Once a rising star in the European Banking-as-a-Service (BaaS) sector, Solaris now finds itself in a precarious position. The Berlin-based fintech firm has scrambled to secure an urgent €140 million in Series G funding round to stabilise its finances as it faces a sharp valuation drop (reportedly €90M) and workforce reductions.
The round was led by Japanese financial heavyweight SBI Group and German exchange group Börse Stuttgart, with participation from a diverse group of investors and strategic partners.
The fresh funding will support Solaris in maintaining operations until it reaches profitability. The company intends to use the funds to support its operations and accelerate its ability to seize market opportunities.
As part of the Series G round, SBI Group will become the majority shareholder, signaling a transformative evolution in Solaris’s shareholder structure. Together with Boerse Stuttgart Group, SBI is currently undergoing an ownership control process, reinforcing their commitment to Solaris’s long-term success.
From unicorn to survival mode
Founded in 2015 by Andreas Bittner and Marko Wenthin, Solaris has been touted as Europe’s largest embedded finance platform. Once a rising star in Germany’s fintech sector, Solaris has seen its valuation collapse from a peak of €1.6 billion to just €90 million (as per The Munich Eye), following this emergency €140 million funding round. This drastic decline reflects the company’s deep financial and operational struggles, exacerbated by a mix of regulatory scrutiny, market shifts, and strategic missteps.
The BaaS provider, which supplies white-label banking infrastructure to fintech firms like Trade Republic and Tomorrow Bank, expanded aggressively during the low-interest rate environment of the pandemic. However, as market conditions worsened, Solaris struggled to sustain growth, forcing the company into drastic cost-cutting measures.
Adding to this, since CEO Carsten Höltkemeyer took over in October 2022, Solaris has undergone significant layoffs, cutting 240 employees out of a 700-strong workforce by October the same year. The first wave of 50 job cuts began shortly after his arrival, with further reductions following as the company attempted to stabilise finances.
Despite these efforts, Solaris reported €178 million in losses for 2023, raising concerns about its long-term viability. The company has also been under scrutiny from German regulator BaFin since 2020, facing increased capital requirements and restrictions on new partnerships due to compliance issues. Compounding its challenges, Solaris recently filed a lawsuit against Binance, claiming the crypto exchange owes it €144 million in guaranteed fees after terminating their Visa debit card partnership.
Late last year, there were reports that Solaris is urgently seeking €100 million or it may explore a potential sale. Existing investors BBVA, Lakestar, and HV Capital were reported to contribute to the new round. On the other hand, Deutsche Bank and BNP Paribas were said to show interest in acquiring the struggling fintech.
That said, while Solaris remains a significant player in European BaaS, its survival now hinges on swift strategic realignment and regaining investor confidence in an increasingly volatile fintech landscape.
“The securing of our Series G funding marks the successful completion of a two-year transformation journey, providing the foundation for our continued growth. This fresh capital will not only support our operations until we reach profitability but will also accelerate our ability to seize market opportunities and build a strong core capital base. I am deeply grateful to our investors for their unwavering confidence and shared ambition as we continue to lead Europe’s embedded finance market,” said Carsten Höltkemeyer, Solaris CEO.
“Becoming the majority shareholder in Solaris is a natural step in our ongoing investment journey with the company. Solaris is well-positioned with cutting-edge technology and an exceptional team to pioneer the next phase of embedded finance in Europe. We are excited to support Solaris in realising its vision”, added Yoshitaka Kitao, Representative Director, Chairman, President & CEO of SBIHD.
“Solaris has been a partner of our fast growing digital and crypto business for years. Now we seize the opportunity by acquiring a stake in Solaris to increase our strategic options and further boost our growth. We are glad to do this jointly with SBI Group, another long-standing partner of Boerse Stuttgart Group,” said Dr, Matthias Voelkel, CEO of Boerse Stuttgart Group.
Product offerings
With a full banking license, as well as e-money and brokerage licenses, it enables businesses to integrate fully digital banking services directly into their products through straightforward APIs. This approach allows companies to offer customised financial solutions to their customers without handling the regulatory complexities themselves.
Solaris offers a range of services, including:
- Digital banking: Building neobanks and offering various types of accounts.
- Payments: Providing branded debit, credit, or prepaid cards from Visa or Mastercard, and optimising payment flows.
- Lending: Offering consumer and SME loans, including Buy Now, Pay Later (BNPL) solutions.
- Identification: Onboarding retail and business customers smoothly and securely with digital KYC services.
By leveraging its Banking-as-a-Service platform, businesses can embed financial services quickly and compliantly into their own product offerings, creating seamless financial experiences for their customers.
