Konsentus, a leading open banking technology provider, has been sold to its management in a pre-pack administration for just £350K according to documents deposited at UK Companies House. Konsentus continues to trade and the 19 staff on London have been transferred to a new company.
The sale shines a light on the difficulties common to many vendors as the market for open banking grows much more slowly than expected
Konsentus was founded in 2018 by Mike Woods and Brendan Jones to provide open banking directory services to central banks, financial services regulators, and financial institutions. It claims to consolidate data from more than 115 registries or databases in Europe.
High profile advisor, David Parker, also invested and joined the board. Mastercard invested in 2019 followed by a VC, Middle Game Ventures in 2020. The business raised £7m of capital in total, supplemented by £2m loans from Israeli bank, Mizrahi Tefahot.
The administrators say that the company had “anticipated that open banking would be adopted at a much faster pace than was the case.” It blames both the war in Ukraine and the uptick in global price inflation.
As a result of the slow pace of market development, Konsentus “experienced cash flow difficulties and attracting new customers became challenging.” Despite taking actions to reduce operating costs, the company “was still under pressure from its creditors and was unable to pay its liabilities as they fell due.” HMRC was threatening winding up for non-payment of taxes which presented an imminent risk of insolvency leading to the appointment of administrators in February 2024.
The administrator’s report shows that despite claiming to be active in 37 markets around the world, Konsentus made sales of just £1.7m in 2022/23. The operating loss was £1.9m, taking accumulated losses to £9m.
Management has spent £7m developing the company’s products and also acquired a French business, Open Banking Europe (OBE) for £1.46m which is now being wound down.
Konsentus has been offered for sale as a going concern since early February. The administrators say that it attracted plenty of interest with 16 parties signing the NDA to receive full particulars. However, all 16 declined to bid for the company, citing “high customer churn, low recurring revenues and customer renewal risk.”
The only offer received was from the founders themselves at a knock-down price of just £350K. The money is payable in stages over the next 12 months plus 5% of any turnover between £2 -£3m and 7.5% above £3m.
There is general consensus that open banking offers the chance to reengineer the relationship between banks and their customers in new and exciting ways. In taking control of a leading technology provider for just £350K, the new owners of Konsentus may have got themselves a bargain if they can finance trading until reaching breakeven.
Their venture ended in failure after burning through a staggering 9 million pounds. As you suggest, the current owners of Konsentus may have acquired the company at a significant discount. It’s unlikely that potential investors would overlook the fate of the previous ones who suffered losses. For current clients, prospects, employees and investors, it would be prudent to distance themselves from this toxic company.
No matter through which lense you look at it, their venture ended in failure after burning through a staggering 9 million dollars. As you suggest, the current owners of Konsentus may have acquired the company at a significant discount. It’s unlikely that potential investors would overlook the fate of the previous ones who suffered losses. For current clients, prospects, and investors, it would be prudent to distance themselves from this toxic company.
[…] The unexpectedly slow growth of open banking is causing some investors to run out of patience. This was illustrated by Konsentus, a high-profile London-based provider which has been sold to its founders in a pre-pack administration for just £350K. More on the Business of Payments blog. […]