Shelter Closes Its Doors After Eight-Year Operation
In a significant move for the fintech industry, Cushion, a startup that developed a bill aggregator and buy now, pay later (BNPL) solution, has announced its shutdown. The decision was made by the company's founder, Paul Kesserwani, at the end of 2022.
Cushion, founded in 2016 as an overdraft fee negotiation fintech, made a shift in focus in 2020, moving towards helping consumers manage BNPL loans and other bills. The company's service, often referred to as "Plaid for BNPL", processed 30 million emails and over $300 million in BNPL loans, making it the only such platform in the market.
In under a year, Cushion processed $40 million in payments. The company also offered a credit-building virtual payment card in addition to its aggregator service.
The winddown of Cushion aligns with expectations laid out in the F-Prime Capital's 2024 State of Fintech report, which projected "many challenging fundraises, distressed sales, and shutdowns" in 2024. The report also mentioned several other fintechs conducting layoffs during that period.
The shutdown of Cushion is one of several fintech-related events in 2024. Linqto, a private investment fintech platform, officially shut down in 2024 due to financial and legal difficulties. Fidelity National Information Services (FIS), a major fintech firm offering banking services, announced layoffs of 133 employees in its Seattle-area office to refocus its embedded finance strategy. While FIS did not shut down, the layoffs reflect cost-cutting aligned with strategic shifts, likely linked to capital optimization.
Other companies with layoffs impacting hundreds or thousands of employees in 2024 include large financial institutions such as Citigroup. However, these layoffs were not necessarily tied purely to capital issues or full shutdowns.
Cushion had raised more than $21 million from investors and venture capital firms such as Flourish Ventures, Vestigo Ventures, and Better Tomorrow Ventures. The company secured $15 million in bank fee refunds. Kesserwani did not return a request for comment, nor did several of Cushion's investors.
The aggregator service was launched early in 2023. The change in focus was inspired by Kesserwani's personal experience of finding it difficult to keep track of BNPL loans.
As the fintech industry navigates through challenging times, the shutdown of Cushion serves as a reminder of the need for careful strategic planning and capital management.
References:
- Linqto Shuts Down, Files for Bankruptcy
- Citigroup to Cut 4,500 Jobs Amidst Cost-Cutting Measures
- FIS Announces Layoffs in Seattle-Area Office
- Tech Layoffs Impact Fintech Sectors
In light of the F-Prime Capital's 2024 State of Fintech report, another fintech platform, Linqto, faced similar challenges and officially shut down in 2024. Similarly, Fidelity National Information Services (FIS), a significant fintech firm, announced layoffs to refocus its embedded finance strategy, showing signs of cost-cutting and strategic shifts. These events underscore the importance of strategic planning and capital management in the fintech industry during challenging times.
