December 1, 2015
The year 2015 was an exciting year for many FinTech startups globally. With some great funding rounds, acquisitions and investments, these startups saw the rising sun of success. But it’s in the risky nature of entrepreneurship that some companies emerge as winners while others bite the dust. Unfortunately, there were a few FinTech companies which were not able to pave their way to success due to factors such as disorientation in business planning, decreasing customer engagement and lack of funding. We bring to you a list of seven such FinTech companies which closed its operations in 2015.
1. Buttercoin (US): Buttercoin turned off its services on April 10, 2015. It advised its current users to move their bitcoins to another service and remove their dollar balances. The bitcoin exchange startup was part of the Y-Combinator batch YC S13 and backed by Google Ventures. The company was founded in 2013 with the aim of targeting the global remittance market.
Reason for shutdown: The company has cited that with the dip in bitcoin interest among Silicon Valley investors, it wasn’t able to generate enough venture capital interest to continue funding Buttercoin.
2. Yapital Mobile Payments (Germany): Launched in 2011 by German retail giant Otto Group, Yapital used QR codes to let people make in-store and online payments and pay bills through their mobile phones. The company will be closing its offerings by January 31, 2016 for the customers.
Reason for shutdown: Despite claiming that the service was popular with retailers, the Otto Group has given up on the slow pace of consumer adoption, and low margins which were due to new interchange regulations.
3. Bonafide (US): Founded in 2013, the New York-based bitcoin reputation startup, Bonafide has decided to cease its operations and start liquidation. The company offered an API that provided reputation data to bitcoin companies offering exchange, wallet and other services.
Reason for closing: The company said that the receding investor interest from consumer-facing applications for the technology was the reason behind the decision of closing down the company.
4. TrustBuddy (Stockholm): The European peer-to-peer lender decided to suspend its operation in October, 2015. Established in 2009, TrustBuddy was a pioneer in the sector and had set out with ambitious expansion plans, including in Spain and the UK. The company planned a significant expansion in the UK and processed £10M of loans in the first half of this year.
Reason for closing: The company halted its on-going operations after new management discovered misconduct including allocation of new lender capital to existing bad debt. The platform found that lenders were owed £3.6M more than was held in client accounts while £3M loaned to borrowers was not assigned to any lender. The problems occurred in TrustBuddy’s core short-term consumer lending operation, effectively a payday lender.
5. Why Own it (Hamburg): The peer-to-peer lending app was shut down in February 2015. The app was launched in 2012 and in August 2012, the first iPhone version was available in the App Store. The first version of the app was focused on lending items to friends. A year later, an update was launched that also allowed borrowing items from strangers, showing offers in the neighborhood.
Reason for closing: The company’s founder, Philipp Glöckler stated in his blogpost that he clearly underestimated the conception of a mobile app compared to a website. Also, the team was under the impression that word of mouth would make the app a success. Unfortunately, not everyone who likes an app recommends it to friends and family.
6. EverythingMe (Israel): The Android launcher EverythingMe decided to terminate its operations in October 2015. the Israeli startup has officially shut down, laying off all of its 36 employees in the process. The company was founded back in 2010. The app already hit 15 million downloads and they received $35 million as funds from a number of investors like SingTel Innov8, Horizons Ventures, Telefónica, Draper Fisher Jurvetson and Mozilla.
Reason for shutdown: The founders were not able to find the perfect business model for them.
7. Melotic (China): Headquartered in Hong Kong, this company was a digital assets exchange based on bitcoin. Its goal was to facilitate exchange between alternative digital currencies and various app-specific coins. Melotic closed a US$1.18 million seed round in October 2014 from investors, including 500 Startups.
Reason for shutdown: The company did not experience enough growth in their product to justify the ongoing costs of development, maintenance and support.