"With a private equity investor, different guns are brought out".

Stephan Stricker has made a multi-million exit with Pair Finance. In this interview, he talks about tough negotiations, payouts to employees and what his wife thinks when he goes to bed at night.

Stephan Stricker sets the tone right away. "You ask the questions, I stand at the ready," says the man with the gray sweater and the apparently irrepressible urge to want to make a difference. Barely a week has passed since he pulled off a more than impressive multi-million exit with his debt collection start-up Pair Finance. Since then, Pollen Street Capital owns around 60 percent of Pair Finance, with Zalando, Finleap and management each holding around a third of the rest. And now?

Mr. Stricker, Pollen Street reportedly paid 100 million euros for 60 percent of Pair Finance. Important first question: what were the celebrations like?

The signing was last week on Friday, we were at the notary for eight hours. After that, we took a breather. On Tuesday, before we announced it, we also inaugurated the employees. But the big celebration is still to come.

Are you the party type or do you want to get straight on with it?

I can already see a lot of things I could tackle again. Maybe that's why some friends have advised me: "Enjoy this moment now. Don't rush into the next project and topic." That's what I'm trying to do now for the next few days and draw strength from the success for the upcoming topics on my agenda, because I'm already itching in my fingertips again.

Did you actually give out a lot of employee shares before the exit?

I think it's enormously important to give employees a stake in a company at an early stage so that they can benefit from it if it's successful. That's why we issued Virtual Share Options, or VSOPs, to all key core employees. And it was very important to me in the negotiations with Pollen Street to ensure that these employees are now paid in full or in part. They should receive their tribute for the great work they have done over the past years. At the closing, I saw how much money had gone to the employees, and I was very proud.

With Pollen Street, we now have a company on our side that can take us to the next level.

You actually wanted to find a new investor as early as 2021. Why was that?

We have grown extremely quickly in the past few years; in 2020 alone, it was more than 80 percent in 2021. We've become profitable at the same time, which is extremely rare for startups at this stage, after all we've only been around since 2016. At the same time, I've noticed that we need a new class of investor. The VCs and business angels who had supported us up to that point were great. Without them, we wouldn't be here today. With Pollen Street, we now have a company on our side that can take us to the next level.

They had already called off the search for 2021 because they couldn't find a suitable investor. What has changed?

Not that much. But we had two major hurdles in our search for an investor. The shareholders wanted us to be valued in triple digits, and we had to say to many interested parties: We won't talk to you before that. And the other hurdle was me. I was extremely critical and skeptical of every potential investor because I really wanted to stay on board and continue to run the baby. I had to find a VC or private equity investor who I liked working with and who I was convinced would want to internationalize and professionalize the company. We didn't find such an investor in 2021, but we did in 2022 with Pollen Street. The negotiations were, of course, an intensive process for all sides.

Until then, 40 percent belonged to Finleap and the rest to many different investors. So they were used to negotiations.

There was one thing I quickly noticed: With a private equity investor, different guns are brought out. They look much more intensively at every financial figure, and the discussions with management are much more intensive than I was used to from investors in the VC scene or from business angels. In negotiations, a completely different set of cuffs is applied and each side must be prepared to make compromises. That was me, that was Pollen and that was Finleap, and that's why we can now celebrate this success.

I want to expand into another country every year from now on, into the Benelux countries and also into France.

The current market situation is not exactly exhilarating for an exit. Has that depressed the valuation?

Not at all. The current situation makes it difficult, especially for those companies that are not yet profitable. But that's us, which is why the market sentiment hasn't hit us that hard. Besides, two years ago, for example, Pair Finance was not even ready for such a deal. It is only in the last 24 months that we have grown so much and become profitable. So the timing is just right.

What is the plan now?

We are already growing strongly in Germany, and last year we went into Austria. I want to expand into another country every year from now on, into the Benelux and also France. I think we have a product with our platform that no one else in a traditional industry has.

Are you not afraid or worried?

An entrepreneur should not be afraid. Of course, I worry a lot or I worry that something is not going fast enough. If they ask my wife how many thoughts I go to bed with, she will say: he thinks about Pair Finance 24/7. And that would be true. But these worries are not worries in the actual sense and not existentially threatening, but questions like: How can we implement a certain product faster, win over a customer faster, or expand into another country faster? Our biggest opponent is time. There is a lot of market potential and we want to tap into it.

Thank you very much for the interview.

Personal details: Stephan Stricker (40) is founder and CEO of Pair Finance, Germany's leading fintech for debt collection. Before Pair Finance, Stephan Stricker was involved in the development of successful AdTech companies in San Francisco/USA and Sao Paulo/Brazil in leading positions. From 2010 to 2013, he worked for KMPG in the areas of strategy consulting and restructuring. Stephan Stricker graduated in business administration from the Universities of Sydney and Münster.