Legaltech startup Rightnow files for bankruptcy

Rightnow asserts legal claims against airlines, fitness studios and electricity providers. Carsten Maschmeyer has invested millions. Now the startup has to file for bankruptcy, but has already started a pivot.

Eight years after its founding, the legal tech startup Rightnow filed for insolvency at the Düsseldorf District Court on February 25. This can be seen from the insolvency register. On the company's website, customers are informed that most of the services offered have been paused. The reason given, however, is surprising in light of the insolvency announcement: "Unfortunately, high demand is leading to delays in processing. We are working flat out to ensure that we can offer the service again," it says.

The reason for this step was the failure of a planned and urgently needed financing round, explains founder Phillip Eischet when asked by Gründerszene: "Due to the lack of sources of financing for the original business model of RightNow GmbH and the subsequent failed restructuring negotiations - despite intensive efforts on the part of the equity investors and founders - the insolvency of RightNow GmbH was ultimately unavoidable." At the same time, he asserted that he was still motivated and believed in the future of his company.

He explains what will happen next for Rightnow customers:

"There are no outstanding customer cases, as the old business has been paused for more than a year." The customers have all been paid out and the claims are currently being enforced against the debtors, but the customer no longer has anything to do with this.

To understand this, let's take a look at Rightnow's business model: In the years since its founding, the legal tech company has established itself as a service provider in the area of ​​consumer rights. Rightnow bought customers' legal claims against companies and paid them compensation within 24 hours - withholding a fee.

Rightnow took care of refunds for flight cancellations and then took over the entire debt management from the airlines. If they didn't pay, a reminder was automatically sent. And if the airline still didn't pay, Rightnow went to court. To do this, the startup cooperated with lawyers across Germany. "To keep the effort low, we pool hundreds of cases and file class action lawsuits," said co-founder Benedikt Quarch in an interview with Gründerszene in 2018.

Rightnow later expanded its field of activity and bundled legal claims against various providers such as electricity suppliers, Netflix, the railways and fitness studios into class action lawsuits. According to Rightnow, it has already helped more than 500,000 consumers enforce their rights. "We want to make legal enforcement as easy and quick as ordering pizza," Quarch told Gründerszene at the time.

According to Eischet, RightNow GmbH financed itself through private debt funds. In 2018, the Rightnow founders founded another company, initially under the name ITnow, which was later renamed RN Inkasso GmbH. According to the articles of association and statutes, the company's purpose is "the provision of debt collection services with all auxiliary and ancillary business on its own and third-party account, as well as service services including support for electronic data processing by debt collection and other legal service providers, as well as the acquisition, collection and resale of claims of all kinds at home and abroad, including the acquisition of companies specializing in this." This company, the founder emphasized to Wirtschaftswoche, is not affected by the insolvency filing.

"RN Inkasso GmbH is working successfully with a backend funder from the litigation funding sector and recently initiated a high-profile class action lawsuit involving almost 10,000 customers against X (formerly Twitter)," reports Eischet. He describes this company's model as "new and sustainable". It has been successfully established and will continue to be used. "On the employee side, we had already made the necessary adjustments as part of the pivot to the changed business model; as of March 1, only the two managing directors are still active employees at RightNow GmbH."

In 2018, Carsten Maschmeyer with his VC Seed & Speed ​​and the Trivago founders, among others, invested 25 million euros in Rightnow. In another round in 2021, the technology and fintech investor VR Ventures and the family office of the Schwarzwälder Boten put further money into the company, raising a total of 8.5 million euros in this round.

In the case of Rightnow GmbH, the Düsseldorf District Court has appointed lawyer Dr. Jan-Philipp Hoos as insolvency administrator. He told Gründerszene that he is still in the process of gaining an overview and is therefore unable to answer any questions about the case.

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