According to documents filed in the U.S. Bankruptcy Court on April 7, startup Solid (formerly known as Wise) as a bank, filed for Chapter 11 bankruptcy protection.
Founded in 2018, the fintech company has raised a total of nearly $81 million from investors such as FTV Capital and Headline. According to Pitchbook, Solid was valued at $330 million as of August 2022 when it announced funding for the $63 million Series B round led by FTV.
Based in Palo Alto, Solid has worked with fintech and vertical SaaS companies to provide banks, payments, cards and cryptocurrency products via easy-to-integrate APIs. The company touted itself as “FinTech AWS” and claimed that revenues grew 10 times in August 2022, doubling its customers to 100, and increasing profitability. According to the documents, it is currently in the process of rebuilding or selling itself.
“After considering all the options, we decided that a voluntary Chapter 11 reorganization was the best course,” co-founder Arjun Thyagarajan told TechCrunch. “We are optimistic that the court’s teacherized sales process will attract the right buyers and lead to positive outcomes for the company, customers and shareholders. SOLID intends to continue operating the business in its normal course through this process.”
According to the bankruptcy filing, Solid has been unable to raise more capital since his last funding round and has “facing a significant and costly lawsuit.”
In 2023, Solid was the target of a lawsuit filed by Series B Investor FTV Capital, seeking to regain a $61 million investment.
The FTV Capital lawsuit allegedly, among other things, that solid co-founders Thyagarajan and Raghav Lal “lied to FTV about company revenue, customer termination and the business generally deceives FTV.” The company also asked Thyagarajan and Lal to resign.
The startup co-founder pushed back and submitted a countersuit against FTV and its partner Robert Anderson. In it, they described FTV as “an aggressive private equity company,” claiming that “the moment when the investment was no longer profitable (the company) would try to rely on claims of fraud, threats and powerful armed tactics to regain money.”
According to the bankruptcy filing, the FTV lawsuit was dismissed in April 2024 as “biased under the settlement reached by the parties.”
As of the petition date, SOLID said the capital structure consists of “current revenues are limited” and unsecured trade obligations totaling around $760,000,000, with approximately $7 million in cash. Currently, we only have three employees.
The company filed for bankruptcy under Sub-Chapter V. This imposes a short deadline for filing a restructuring plan, allowing for more flexibility in negotiating a restructuring plan with creditors.
SOLID is not the first BAAS startup to file for bankruptcy. Last April, Synapse applied for Chapter 11, hoping to sell the assets to another Fintech Tabapie for a $9.7 million fire sales. But Tabapai walked.
What did both startups have in common? Evolve Bank & Trust was a partner bank. In particular, another fintech – mercury – recently declared that it ended its relationship with Evolve.
Jason Mikula and Rk of Fintech Business Weekly | Consultants posted about X’s bankruptcy. According to Mikula, Solid’s 20 largest unsecured creditors include Amazon (AWS), regulatory consulting shop FS Vector, Visa, Plaid, Trulioo, Spade, and many law firms.
TechCrunch contacted FTV for comments but did not receive a reply at the time of writing.