The collapse of Stenn, a fintech company once hailed for its innovative approach to funding e-commerce and cross-border trade, has sent ripples across the small business funding world. Stenn, which had raised hundreds of millions of dollars in venture capital and debt, is now under administration by Interpath Advisory under a UK court order. According to reports, allegations of ties to money laundering, particularly linked to Russia, are at the heart of this dramatic downfall.
What Stenn Was Supposed to Do
Stenn positioned itself as a game-changer for SMBs in the e-commerce space. Its platform offered invoice financing to small businesses engaged in international trade—a lifeline for companies needing quick access to working capital while waiting for invoices to be paid. The business model seemed promising: take the friction out of cross-border trade by providing funding to SMBs that larger banks often overlook.
But now, instead of being celebrated as a fintech success story, Stenn is embroiled in allegations of financial misconduct. Ironically, the company went out of its way in a 2022 TechCrunch article announcing its Series B funding to emphasize that it had no ties to Russia—an odd claim to highlight, given that the current allegations involve potential Russian money laundering. Was this foresight, misdirection, or just a coincidence? Either way, it raises eyebrows.
A Cautionary Tale for Venture-Backed Fintechs
While we don’t yet have all the details, one thing is clear: venture-backed fintechs face immense pressure to scale quickly and deploy capital aggressively. Stenn raised $50 million in Series B funding at a $900 million valuation and secured hundreds of millions more in debt to fuel its lending operations. That kind of capital doesn’t come without strings. Investors expect growth, and growth often means taking on risk.
It’s worth noting that I’ve written before about how pressure to grow can lead to cutting corners (mainly, leading to working with knucklehead brokers for deal flow). Is that what happened here? While we can only speculate, the allegations against Stenn—combined with its rapid rise and fall—suggest that something in the growth-at-all-costs strategy went horribly wrong.
Stenn’s Administration
If you visit Stenn today, you’ll find a notice that it has been placed into administration under the management of Interpath Advisory. This legal process, ordered by a UK court, underscores just how dire the situation has become. For SMBs that relied on Stenn for funding, this collapse could mean significant disruption to their cash flow and operations.
Final Thoughts
The collapse of Stenn serves as a stark reminder that not all fintechs are built to last, no matter how shiny their pitch decks look. For SMBs, the lesson here isn’t just about choosing the right funding partner—it’s about understanding the risks of aligning with companies that might be prioritizing growth over stability and compliance.
Stenn’s downfall is also a call to action for investors, regulators, and SMBs to dig deeper into how fintechs operate, especially when billions of dollars are at stake. As for Stenn, it’s yet another name added to the list of fintechs that promised the moon but delivered chaos.