One of America's biggest fintech startup Parker has filed for bankruptcy and is widely reported to have shut down. Widely known to be a well-funded startup, Parker offered corporate credit cards and banking services for e-commerce businesses. The startup was part of Y Combinator’s winter 2019 cohort, and its Series A was led by Valar Ventures.
Parker touted corporate credit that it said was designed for use by e-commerce companies. Company's co-founder and CEO Yacine Sibous said that Parker's “secret sauce” was an underwriting process that could properly assess e-commerce cash flows.
While Parker’s website is still up and doesn’t mention any shutdown, company's troubles are reportedly confirmed in its May 7 filing for Chapter 7 bankruptcy protection. The filing states that the company has between $50 million and $100 million in assets, with liabilities in the same range. It also states that Parker has between 100 and 199 creditors.
What CEO Yacine Sibous wrote on LinkedIn
While in a recent post on LinkedIn, Parker CEO and founder CEO Yacine Sibous did not explicitly confirm that the company has filed for bankruptcy or has shutdown, the CEO wrote that if he started over, he will do some things differently. Here's his LinkedIn post:
My fintech company reached $65M revenue and raised over $200M in funding.
If I had to start over today, I’d do these 6 things differently:
1. Keep the team small
2. Be diligent on culture fit
2. Have a longer term perspective
3. Build core infrastructure sooner
4. Think about defensibility from day one
5. Invest in compounding GTM channels early
6. Avoid over-hiring, reactive decisions, and doomsayers
What Jason Mikula wrote on YC-backed Parker filing for bankruptcy
Fintech consultant Jason Mikula recently claimed that Parker had been in negotiations for a potential acquisition, with the failure of those talks ultimately leading to the startup’s abrupt shutdown. Mikula added that this “has left small business customers in a tough spot”
Scoop: YC-backed Parker, an SMB/ecom-focused banking & credit card fintech that abruptly shut down this week, has filed Chapter 7 bankruptcy:
The company, backed by names that include Y Combinator and Valar Ventures, claims on its website to have raised "over $200M in funding."
Parker offered a credit card, treasury management/bank account, and bill pay, with a target market of ecommerce-focused small businesses.
While technically true, $125M of the "over $200M" was an asset-backed lending facility supporting the company's credit card, not operational capital.
Parker partnered with Piermont Bank on its banking product and Patriot Bank, N.A. on its commercial credit card.
Per communications I've reviewed, Patriot became aware on May 3rd (Sunday) that Parker intended to cease operations the following day, Monday May 4th.
Sources familiar with the situation have told me that a potential acquisition of the company Parker had been negotiating ultimately fell through, leading to the abrupt shutdown.
Still, the sudden termination of the program has left small business customers in a tough spot -- and pose questions about Piermont's and Patriot's oversight of the program.
Per Parker Group's Chapter 7 (liquidation) bankruptcy petition, the company reports between $50m-$100m of assets and between $50m-$100m of liabilities, with between 100-200 creditors.
As this is a liquidation, not a reorganization, there typically are no first-day motions. A creditor matrix has not yet been filed.
Typically, the next steps would be the automatic appointment of a Chapter 7 trustee to oversee the assets of the estate.
Within 14 days, the estate must file schedules with the court detailing all assets, all liabilities, executory contracts and unexpired leases, and a statement of financial affairs.
Notably, any customer deposits are held at Piermont and should not be impacted by Parker's bankruptcy.
However, as we've seen with previous fintech bankruptcies, the failure of a fintech partner can and has impacted "end users" ability to access their funds.
The ability and time needed for Parker's small business customers to access any funds likely depends on how Parker's bank account offering was operationally structure -- whether funds were held in an FBO at Piermont and ledgered by Parker (and/or a Parker service provider) vs. whether these accounts were held directly "on core" at Piermont.
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