German fintech Monedo files for bankruptcy

Monedo, a Germany-based online lender and one of the most highly valued Fintech startups in Germany with high profile backers like Thiel, JC Flowers and the global media firm Naspers has filed for bankruptcy after it failed to recover from the Coronavirus pandemic.

According to sources, Monedo filed an insolvency claim in a German Court last week and law firm Brinkmann & Partner had been appointed to manage the proceedings.

Monedo was founded in 2012 under the name Kreditech and originally focused on providing microcredit loans. By 2017 the startup was valued at over €230m but its valuation had dipped by December 2018 because of major defaulters in Russia and India. It was followed by a management reshuffle and the appointment of a new Managing Director David Chan and a new CFO Mariusz Dabrowski.

In March 2020, the company changed its name to Monedo and also switched direction to focus on algo-powered loans and a greater use of machine learning in its underwriting process. But the onset of the Coronavirus pandemic and the reduction in risk appetite among lenders shattered chances of recovery for Monedo.

Monedo was banned from offering loans in its home market Germany because of its credit assessment processes and had instead chosen to focus on markets such as Spain and Poland as well as India. 

Online lenders were also hit especially hard by new laws passed in European states as a result of the pandemic which allowed borrowers to postpone their repayments. As Monedo’s key markets were Spain and Poland, this new law battered Monedo’s business to a great extent.

Despite Monedo’s insolvency, Dr Christoph Morgen from the law firm Brinkmann & Partners, wants to find an investor willing to keep the company going.

“I plan to continue operations and have already started talks with possible financiers,” he said in a statement. “It is my goal to bring the investor process, which was started before the insolvency application and which according to the Monedo management looks promising, to a successful conclusion.”