Social finance app Lendstar files for bankruptcy
Written by Hannah McGrath
Lendstar, a German social finance app enabling peer to peer payments and lending, has announced it is filing for bankruptcy.
The Munich-based FinTech, founded in 2012, allowed friends to chat, pay, split bills and lend money for free on a secure mobile app.
In a blog posted in German to Lendstar’s website on Wednesday, founder and chief executive Christopher Kampshoff said that the company had taken to decision to file for bankruptcy as it had been unable to find buyers, partners or financing.
The post read: “Unfortunately we can not fight anymore and the way we have to go is a difficult one. Yesterday [28 August] we had to file for bankruptcy.”
It went on: “In recent weeks, we have had very good discussions with various parties about a potential sale of Lendstar. Unfortunately none of these discussions became sufficiently concrete. Therefore, together with our current investors, we decided not to continue financing Lendstar.”
The platform, which allowed for mobile payments via all German and Austrian banks, had struck partnerships will Amazon and Zalando and enabled users to trade offline and purchase mobile phone credit.
It was financed through fees from banks who co-branded versions of its mobile app. The company had increased its user base and doubled its operating revenue in every one of the last three years, Kampshoff said.
But, he explained: “Unfortunately, all of this growth alone was not enough to make Lendstar sustainably profitable. The necessary investments could not have been made from the existing circle of investors.”
He added that the firm had been searching for a strategic partner and had attracted interested parties, but ultimately no potential buyer made a bid to take over, prompting existing investors and the company’s leadership team to initiate “the bitter step into insolvency”.
He assured customers that the app “will continue to work as usual” and that everything that is important for its use can still be found while the company works on a “good solution” to its issues in the coming weeks.
FSTech has contacted Lendstar for further comment.