Challenges for Financing Fintechs: Vai Trade Discontinued, Myos Halts Loan Disbursement

The financing fintech sector is experiencing difficulties, as evidenced by the Berliner Volksbank’s decision to discontinue Vai Trade and Myos’ decision to pause its loan disbursement.

Myos Pauses Loan Disbursements

Myos, a Berlin-based fintech, was renowned for pre-financing goods for online retailers, an innovative solution for sellers on platforms like Amazon, Ebay, and Shopify, who often faced challenges securing funds from traditional banks. As a security measure, Myos would sell the goods if a default occurred, a smart strategy to mitigate losses. In the summer of 2021, the company raised €25 million to fuel its growth.

However, Myos has temporarily suspended its loan approvals. The company stated that the decision was made to adapt to the evolving risk profiles in the current market while striving to offer the best possible deal to their customers. A new product is in the works with their financing partner, but it may not be available until early 2024.

The company’s restructuring has had significant implications. Many of the approximately 40 employees were let go, with only a small core team remaining. The challenging e-commerce market is believed to be one of the reasons behind this restructuring, with increased purchase prices due to inflation and raised platform fees leading to a higher probability of defaults. The company declined to comment.

Vai Trade Shuts Down

Vai Trade, a competitor to Myos, is also facing challenges and has decided to cease operations completely. The Berliner Volksbank, which owns Vai Trade, initially founded the fintech in collaboration with the company builder Bridgemaker. In 2020, the bank took over all shares as part of a “strategic realignment”.

However, the bank has confirmed that Vai Trade will cease operations at the end of the year due to changing market conditions, such as a significantly higher interest rate level, which has affected demand for this type of financing. Alternative offers will be provided directly by the Berliner Volksbank if desired. For the last 20 employees at Vai Trade, quick and suitable follow-up solutions have been found, some of them at other companies or within the bank itself.

Impact on the Fintech Market

Despite these challenges, Vai Trade had shown positive economic development, reaching break-even for the first time this year. A spokesperson stated that if conditions had remained stable, the business would likely have continued to grow in profitability. However, the rapidly increasing interest rate level has made pre-financing invoices considerably more expensive for companies, making offers like Vai Trade less attractive and increasing the risk of defaults for the providers themselves. These developments are likely to impact other fintechs in the market as well.