What happened: Last week, it was reported that German banking-as-a-service provider Solaris is searching for new funding of reportedly €100-150 million (FinanceFWD). The team is planning to close the round before the end of the year, but it was also stated that Solaris is talking to potential buyers as an alternative to a new funding round. Just a few weeks ago, Solaris announced it was shutting down its e-money unit, formerly known as Contis (covered in a previous EF Review edition).
My comment: Solaris’ closed their last funding just earlier this year, which was a €96 million round plus another €100 million as a guarantee, all from their existing investors. A few people reached out to me after they read the above linked article and asked me if it was true. I don’t have any special insights, but based on Solaris’ stage and the market environment, it should be pretty standard to evaluate different options, including a sale. That being said, a sale of Solaris might be more likely than many of us believe after hearing about it the first time (including myself). Solaris was the first fully focused banking-as-a-service provider in Germany (perhaps continental Europe), but its first mover advantage feels now more of a curse than a blessing. The initial plan to remain a long-term partner for neobanks didn’t work out (they go out of business or get their own licence at one point), and new venture areas such as identity, crypto, or trading-as-a-service were either stopped before they properly launched or didn’t fully meet their internal expectations. In the past years, Solaris returned to focus on banking products and significantly increased their requirements in size for new customers. Early-stage startups have had an ever harder time speaking with Solaris than before, and enterprises were the only customers that mattered (e.g., for co-branded cards).
Obviously, none of us know how the story of Solaris will continue, but a VC-funded tech company in its 9th year that is somehow still searching for its place won’t find fresh funding easily. I will cross my fingers that it works out for the team though.
