After eight years, cushion shutters have come to an end.
In a surprising turn of events, the fintech company Cushion has announced its shutdown. Founded in 2016 as an overdraft fee negotiation fintech, Cushion shifted its focus to managing buy now, pay later (BNPL) loans in 2020.
The winddown of Cushion aligns with expectations outlined in the F-Prime Capital's 2024 State of Fintech report, which predicted a challenging year for many fintech companies. Cushion's founder, Paul Kesserwani, announced the shutdown on LinkedIn, citing personal experiences of finding it difficult to keep track of BNPL loans as the inspiration for the shift in focus.
Since its inception, Cushion had raised more than $21 million from investors and venture capital firms such as Flourish Ventures, Vestigo Ventures, and Better Tomorrow Ventures. The company's most recent publicly announced raise was $12 million in May 2022, which raised its valuation to $82.4 million, according to PitchBook.
Cushion built the only 'Plaid for BNPL' on the market, processing 30 million emails and over $300 million in BNPL loans. In addition to the aggregator, Cushion also offered a credit-building virtual payment card. The aggregator worked by combing through users' emails.
However, the shutdown of Cushion comes at a time when a significant number of other fintechs conducted layoffs in 2024. Fintech companies like Tally, a credit card debt management platform, also folded due to capital issues.
Despite the shutdown, there is no evidence of fintech companies buying Cushion's purchase licensing rights in 2024. A search of the available documents reveals discussions on general fintech regulatory developments, fintech earnings of specific companies like Bancorp, and broader fintech industry trends, but none mention Cushion or any transactions related to its licensing rights in 2024.
Several of Cushion's investors, including Kesserwani, did not return a request for comment. It remains unclear what the future holds for the fintech industry, but the shutdown of Cushion serves as a reminder of the challenges faced by fintech startups.
Cushion processed $40 million in payments in under a year, demonstrating its potential in the market. As the industry evolves, it is hoped that lessons will be learned from the experiences of companies like Cushion, and that startups will be better equipped to navigate the challenges ahead.
Technology advancements in the finance sector, with a specific focus on buying now, paying later (BNPL) solutions, have been a significant area of investing in recent years. However, the shutdown of fintech company Cushion, a trailblazer in building the 'Plaid for BNPL' market, serves as a cautionary tale for fintech startups, showcasing the challenges these businesses may face in navigating the industry.
