German fintech company Solaris, previously known as Solarisbank, has raised €38 million ($41.8 million) in funding to support the growth of its banking-as-a-service business.
The funding, described as the first close of its Series F round, comes from existing investors in an inside round.
Solaris offers a range of financial services through its embedded finance platform, including banking and card services, payments, lending, ID verification, and digital currencies.
The company counts Samsung, American Express, and Coinbase among its clients. With this funding, Solaris plans to scale up its operations and enhance its banking-as-a-service offerings.
The valuation of Solaris stands at approximately $1.6 billion, the same as its valuation in 2021 when it last raised funds.
Previous investors in the company include ABN AMRO, Visa, BBVA, Samsung, Lakestar, and FJ Labs. Since its inception, Solaris has raised over $441 million in total funding.
Considering the current slowdown in venture capital activity, an inside round of $42 million at a flat valuation demonstrates the company’s stability.
Solaris faced challenges in 2022 and underwent significant leadership changes. Co-founder Roland Folz stepped away from his role as CEO, making way for Carsten Höltkemeyer, a veteran in the fintech industry, to take over.
The company’s spokesperson highlighted its focus on efficiency, compliance, and profitable growth in 2023.
To address market changes, Solaris implemented cost-cutting measures after recording a loss of €56 million, despite generating revenues of €130 million and achieving 30% growth.
The company aims to achieve profitability by streamlining operations and focusing on core products. Solaris also intends to integrate Contis, a major embedded finance competitor it acquired with the funds raised in 2021.
The fintech sector experienced significant funding during the pandemic as consumers and businesses embraced digital-first and flexible transaction methods.
However, Solaris noted a 46% decline in global fintech funding in 2022, reflecting a shift in the investment landscape.
Fintech companies now face the challenge of delivering on their promises in the long term. Solaris’s funding round serves as a test case for the industry, which seeks sustainable profitability while navigating evolving market conditions.