He Raised $270 Million To Enable Companies To Issue Physical And Virtual Credit Cards And Integrate Data Into Their FinTech Stack

In a rapidly evolving world of fintech and entrepreneurship, few stories exemplify resilience, adaptation, and foresight quite like that of Malte Rau.

From a childhood shaped by the fall of the Berlin Wall to leading a multi-million-dollar fintech startup, Malte’s journey reflects his personal growth and the challenges of steering a business through global crises, market volatility, and the rigors of scaling in heavily regulated industries.

In this interview, Malte talks in detail about navigating his company, Pliant, through different countries and currencies. He also reveals fundraising insights, having raised over $70M on the equity side and more than $200M on the debt side.

Listen to the full podcast episode and review the transcript here.

Early Years: From Berlin to Consulting

Born in Berlin just as the Berlin Wall was coming down, Malte grew up amid the excitement of change and transition, though he was too young to fully remember the historic moment.

However, Malte’s move away from Berlin at the age of 10 would be the beginning of experiences that shaped his resilience and adaptability. Reflecting on his childhood, he speaks about the challenges of moving to a new place, making new friends, and adjusting to a new environment.

These early experiences taught Malte the importance of finding stability in uncertain situations. They shaped his personality and developed skills, which later proved invaluable in his entrepreneurial endeavors.

Initially uncertain of his career path, Malte found himself drawn to consulting after studying economics and management. However, he began to hone his analytical mindset in consulting, particularly in the field of risk management.

Malte spent some time in an internship abroad in the US but returned to consultancy. Working with big firms like KPMG, he immersed himself in analyzing data and preparing for worst-case scenarios.

Ironically, though his job was to mitigate risk, Malte would eventually become a risk-taker in the fast-paced world of fintech. He describes himself as a “risk friendly and not risk averse risk manager.”

Although Malte worked for big banks, he quickly saw that the projects took time. As the consultant, he had to leave after the implementation and couldn’t really witness the impact of his efforts.

A Leap Into Fintech

After spending years working with banks and larger corporations, Malte made a critical shift in his career when he was introduced to the fintech world. A chance conversation with a former colleague led him to join auxmoney, a fintech startup in the consumer lending space.

This move marked the beginning of Malte’s entrepreneurial journey as he transitioned from the relatively stable world of consulting to the dynamic and uncertain world of startups. “The impact you have in a startup is immediate,” he recalls.

Malte found the fast-paced environment invigorating, but it required him to think differently. Unlike large banks, fintech startups operate without a safety net, and he quickly realized that traditional risk models used by banks didn’t apply to fintechs.

Malte’s experience at auxmoney, a small company with just 30 employees, and later, ventures in SME lending at Lendico Global Services would lay the foundation for his understanding of navigating the complexities of the fintech world.

During his time with Rocket Internet, Malte played a crucial role in building a venture debt fund focused on refinancing fintechs with lending operations. He saw that SMEs don’t necessarily have as much data.

This experience gave Malte a deep understanding of how startups in the lending space operate and how critical liquidity is to their survival. It also highlighted the importance of balancing risk and reward—something that would become a central theme in his later ventures.

Malte recalls how they had some touchpoints with the equity arm but were disconnected because Rocket had $2B in cash reserves. Instead of investing in equity, they opted also to build a debt practice. They also swapped deals, which was one strategy for building pipelines, and tapped the potential to earn high returns.

As Rocket started shutting down most of its services and debt practice and turned its focus on different areas like fintech, Malte decided to venture out and start his own company.

The First Bumpy Ride: A Learning Experience

Like many entrepreneurs, Malte’s first attempt at starting his own company was filled with excitement and challenges. His first venture, focused on risk management solutions in the open banking and data world, didn’t unfold as planned.

Malte recalls starting with an idea and talking to angels and people he had worked with for a while. He had people interested in investing since they trusted in his judgment, which was an exciting experience that built up his confidence.

Malte realized that angel investors have a higher risk profile, and like pre-seed investors, they are also looking for higher returns. While the market opportunity seemed vast, the company ultimately failed to gain traction due to long sales cycles and misalignment with market timing.

As Malte discovered, selling to banks was a slow process that often stretched across years, even though this new data source was super relevant for risk management.

Early FinTechs would utilize the data to close their information asymmetry and convince customers to use their loan products. At that point in time, this way of underwriting was not really available to banks.

“I guess this won’t work out,” he recalls thinking after watching banks show initial interest, only for deals to fall through due to budgetary delays. Despite the company’s failure, Malte reflects on the experience as a crucial learning moment.

The venture may not have succeeded, but it taught him the importance of market timing, building investor trust, and the resilience needed to continue moving forward.

Mentorship and Resilience: The Power of Support

When the first venture ended, it wasn’t easy for Malte to pick himself back up. However, he had taken several lessons from his experiences. For one, he learned that investors are well aware of the risk factors when investing.

The support of a mentor made the difference. A former CEO who had hired Malte early in his career saw potential in him and provided both encouragement and tangible support, even helping with fundraising for the next venture.

“It wasn’t like I needed a slap across the face, but more like someone standing behind me, pushing me to take the next step,” Malte explains. This support system, combined with the confidence that others had in his abilities, gave him the courage to try again.

The Birth of a Rocket Ship: Founding Pliant, His Current Venture

With renewed energy and the lessons from his first venture fresh in his mind, Malte set out to found his next company—this time with a clear understanding of the challenges ahead.

The fintech space was becoming crowded, but Malte and his co-founder saw an opportunity in the card-issuing space. Unlike many of their competitors, they focused on enabling partners to tap into the mass market rather than trying to dominate the market as a direct provider.

“We’re more a bunch of nerds in love with the technology and the complexity,” Malte says, describing how the company found its niche in the market. This approach not only differentiated them from their competitors but also proved to be a winning strategy.

