German fintech Monedo files for bankruptcy amid pandemic pressure

Germany-based Monedo, a lending startup that was once valued at €230M ($273M), has filed for bankruptcy.

Why should we care?
The fall of Monedo, formerly known as Kreditech, is a bellwether for an industry hit hard by COVID-19. To respond, some digital lenders are reducing new loan originations, drawing down credit lines, or implementing other cost-cutting measures. Monedo is a 7-year-old company that was backed by Peter Thiel and JC Flowers. It used an algorithmic scoring model and focused on markets outside of Germany, since its practice of using publicly available data to underwrite customers is illegal in Germany. In Spain and Poland, two of its key markets, the company faced a revenue crunch because of laws that allowed borrowers to postpone payments. This isn’t the first time Monedo has been on the verge of collapse. In 2018, its valuation went to zero because of loan defaults in India and Russia. Monedo, which raised $519M in total, is currently looking for an investor to keep its operations moving.