Belief in your own innovative business idea and the courage to found a startup are essential for the growth of the German economy, perhaps now more than ever. But not every startup becomes a long-term success story. I, too, had to file for insolvency with my digital agricultural trading platform, Agrando. What were the causes? What lessons did I learn? And what advice would I give to founders in a similar situation?
The insolvency of Agrando at the beginning of 2022 had several causes. The agricultural market had collapsed dramatically due to the war in Ukraine. This was also the reason a planned financing round fell through, and subsequent funding commitments were withdrawn. In addition, the capital market changed rapidly during that time. Fundraising became nearly impossible because many investors avoided risk and pulled back.
For me, it was many months of intense psychological stress, especially the fear of personal insolvency. Not only was my own financial security at stake, but I also feared losing the trust of my family and business partners.
Looking back, our “all in” strategy at the time aligned with the venture capital market. Perhaps I underestimated the risks involved. With the knowledge I have now, I would choose a slower, more sustainable approach. A timely shift toward profitability might have given Agrando a chance of survival, even though the entire agricultural innovation market was already under enormous pressure at the time.
Today, I have a much clearer understanding of when a company is truly ready to scale. Back then, we grew too fast, too early. The larger the team became, the slower necessary decisions were made, and essential product developments were delayed or not implemented at all.
Insurance and Responsibility
It may seem obvious, but for me, one of the most important lessons from my insolvency was how crucial good insurance and careful documentation are. Just to minimise personal risk alone, I strongly recommend taking out D&O insurance (directors and officers liability insurance) as early as possible.
Equally important in my experience is thorough documentation and regular reporting to shareholders, especially regarding the financial situation and future forecasts. Even though these duties may sometimes appear annoying, they can be critical in the event of insolvency.
This is exactly what I experienced in practice: at Agrando, I regularly sent out monthly shareholder reports with our planned versus actual performance and all company-relevant financial figures. Annually, I shared a financial forecast with all business partners. Being able to prove that you reported transparently and consistently provides an important line of defence. This is a key learning I have implemented from the start in my new company, EverLeaf, and one I would strongly recommend to every founder.
When insolvency looms…
The rules are tough but clear. The obligation to file for insolvency applies to all companies that are insolvent or overindebted. This also applies if there is a threat of overindebtedness.
This threat hangs like a sword of Damocles over startup founders if they cannot prove how the next 12 months will be financed. For startups, this is actually part of daily business, because financing rounds are often concluded with a maximum runway of 24 months (at Agrando, they were never longer than 16 months).
To illustrate the problem: if, for example, you have twelve months of runway (i.e. the time until the money runs out), you would be obliged to file for insolvency immediately after the financing round has been completed, simply because you only have eleven months of continuation forecast left. Continuous documentation is essential because, from the moment the obligation to file for insolvency applies (i.e. from the day imminent insolvency exists), you must be able to demonstrate why you did not file for insolvency. To do so, you need:
- Reports showing positive business development
- A business plan that outlines, for example, when new investor funds are expected
- Evidence of acquisition, customer, or investor discussions that make it realistic to expect incoming funds at the projected time
As a managing director, you always carry the burden of proof. You must be able to demonstrate at any time that a positive continuation forecast exists.
Caution when choosing your business partners and investors
Perhaps the most important lesson I learned from my insolvency is to trust your gut when choosing business partners and investors. If possible, do not base your decisions solely on strategic considerations. Personal compatibility matters just as much because in a crisis, you need people who will stand by your side.
At my new venture, I chose to work with people who share my values and with whom I have built a solid foundation of trust. This allows us to work together objectively and confidently, even in difficult times, and to face challenges as a team.
Get help
First of all, false ambition does not help anyone. I only realised this late, because for a long time I did not want to admit to myself that we had failed. In retrospect, it was a stroke of luck that my mentors and a few close friends urged me to seek professional advice. I was then connected with an experienced consultant who made me aware of the seriousness of the situation and initiated the insolvency process with me. He helped me set priorities and focus my actions. This gave me enormous support at a time when it felt as if everything and everyone were working against me.
I have also come to appreciate the role of insolvency lawyers, though it is important to consider when and how to involve them carefully. Insolvency lawyers are often expensive, and they operate under strict legal regulations, which can be particularly challenging in cases of imminent insolvency, as a positive continuation forecast for the next twelve months must be clearly demonstrated.
That is why I believe early consultation is essential. It allows you to be prepared in case of an emergency and helps avoid mistakes during the preparation process. Since insolvency lawyers act strictly in accordance with the law, they help reduce liability risks, but may not always take individual circumstances into account.
This can quickly lead to an obligation to file for insolvency, especially in startups where impending overindebtedness is already an issue.
Knowledge protects
No one likes to hear the dreaded words “obligation to file for insolvency”. But understanding what this means and why it matters is crucial for any managing director.
All managing directors are legally required to file for insolvency with the competent insolvency court within three weeks of becoming insolvent or overindebted. There is no room for discretion. The deadline begins at the moment actual insolvency or imminent overindebtedness occurs and is defined by law. It is not a flexible deadline and cannot be calculated retroactively based on payment terms or outstanding invoices.
Each day this obligation is not met increases your personal liability as the managing director.
Transparency pays off
Especially toward your own team, I always recommend being transparent. During the insolvency process, we had regular team meetings to openly discuss the financial situation and the search for buyers. Of course, we lost employees, and of course, it was understandable that some team members looked for other opportunities. When asked, I even offered to serve as a reference for job applications.
This openness was appreciated by many of our employees. Some of them are now part of my new company.
My conclusion
The insolvency was probably one of the most educational experiences of my life. It might sound strange, but looking back, I am even glad I went through it. Why? It has had a major impact on the decisions I make today. Nevertheless, I would not want to go through it again, and I would not wish it on anyone else.
As tough as it may be for business owners, I now see insolvency law as a good thing. It protects the economic interaction between companies and, ultimately, all of us. For example, it ensures that employees can count on being paid at the end of the month, and that other companies can rely on us to pay our invoices. Otherwise, they may end up facing the risk of insolvency themselves. It was only through this experience that I truly understood the weight of the responsibility I carry as a managing director.
I worked on Agrando for over ten years, and from one day to the next, it was all gone. But insolvency is not the end. No one can take away your experience, your network, or the valuable lessons you have learned. Without Agrando, there would be no EverLeaf today. With EverLeaf, we are profitable, have grown to 180 people, and reached 4 million in annual recurring revenue in less than three years, all without outside investors. And most importantly, many former Agrando colleagues are now part of the team again. That is something I am truly proud of.
Today, I encourage founders to launch their ventures with courage, but also with a clear focus on what truly matters: strong safeguards, regular critical reflection, and a deep awareness of the responsibility you carry toward society.
Read the orginal article: https://www.eu-startups.com/2025/07/insolvency-is-not-the-end-heres-what-ive-learned-from-mine/
