Railsr returns after GBP 20 million funding round

After being sold in March 2023, the company became the trading name of a new entity called Embedded Finance. This was due to its second round of layoffs in the US, allegedly having funding issues and a potential flash sale to a Nigerian fintech.  According to statements given to AltFi, the company faced severe cash flow issues in the second half of 2022 despite reportedly receiving GBP 38 million in funding in October 2022.

Currently, investors from D Squared Capital and Moneta Venture Capital are funding the company with cash, in the form of convertible loan notes, to support its operations, according to a report from Sky News. Officials from Railsr stated that the substantial new investment is set to allow the company to grow and extend its operations. Moreover, representatives indicated that it was a challenging period for the sector, with many companies growing too fast and not being able to sustain and develop their internal controls, therefore being required to scale back in a difficult economic environment. However, the new funding may allow Railsr to recover and rebuild, with its strategy offering the company a clear pathway to return to growth.

Formerly known as Railsbank, Railsr provides financial services, including banking and wallets, cards, credit, and rewards. As a Principal Visa and Mastercard issuer, the fintech offers Banking-as-a-Service (BaaS) and Cards-as-a-Service with solutions such as card issuance, virtual wallets, and BIN sponsorship. At the beginning of March 2023, Railsr was purchased and re-capitalised by a consortium led by D Squared Capital. By receiving approval for change of control from the Financial Conduct Authority (FCA) in the UK, the company assured the continuance of its clients’ operations and more than five million end-users.

A few days prior to this, Railsr reportedly began to consider the possibility of a sale through a pre-pack administration due to mounting financial and regulatory issues. Even if the company was deemed a promising participant in the UK payments sector, with representatives describing it as a near-unicorn, Railsr faced significant financial and regulatory challenges, raising concerns over its stability. At that time, the company was also under scrutiny of regulatory authorities, with the FCA reportedly auditing its UK subsidiary for several months, and the Bank of Lithuania preventing its local unit from accepting new customers, mentioning concerns over potential violations of anti-money laundering and terrorist financing laws. 

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