German Neobank Ruuky Files for Insolvency

The German neobank Ruuky announced it has filed for bankruptcy after less than three years in operation.

In a LinkedIn post Monday (Jan. 9), the Hamburg-based FinTech said the decision comes after the company experienced incredible growth, amassed a loyal customer base, and became the largest Neobank on social media in Europe.

“We are living in challenging times, and despite our best efforts, we were unable to overcome the market dynamics to raise additional funding,” the notice said. “This decision to file for insolvency was not taken lightly and breaks our hearts.”

The decision to file for insolvency came after Ruuky failed to secure fresh funding from either new or existing investors. According to Crunchbase, around 4 million euros in Venture Capital (VC) has been invested in the neobank by Cavalry Venture and Vorwerk Ventures.

While the company has said all customer funds are secured noting that users will still be able to access the app while the firm winds down.

Ruuky’s basic proposition is a digital banking and savings app for teenagers. But while the firm stated in the LinkedIn post that it has “amassed a loyal customer base,” that has not been enough to stave off trouble in a difficult funding environment.

“We have not been able to raise new capital in the current market environment,” the startup’s co-founder and CEO, Jes Hennig said to Business Insider. “We have to accept that the market conditions for capital-intensive startups have changed,” he added.

As PYMNTS has reported, a wide slowdown in VC funding left few sectors or markets unaffected in 2022.

With very few exceptions, such as outlier startup ecosystems in Kenya and Saudi Arabia, a relatively robust first half of the year was followed by a sharp drop-off in VC investment during the third and fourth quarters that affected startups across Europe the Middle East and Africa (EMEA).

While the most well-known neobanks have risen to the top by picking up massive customer bases and securing hundreds of millions of dollars worth of VC funding, few have managed to turn a profit. In fact, following a global trend among neobanks, European giants like N26 and Monzo have changed course in the past year to put a greater emphasis on profitability. 

In comments made to the Financial Times in December, Monzo’s CEO, TS Anil, said that the U.K.-based digital bank would be profitable in the next financial year. 

“In the tech space you saw a lot of companies who built business models out of free or cheap cash,” Anil said, adding that “we’ve never been one of those companies who have a bloated headcount when things are good and panic when things get worse.”

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