Lending start-ups Creditgate24 and Advanon are merging, as the coronavirus crisis prompts a round of consolidation in Switzerland's fintech sector.
Lending platform Creditgate24 is taking over Advanon, a debt financing platform, the two companies told finews.com. Creditgate24 founder Christoph Mueller and Advanon co-founder Phil Lojacono stopped short of crediting the pandemic with their merger, an a joint interview with finews.com.
«Advanon hasn't had any outages in the crisis, and our portfolio is very robust,» Lojacono said. Mueller signaled that March had been a peak month for Creditgate24, «even if the institutional investors who are normally responsible for most of our volume were in shock. In the crisis, growth came from the 'crowd',» Mueller noted.
Existential Crisis
Advanon recently emerged from an existential crisis: the five-year-old start-up shed the bulk of its staff last year, as finews.com reported. In 2018, it had fallen prey to a fraud scheme which battered trust among its clients.
«Advanon was in principle in a position to continue on its own, after our successful turnaround last year,» Lojacono said. «However, we had to back away from the idea of exponential growth, which in turn raised the option of a merger.»
Shrinking Offering
Investors also acknowledged the soberer view of each fintech's prospects. Urs Wietlisbach, a co-founder of $94 billion asset manager Partners Group, is a backer of both Creditgate24 and Advanon – which simplified merger talks.
The deal, of which terms weren't publicly disclosed, underscores the abundance of lending platforms in the Swiss market. The number has shrunk to 15 from originally nearly 30 – but is still relatively high for the limited market potential.
Complementary Fit
«Both we and our investors think that consolidation is lending start-ups would make sense for clients. Too many platforms are ultimately inefficient,» said Mueller, who will be CEO of the merged company with roughly 40 employees.
Lojacono will oversee business development, human resources, and marketing at the combined firm. The duo said the platform – together, Creditgate24 and Advanon have executed roughly $638 billion in volume since their respective starts in 2015 – represents the widest product offering in Europe. The combined company can offer financing as disparate as consumer credit and trade finance.
Further Dealmaking?
The merger plays to the two start-ups' differing strengths: «Advanon is the perfect complement to Creditgate24's product offering. We're especially convinced about Advanon's technology and its team's know-how, while our strengths lie more in finance and risk management,» Mueller said.
They duo left unanswered the question of further dealmaking. It seems apparent that the Swiss lending market isn't voluminous enough to keep the platforms currently in the market busy as well as profitable.
