Football fans like to call a particularly talented player “football god”. And Dutch national coach Louis van Gaal earned the title of “God of Change” when he substituted players at the right moment against Chile and Mexico at the 2014 World Cup in Brazil and won the games.
Werner Kräutlein also called his Leipzig start-up “God of Change” in 2019. It promises customers to easily switch to cheaper tariffs with energy suppliers and insurers if they have their bank accounts scoured by the company’s software. At the time, the name seemed just as clever as the business model.
But now the change god is broke. The company with the awkward name contract change service GmbH, which owns the Wechselgott brand, has filed for bankruptcy, affecting around 30 employees. For half a year, Kräutlein had been looking in vain for investors or a buyer, but it is still unclear whether things will continue in Leipzig.
The bankruptcy shows the fundamental change in the environment for start-ups. Because of the rise in interest rates, investors have become much more demanding and selective, after all they have alternatives again. They want to pay little money for many shares and set conditions for participation or takeovers. If they get involved at all.
The customers should get cheaper offers, the start-up a commission
The basis of the change god model is the so-called PSD-2 interface of the banks. The money houses must allow external companies access to the account data if the customer so desires. With complex algorithms, a service provider like Wechselgott can then first determine which energy supplier the customer regularly transfers to or which insurer debits which amount – and then make cheaper offers themselves. Wechselgott acts as a pure intermediary, the contracts are concluded with insurers and energy suppliers. The company receives commission for this. The bankruptcy will therefore not affect customers directly, they will not suddenly find themselves without a contract.
Originally, changing electricity and gas contracts was the largest and most profitable business area for the Leipzig start-up, but the energy crisis put an end to that. There were no longer any providers to whom it would have been worth switching. Wechselgott has a license as a broker to broker insurance. The most important partners are the Volks- und Raiffeisenbanken, whose customers the Leipzig company makes offers to. Wechselgott had actually agreed to cooperate with the insurer R+V, which belongs to the Volks- und Raiffeisenbanken, in order to offer so-called switch tariffs. Customers are guaranteed to save ten percent compared to the existing policy. It is unclear whether the project is still going ahead.
In mid-2021 everything still looked good in Leipzig. The Maklerpool Fonds Finanz had just participated together with the Volksbank Mittelhessen, together the investors put 5.6 million euros of fresh money into the company. Wechselgott was valued at 28 million euros at the time. Fonds Finanz then held a stake of 8.9 percent, three Volksbanks also participated, in addition to Central Hesse, Mittweida in Saxony and Dortmund Northwest. But Wechselgott is still making a loss today, in 2021 alone the loss was 2.1 million euros, figures for the past year are not yet available. In any case, the start-up needed more money from investors or a buyer in the second half of 2022. But the search was unsuccessful. Domcura, a subsidiary of the financial sales company MLP, was interested, but the deal fell through shortly before the conclusion. Apparently the change god gambled this time.