Although Malte and his co-founder had an interesting approach to the market, convincing VCs and investors was challenging. However, by offering both direct and indirect business models, they were able to save significantly on marketing expenses while expanding their reach.

The Pliant business model as a B2B card issuer is built around two main revenue streams. First, they offer software around the card, which allows them to charge clients for value-added services.

However, the main revenue driver is the interchange fee—a percentage charged to merchants every time a card is used. Malte explains that the business space in Europe is not regulated or kept like consumer cards, which is why there are fewer cards than in the US.

This approach has allowed the company to scale rapidly while providing significant value to its partners. Pliant makes an average of 2% when it is actually much more per transaction in the US. Malte explains that it’s a big revenue stream, and the customers didn’t really have to pay for it.

Dancing with Black Swans: Overcoming Early Challenges

The early years of the company were not without challenges. As the world was hit by the COVID-19 pandemic, Malte and his team faced an uphill battle. They had just begun raising funds when the first lockdowns hit, causing some term sheets to be withdrawn.

However, Malte and his co-founder managed to secure funding from a family office and pushed forward despite the uncertainty. In retrospect, Malte concedes that waiting for a while would have made the funding cheaper, and they could have obtained a more favorable cap table.

In any case, they moved forward with the project and hired their first seven engineers, bringing the team to 10 members.

Just as they were finding their footing, they were hit with another crisis—the collapse of Wirecard, a major payment processing company in Germany that had partnered with Malte’s company.

The scandal rocked the fintech world and left Malte’s company in a precarious position. After three months, they had virtually no setup left but continued to push forward with the intention of finishing the product.

Raising Funding for Pliant

Once again, Malte’s resilience came through. Despite the setbacks, he started searching for new partners. They didn’t have adequate money to go live at one point, so they raised two pre-seed rounds, which again, was highly challenging to execute.

Even so, Pliant raised a little more than $70M on the equity side, and on the debt side, it needed around $200M for refinancing its card receivables, which is not fully utilized but was committed.

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Malte used the money to scale the business, particularly for the customer base that has high spending and needs credit lines in millions. He explains that they continue to raise even more funding, especially debt because FinTech has many cash requirements.

Looking back at the fundraising journey, Malte talks about how they absolutely had to raise funding by the end of 2022. Of the 150 VCs they approached, 99% turned down the request. However, they were lucky enough to find one Japanese investor, SBI Investment.

SBI was quite active as a FinTech investor in Europe, so Malte and his co-founder flew to Tokyo for a 20-minute meeting for the final signing. Since he is from a debt background, he finds that debt is easier since it’s very rational and number-driven.

On the other hand, raising equity is about selling a vision, which can be harder to understand for someone more comfortable around numbers and hard data. Looking forward, Malte expects to raise Pliant’s series A round in a more relaxed environment.

Dealing with Challenges

Yet another crucial aspect that Malte had to deal with when building Pliant was compliance with regulations. As he explains, this sector is heavily regulated, and the company has to invest heavily in legal advice and fees.

Then again, Malte had to manage multiple partners and vendors, which required time investment because of the extensive discussions about the finer details. They had to acquire the necessary licenses and triple-check everything, so their legal projects cost more than expected.

Malte explains that Pliant’s go-to-market proposition is clearly that best-in-class software and banks, which is their market position. He says, “Businesses have a very strong relationship with their bank, which is a harder bond than having a millennial checking out a new Neobank.”

Malte envisions a future where Pliant can bring the technology to banks so that everybody can utilize or benefit from its digital cards. Customers using the cards can benefit from the many features, facilities, and conveniences.

Pliant is now operating in different countries and currencies. Regarding marketing, Malte and his co-founder have adopted a conservative approach. For them, every market is like a new market marketing channel similar to a Google campaign.

When expanding to a new core market, they hire two people and give them a specific time frame to see if they can start paying off. There have been instances where a market was not viable, so they would delay the project for six to 12 months or perhaps hire a new team.

However, Malte has been cautious about never building big offices and hiring large teams of 10 people. He prefers to work with the bootstrap mindset. Even though Pliant has a broad reach and can also do a lot of cross-border things, it has always stayed quite conservative.

Malte’s strategy is always to follow their highest-bending clients but, at the same time, try to really get market access through their partners. They could have more complexity if they had been more aggressive in these markets.

Malte also explains that multi-currency sounded easier than it was to launch because the liquidity flows behind it were just very complicated. Pliant was not only offering but also lending in many currencies. However, maintaining records and conversions in all of these currencies can be tricky.

Conclusion: The Art of Resilience

Malte Rau’s entrepreneurial journey is a testament to the power of resilience, adaptability, and learning from failure. From navigating the complexities of fintech to overcoming global crises, Malte’s story offers valuable lessons for entrepreneurs in any industry.

His ability to pivot, learn from setbacks, and find innovative solutions has allowed him to build a thriving business in a competitive and highly regulated market. For Malte, the journey is far from over. His company is poised to capture new locations and new currencies moving forward.

Listen to the full podcast episode to know more, including:

• Malte Rau’s entrepreneurial journey is rooted in resilience and is shaped by early experiences of adapting to new environments.
• He transitioned from consulting to fintech, finding excitement in the fast-paced, high-risk world of startups.
• His early ventures taught him the importance of market timing and building trust with investors.
• Founding Pliant, Malte focused on B2B card issuing with a unique value proposition, allowing the company to scale quickly.
• Pliant raised over $70M in equity and $200M in debt, vital for its operations and expansion.
• Malte overcame multiple challenges, including the collapse of Wirecard, pandemic disruptions, and tough regulatory hurdles.
• His conservative market expansion approach ensures sustainability while maintaining a focus on high-spending clients and cross-border operations.

 

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