Its valuation at $1.7 billion was just hot air. The GloriFi online bank, backed by the controversial American entrepreneur Peter Thiel, is closing its doors. The establishment stumbled only three months after the start of its activity. Blame it on a difficult start, multiple errors, a lack of a banking license and an economic climate deemed difficult by its communications director.
But behind the idea of a purely economic failure lies above all “multiple negative stories that have taken their toll”still recognized the director of communication in an internal e-mail sent to employees and shared by the wall street journal. It is also digitally that the company has dismissed its employees, seeking to remain discreet about the operation.
A far-right bank
GloriFi was built, by its leaders, as a far-right bank, for far-right supporters. So all the values were there: racism, hatred towards the LGBT community, glorification of God… even carrying a weapon was a reason for the bank to offer a discount on home insurance.
The target market was “100 million Americans who want to be free”, said the project’s investors, who injected tens of millions of dollars into the bank. At the head of the thread, the founder of PayPal and Palantir, Peter Thiel. The Donald Trump sympathizer had joined forces with a certain Kenneth Griffin of the Citadel hedge fund (one of the hedge funds behind the GameStop affair).
A month ago, the reactionary bank already closed access to account openings after having exceeded – according to its words – 50,000 customers. The launch objectives were largely exceeded, however, hiding an internal crisis situation, where “the investors’ money was almost gone and GloriFi was on the verge of bankruptcy”. What a journalist from Forbes retorted at the news of the bank’s closure: “how fast can a banking startup without a bank burn through $50 million?”.
In all, 84 reactionary billionaire funds lost money in this case. And customers who have opened an account will have to be patient. The bank says that it was preparing support for its customers from its website, but as a reminder, it did not yet have a banking license and it could decide purely and simply to refer its customers to its partner. All accounts will be deactivated on December 6.
Wanting to do everything very quickly, GloriFi had even prepared its SPAC to go public. DHC Acquisition Corp, on the Nasdaq, was to sign with the bank to allow it to join the public markets and therefore access more capital. The merger was planned for early next year. Yet another plan fell through and which further distanced the startup from its main project: to build a bank.
Start-up errors, the alcoholism of its leader, macro-economic difficulties… all these arguments are nothing compared to GloriFi’s unsuccessful strategy of betting everything on marketing. Like many other startups, its leaders have spent too much time and too many resources in the fantasy of a disruptive project. The desire to directly do better than a traditional bank is a sign of bad omens. We have seen it with neo-banks in Europe. “A boldly themed neo-bank has yet to act like a bank”added Ann Rutledge of Forbes.