Solid’s Stunning Fall: Once a Fintech Darling, Now Filing for Bankruptcy After $81M Raised

Solid, a fintech startup that after branded itself as “the AWS of fintech,” has formally filed for Chapter 11 chapter safety. The submitting was submitted on April 7 within the U.S. Chapter Courtroom for the District of Delaware.

Based in 2018 and previously generally known as Sensible, Strong had raised roughly $81 million from outstanding traders, together with FTV Capital and Headline. On the peak of its momentum in August 2022, the Palo Alto-based startup introduced a $63 million Sequence B funding spherical led by FTV Capital, bringing its complete valuation to $330 million, in response to PitchBook.

Strong operated as a banking-as-a-service (BaaS) platform, enabling fintech and vertical SaaS firms to embed monetary providers reminiscent of banking, funds, playing cards, and even crypto merchandise by means of easy-to-integrate APIs. It attracted consideration for its formidable positioning within the fintech house and claimed to have skilled a 10x income progress, doubled its buyer base to over 100 purchasers, and reached profitability by mid-2022.

Nonetheless, the corporate’s trajectory has shifted dramatically. In line with chapter paperwork, Strong is now exploring restructuring or a possible sale. Co-founder Arjun Thyagarajan expressed cautious optimism regardless of the submitting.

“After contemplating all choices, we’ve determined {that a} voluntary Chapter 11 restructuring is the perfect course,” he informed TechCrunch. “We’re optimistic that the court-supervised sale course of will appeal to the best purchaser, resulting in a constructive final result for the corporate, clients, and shareholders. Strong intends to proceed working its enterprise within the unusual course by means of this course of.”

The chapter submitting reveals that Strong was unable to safe further capital following its final spherical and have become embroiled in expensive authorized disputes. In 2023, its main investor, FTV Capital, filed a lawsuit looking for to get well its $61 million funding. The agency accused co-founders Thyagarajan and Raghav Lal of misrepresenting key metrics like income and buyer churn and demanded their resignation.

In response, the founders countersued FTV and associate Robert Anderson, alleging aggressive and unethical conduct. They painted FTV as a non-public fairness agency that turned hostile as soon as its funding underperformed, resorting to unfounded accusations and intimidation techniques.

That authorized dispute has since been resolved. In line with the chapter submitting, the litigation with FTV was dismissed “with prejudice” in April 2024 following a settlement between each events.

As of the petition date, Strong disclosed having roughly $760,000 in unsecured commerce debt and round $7 million in money, although $2 million of that was locked in non-liquid reserves. The corporate now reportedly has simply three remaining workers.

A Restructuring or Fireplace Sale? What’s Subsequent for Strong

Strong filed beneath Subchapter V of Chapter 11, which is designed for small companies, providing quicker timelines for restructuring and extra flexibility in negotiating phrases with collectors.

Notably, Strong isn’t the one BaaS firm to face such a destiny. In April 2023, fellow BaaS startup Synapse additionally filed for Chapter 11 chapter, making an attempt to promote its property in a $9.7 million deal to TabaPay, which finally fell by means of. In each cases, Evolve Bank & Belief was the associate financial institution—a element drawing scrutiny. Just lately, fintech agency Mercury disclosed that it had ended its relationship with Evolve as properly.

The fallout from Strong’s chapter has reached a number of corners of the fintech ecosystem. In line with Fintech Enterprise Weekly, Strong’s 20 largest unsecured collectors embrace main business names like Amazon (AWS), Visa, Plaid, Trulioo, Spade, FS Vector, and a number of other authorized corporations. Updates on the case have been additionally shared by fintech commentator Jason Mikula and RK | Consultants on X (previously Twitter).

As of now, FTV Capital has not issued a public touch upon the matter.

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