The failure of Fintechs is not unusual. It has now been announced that the Berlin-based Fintech Zeitgold is discontinuing its product. It is surprising, however, that Zeitgold was only recently able to obtain a relatively high financing of over 27 million euros.
Zeitgold accounting software to be discontinued at the end of Q3
Fintech Zeitgold started about five years ago to offer more efficient accounting processes, especially to small companies. An AI-based software is supposed to structure documents automatically and thus relieve the entrepreneurs of the tiresome paperwork on the one hand and offer more efficient processes to tax consultants on the other hand. Now the management has announced that they do not see any perspective for the developed product at the moment. The decision to take the product off the market now has consequences for the majority of the employees. 75 employees will have to leave the company. This means that the number of employees will shrink by over 70 percent.
Reasons for the failure
In particular, the target group consisting of small businesses from the gastronomy and retail sectors is said to have left Corona to a limited extent. As can be read on Financefwd, these customers in particular have cancelled the Zeitgold service due to the current situation. Against this background, the decision is understandable. Nevertheless, the decision has given rise to some discussion. Especially since Zeitgold does not really fit into the group of Fintechs who are failing.
The PwC FinTech cooperation radar of 2019 had analysed operational tasks in the Fintech sector and recorded success criteria for cooperation. According to the analysis, the following characteristics may be decisive:
- 89% of the discontinued Fintechs had no venture capital funding.
Investors check numerous criteria of start-ups before making an investment. - Fintechs that discontinue their products or operations are on average four years old.
- Among them are often me-too FinTechs, which, however, had poor prospects of asserting themselves against the existing players.
Fintechs from the B2C sector are more likely to be affected, as they incur high customer acquisition costs that are often underestimated.
For Zeitgold these criteria do not apply in most cases. In particular, the high investor funds of over 50 million euros since the company was founded and the duration on the market are out of the ordinary here. Therefore, the announcement of the discontinuation of the product is quite surprising for many and a very difficult situation for the employees concerned.
