How the crypto bank will continue

Tech stocks and cryptocurrencies have often lost 50 percent or more of their market value since the beginning of the year. That same correction now seems to be reflected in the valuations of start-ups. There have recently been reports that start-ups and fintechs are coming under increasing pressure in terms of their valuations and funding. Klarna is such an example or the banking start-up Kontist. With Nuri, the Berlin crypto flagship start-up, which was able to shine with strong growth figures especially in the previous year, is now hit.

Last week it became known that Nuri would have to lay off around 20 percent or 45 employees – BTC-ECHO reported.

Nuri boss Kristina Walcker-Mayer is open about the stress of the last few days. She makes no secret of how exhausting it was to plan the strategy change behind closed doors. She is visibly relieved to “return to 100 percent transparency”.

In the interview, the CEO provides deep insights into the situation Nuri – and the start-up scene in general – is currently in.

Nuri: Reassessment necessary?

The job cuts suggest that Nuri needs fresh capital in the near future. If you look at the balance sheet figures, as the magazine financial scene made a few days ago, then doubts arise about the sufficient capital resources. The brute growth – scaling, as it is called – is ultimately accompanied by a significant burn rate.

Kristina Walcker-Mayer does not want to comment on the current status of the funding process. However, she assures that you are in permanent contact with investors. Whether the crypto bank Nuri, which allegedly received 144 million euros in the last financing round (amount unconfirmed) was rated, a so-called flat or down round (evaluation stagnates or even decreases), understandably remains unanswered. It would definitely be conceivable in the current market environment.

Venture capitalists are regrouping

In the currently difficult macro situation, the Nuri managing director would like more clarity. Walcker-Mayer says to BTC-ECHO: “What you can definitely tell is that the parameters have changed, which makes for an attractive start-up on our stage. In general, this development in the VC market in Germany has not yet been discussed in detail.” Since the discussion in the US media is already further advanced.

For this reason they would have tried with Nuri in her letter to classify what it means for the financing of start-ups, among other things, if capital becomes more expensive or key interest rates rise significantly and a war in Ukraine unsettles investors.

The partly exaggerated reviews of the last few years are now meeting a new reality. “Last year there was already talk that the prices paid for some start-ups could no longer be justified by the sales projections for the next few years,” explains Kristina Walcker-Mayer in an interview with BTC-ECHO . In the meantime, however, this same demand has come to an abrupt halt, as she goes on to explain: “Especially in the USA there is concern that we are going into a recession, like the dot-com bubble. But even if VCs in Germany are a bit more optimistic, the uncertainty is enormous. They stay away from larger groups and prefer to secure their existing portfolios of start-ups.” As a result, the Nuri managing director thinks it is likely that some start-ups will have to flat- or down-round in the next 24 months.

More than courses: the infrastructure remains

Due to the massive price corrections in cryptocurrencies, it is obvious that crypto start-ups are currently coming under particularly strong pressure. However, it is important for Kristina Walcker-Mayer to point out that one does not lump an entire industry together. She says: “There are many companies building the infrastructure of tomorrow, including Blockchain Finance and Web 3.0. The value that is created here must therefore also be considered separately from the development of crypto courses.”

Nuri: That’s how the job cuts were implemented

When asked what effects the job cuts are having on the company, the Nuri boss explains that individual topics that had been pushed in the course of the strong scaling are now partially parked. “We looked at which topics will really matter in the next six months and where you can most likely let go of. Since we don’t know how long the difficult macro environment will last, we’re taking everything off the table that we don’t need today to quickly become profitable.”

In order not to neglect the further development of the company, the focus is primarily on a reorganization of projects. “What we haven’t done is cut 20 percent of jobs across the board from every department. Instead, we developed a plan or a new strategy and reassembled the teams.”

Outlook for 2022

It is no secret that the year 2022 so far has not been easy for the crypto industry. As Walcker-Mayer admits, Nuri is also confronted with lower investment volumes on the part of retail customers. “However, this decline is not as strong for us as we see it on some other platforms, where active trading is particularly incentivized,” emphasizes the CEO. After all, the product range is more geared towards long-term and regular investing, which is less affected by the market situation. One also benefits from the fact that more and more customers are using the classic bank account, detached from the crypto services.

“If we had gotten into crypto back then, in 2019, before the all-time highs…”, is a sentence that the Nuri managing director has recently heard frequently from VC investors and retail customers. The comparatively low prices are therefore likely to motivate more and more people interested in crypto to buy more or to enter the crypto sector. Kristina Walcker-Mayer is sure of that.

In any case, Nuri customers need not worry. The crypto bank is subject to the highest regulatory standards. The deposits are 100 percent legally protected at all times, assures Walcker-Mayer.