In just the month of May, at least four U.S. fintech startups have either shut down, filed for bankruptcy or been acquired.
Plastiq is a San Francisco-based lending and payments startup that allows small businesses to pay their bills with a credit card. It filed in Delaware to continue operating under Chapter 11 of the federal bankruptcy code. According to its court filings, it has missed $2 million in interest payments on a $43 million loan, despite receiving multiple due date extensions. It also owes substantial amounts to other companies–$3.
Plastiq hit a valuation of $940 million in a January 2022 fundraise, according to PitchBook. Then in a surprising move in September 2022, Plastiq acquired Nearside, a digital bank for small businesses, for about $60 million, which Plastiq funded with $57 million in its own stock. Plastiq received the $22 million in cash that Nearside had on its balance sheet from the deal, a decent get in an increasingly difficult funding environment.
Beyond Plastiq, some other fintechs that provide banking-as-a-service technology, or software that aims to make banking operations faster and cheaper for other companies, have been struggling. The once-hot category Tom Bianco, general manager of embedded payments at Fifth Third, says he was particularly excited by Rize’s talent and the “synthetic ledger” technology it had built, which helps other companies offer payment services and deposit accounts to their customers. He says Rize’s entire team of 20 will join Fifth Third, and no layoffs of Rize’s remaining employees are planned. But when asked about whether Rize will be able to continue to serve its current clients, he declined to comment.
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