Banking-as-a-service startup Solid (previously known as Wise) has filed for Chapter 11 chapter safety, based on paperwork filed within the United States Bankruptcy Court for the District of Delaware on April 7.
Founded in 2018, the fintech firm had raised a complete of practically $81 million in funding from traders akin to FTV Capital and Headline. Solid was valued at $330 million as of August 2022, based on PitchBook, when it introduced a $63 million Series B spherical of funding led by FTV.
Palo Alto-based Solid labored with fintech and vertical Software as a Service corporations and provided banking, funds, playing cards and cryptocurrency merchandise through easy-to-integrate APIs. The firm touted itself as “the AWS of fintech” and claimed in August 2022 that it had grown 10x in income, doubled its prospects to 100 and have become worthwhile. It is now within the strategy of attempting to restructure or promote itself, based on the paperwork.
“After contemplating all choices, we’ve determined {that a} voluntary Chapter 11 restructuring is the perfect course,” co-founder Arjun Thyagarajan informed TechCrunch. “We’re optimistic that the court-supervised sale course of will appeal to the appropriate purchaser, resulting in a optimistic consequence for the corporate, prospects, and shareholders. Solid intends to proceed working its enterprise within the atypical course by this course of.”
Solid had not been capable of increase extra capital since its final funding spherical and “confronted vital and dear litigation,” based on the chapter filings.
In 2023, Solid was the goal of a lawsuit filed by Series B investor FTV Capital, which was trying to get its $61 million funding again.
FTV Capital’s go well with claimed, amongst different issues, that Solid co-founders Thyagarajan and Raghav Lal “lied to FTV in regards to the firm’s revenues, buyer churn, and enterprise typically and additional deceived FTV.” The agency additionally requested for Thyagarajan and Lal to resign.
The startup’s co-founders pushed again, submitting a countersuit in opposition to FTV and its companion Robert Anderson. In it, they described FTV as “an aggressive non-public fairness agency,” and claimed that “the second its funding was now not worthwhile, [the firm was] resorting to made-up claims of fraud, threats and strong-armed ways to attempt to get its a refund.”
According to the chapter submitting, the FTV litigation was dismissed in April of 2024 “with prejudice below a settlement reached by the events.”
As of the petition date, Solid stated its capital construction consisted of unsecured commerce debt totaling roughly $760,000 with “a restricted quantity of present income” and roughly $7 million in money readily available with roughly $2 million of that held in non-liquid reserve accounts. It claims to now solely have three workers.
The firm has filed for chapter below subchapter V, which imposes shorter deadlines for submitting reorganization plans and permits for higher flexibility in negotiating restructuring plans with collectors.
Solid shouldn’t be the primary BaaS startup to file for chapter. Last April, Synapse famously filed for Chapter 11, hoping to promote its property in a $9.7 million fireplace sale to a different fintech, TabaPay. But TabaPay walked.
One factor each startups had in widespread? Evolve Bank & Trust was a companion financial institution. Notably, one other fintech — Mercury — not too long ago declared that it ended its relationship with Evolve.
Fintech Business Weekly’s Jason Mikula and RK | Consultants posted in regards to the chapter on X. According to Mikula, Solid’s 20 largest unsecured collectors embody Amazon (AWS), regulatory consulting store FS Vector, Visa, Plaid, Trulioo, Spade, and quite a few regulation companies.
TechCrunch reached out to FTV for remark however had not heard again on the time of writing.
