The rise and fall of a flagship start-up

Sometimes there is only a fine line that separates victory from defeat. In the case of Berlin Blockchain start-up Lition, there are a few fateful weeks in the fall of 2021. They are upending the European energy industry – and the successful company faces an insurmountable abyss.

In the summer of 2021, the two founders Richard Lohwasser and Kyung-Hun Ha will complete a major funding round. Celebrity investors pledge millions.

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Reality check of an advertised technology

Since its founding in 2018, Lition has been considered the German flagship startup in the blockchain industry. Almost no local company can actually present millions in sales. Lition is the exception. It’s an energy trading platform for everyone, built on blockchain – the reality check of a touted technology. In 2021, over 20,000 people from 160 German cities will use the revolutionary platform. You can buy green electricity directly from green power plants all over Germany. Estimated annual turnover: 20 million euros.

The funding round marks the start of a new chapter in the startup’s tumultuous history. The company is celebrating a huge party in Berlin in August 2021 together with business partners, friends and families. The mood couldn’t be more enthusiastic.

A few weeks later, Richard Lohwasser stands before the district court in Charlottenburg. The founder holds the last remnants of his dream in his hands: a 70-page bankruptcy report. Lition broke – one of the first casualties of the European energy crisis.

Lition founder Richard Lohwasser in conversation

It’s a rainy Thursday in April 2022 when Richard Lohwasser comes to BTC-ECHO’s offices and tells his story. “Most founders probably wouldn’t have come to this interview,” he muses. “Almost nobody likes to talk about failure, especially not in the start-up scene. But it’s part of life.”

At the age of 17, Richard Lohwasser ran his first company: Clanintern, a gaming portal. It becomes one of the ten most visited websites in Germany. A distinguished career follows: Turbo studies in business IT with top marks, PhD in one year. Lohwasser becomes the first division manager at energy company Vattenfall under the age of thirty, then CEO of green electricity supplier ExtraEnergie. But over the years, says the founder, frustration grows. Even the smallest suggestions for improvement are rejected.

Lohwasser makes a decision in 2018 with his colleague Kyung-Hun Ha. Both are bold and bright entrepreneurs and new fathers. They quit their high-paying jobs and found Lition. Friends want to shake up the conservative energy industry – with the power of blockchain.

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The ICO bubble is bursting

In 2017, anything just named blockchain is still booming. A year later, the ICO bubble burst and the market crashed. Lohwasser and his partner start their long journey together with ten employees in the middle of a crypto winter. They believe in the real benefits of technology. Their goal: to make green electricity easy, cheap and flexible. Power plants and customers connect directly through their platform. If you want, you can change the producer in a short time. “A bit like shaking, only with electricity,” is the slogan of an advertising campaign in major German cities. Her title: “Better a storm than a fucking stream.”

Lition lands marketing deals with its subsidiary RTL Sparwelt and gains the popular neo-bank N26 as a partner. Former chief marketing officer Kelly Ford joins as an investor and advisor. Another prominent member of the advisory board will be SAP Chief Technology Officer Jürgen Müller. In collaboration with the German software group, Lition develops a blockchain, tailored to your needs, quickly and in compliance with data protection regulations. But they soon learn that if they want to be successful in the energy field, they have to put some of their technological dreams on the back burner.

“No one wanted to interact with smart contracts,” explains Richard Lohwasser. “The German energy law also forced us to settle our transactions in a contractual way.” Blockchain works internally. However, it cannot fully unfold its potential in this way. On the website, he wanders into the fine print. In the pitch for the 2021 funding round, they no longer mention blockchain at all.

A black swan event

Business is booming anyway – until the fateful autumn weeks of 2021. The energy crisis catches the whole market off guard. Today we know that natural gas storage facilities are almost empty because Putin is delivering less than he promised and renewables are performing poorly. At the same time, demand for energy is increasing due to the coronavirus pandemic. It is a Black Swan event.

Prices increase more than 500 percent. A deadly cascade unfolds for Lition. Investors are withdrawing their bids and electricity providers want to see advances in the millions. Suddenly the company’s money was only enough for a few weeks. “Of course, as a CEO, you start to sweat a lot.” For two months, Lohwasser and his partner fight with all means to save the company. Vain.

Bankruptcy almost cost them their existence. “Many don’t know: In two-thirds of all cases in Germany, insolvency is delayed because the founders file too late.” CEOs are then responsible for their private assets and cannot be put in office for many years. In the worst case, there is a risk of imprisonment. “We were lucky that people outside the start-up scene warned us about it.”

What gives Richard Lohwasser support in these difficult times is his family. “She was there for me like a rock in the surf, even though I neglected her in the previous years. I would say this to every founder: At the end of the day, you should never sacrifice your family for the company.”

Denial of responsibility

This article previously appeared in the May issue of BTC-ECHO magazine.

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