fried’s co-founder of FTX, have pleaded guilty to fraud and are said to ‘co-operating with investigators.