What happened: German banking-as-a-service provider Solaris has announced their EUR 140 million funding round (Finextra).
My comment: If you have not followed Solaris’ story in the past few years, you might assume this funding round is a strong signal. Unfortunately, the opposite is the case. Solaris needed fresh money, and because of the size of their operation, it could not be less than 100 million. Solaris was one of the first movers in banking-as-a-service, but with the change from serving neo-banks and pure fintech companies to going after non-financial brands, other providers were more successful. The most recent strategic shift included going after co-branded credit deals, which means competing with banks and not other BaaS providers. These deals move slowly, but speed is crucial for playing the VC-game.
You might remember my latest Solaris coverage, that existing investor SBI Holdings from Japan will likely be the saviour. And they did lead this funding round. But we also knew that other previous investors would need to pay a high price. And now we know exactly how much. When Solaris exists, SBI Holdings will be repaid roughly double what they invested in this and during their previous funding round. The remaining amount will be split 80:20 between investors of this latest round (incl. SBI) and all other investors (a bit simplified; Payment and Banking; German). Sounds like a nice deal for SBI Holdings? Well, time will tell, I guess.
