Cushion's Journey and Services
Founded in 2016, Cushion developed an app designed to help users negotiate bank and credit card fees, securing refunds on their behalf. The company later expanded its services to include BNPL loan management, processing over $300 million in such loans. Despite these innovations, Cushion struggled to reach the necessary scale for long-term viability.
Announcement of Closure
Founder and CEO Paul Kesserwani announced in a LinkedIn post that the company would shut down at the end of 2024. "Despite bringing multiple new fintech products to market, we didn’t reach the scale needed to sustain the business," he stated. Cushion had raised more than $21 million from investors, including Afore Capital and Flourish Ventures, but ultimately failed to maintain sustainable growth.
Financial Backing and Achievements
Cushion claimed to have secured $15 million in bank fee refunds for its users and onboarded over one million consumers, with more than 200,000 becoming paying customers.
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Its last publicly announced funding round in 2022 raised $12 million, bringing its valuation to $82.4 million. While the company made strides in automating bank fee negotiations and BNPL tracking, its financial performance was insufficient to keep operations afloat.
Challenges in the Fintech Sector
Cushion's closure is part of a larger trend in the fintech industry. In 2024, startup shutdowns surged, with 966 fintech firms ceasing operations, a 25.6% increase from the previous year. Increased competition, regulatory challenges, and difficulties in achieving scalability have made it harder for companies to survive.
Many startups struggle to reach profitability as funding conditions tighten and venture capitalists become more cautious about investing in financial technology firms.
Contrasting Trends: Fintech IPO Boom
Despite these challenges, some fintech companies are preparing for public offerings. Klarna, a Swedish BNPL provider, is set to go public in the U.S. in April 2025, with an expected valuation between $15 billion and $20 billion. Similarly, Chime Financial, a company known for its banking and personal finance services, is gearing up for an IPO.
These developments highlight the industry's volatility, where some firms struggle while others thrive. Companies with strong business models and clear profitability paths continue to attract investor interest, even as others fail to scale.
Industry Implications
The fintech sector’s rapid growth has drawn increased scrutiny from regulators. The U.S. Federal Deposit Insurance Corp (FDIC) has proposed stricter recordkeeping requirements for banks working with fintech firms to ensure consumer protection.
As regulations tighten, companies must adapt to new compliance measures, further complicating the path to success for smaller players.
Conclusion
Cushion’s story reflects both the promise and challenges of fintech. While some companies exit the market, others are preparing for the public stage. The industry remains a high-stakes environment where only the most scalable and well-positioned firms can secure long-term success.
