For every ambitious new business idea that comes into the world and finds enough footing to achieve success, there are hundreds of others that are never able to achieve their lofty goals.
People love to bat the numbers back and forth, but here’s a real stat you can actually cite: The Bureau of Labor Statistics says that 20% of small businesses will fail within the first year.
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If you don’t like the sound of that, hold on tight because it gets worse. The same data says that by the end of year two, 30% of small businesses will have failed. Push that out to five years, and it goes up to 50%. And ten years in, only 30% of businesses will still be standing.
It’s daunting information to contend with, but it also comes with a few key lessons: go in financially prepared for struggle, do your homework to learn what took other entrepreneurs out of the race, and steel yourself for the most difficult challenge you’ve ever faced.
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Unfortunately, another young business has just fallen under the weight of the odds, and it was once a most promising one.
Future Fintech/TheStreet
‘AWS of fintech’ files for bankruptcy
Palo Alto-based banking-as-a-service (BaaS) startup Solid has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware on April 7, documents show.
Solid, which was originally called Wise, was founded in 2018 and at one point was valued at $330 million. The company offered embedded banking, payments, and card products for banks and companies. At its most confident, it once called itself “the AWS of fintech” and said in 2022 that it had already become profitable.
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“After considering all options, we’ve decided that a voluntary Chapter 11 restructuring is the best course,” co-founder Arjun Thyagarajan told TechCrunch. “We’re optimistic that the court-supervised sale process will attract the right buyer, leading to a positive outcome for the company, customers, and shareholders. Solid intends to continue operating its business in the ordinary course through this process.”
Before the announcement, Solid raised close to $81 million in funding but has not been able to secure another round since. The company now says it has cut down to three employees, and its unsecured trade debt is $760,000.
The path that led to Solid’s bankruptcy
The seed of the bankruptcy may have been planted in 2023 when Solid was sued by one of its Series B investors, FTV Capital. FTV had previously invested $61 million in Solid.
The lawsuit made ugly claims about Solid co-founders Thyagarajan and Raghav Lal, saying they lied to FTV about several topics, including company revenue, and asked for their resignation. Solid responded by countersuing, saying,“The moment its investment was no longer profitable, [the firm was] resorting to made-up claims of fraud, threats and strong-armed tactics to try to get its money back.”
The two companies were able to settle out of court, and the suit was dismissed in April 2024.
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