The Luca makers wanted to convert their contact tracking app into a payment service, and investors gave 30 million euros for this. So far, however, the financial start-up has primarily drawn attention to the payment app with aggressive discounts – and has fallen behind on its plan. By Hannah Schwär and Caspar Tobias Schlenk
In mid-October in the upscale Berlin restaurant “Gärtnerei”. The menu includes dishes such as “Truffled Celery Soup” for 12 euros or a king prawn for 34 euros – not cheap food. But for a few months there has at least been the possibility of getting a considerable discount. Between ten and 20 percent can be saved if you use a new fintech app to pay. Around 40 percent of the guests would use the offer, says a waitress when asked. The Luca discount campaign should cost thousands of euros – per evening.
Word has long since got around in Berlin that the Luca app is advertising its new paid service with aggressive discounts. An app that experienced rapid growth during the pandemic because it concluded contracts with the municipalities to track the contacts of people suffering from corona. Rapper Smudo invested in the start-up and toured TV shows to promote the new app. 40 million users are said to have registered, around half used the app once a month, according to internal presentations. It was the success story in Germany in the otherwise so dark Corona year 2021.
A turnover of 100 million euros is within reach
But it wasn’t long before the first doubts about the point and use of the Luca app arose. Many offices did not use the data that often, and criticism of data protection persisted. Eventually, most municipalities canceled their contracts with Luca, and the app lost its functions. The end of a one trick pony?
Patrick Hennig, founder of the Luca app, continued: He convinced financiers such as the controversial financier Target Global and the fintech founders Ramin Niroumand and Julian Teicke to invest a total of 30 million euros (Capital and Finance Forward reported).
The idea for Luca 2.0. was obvious: In the future, restaurant visitors should not only be able to use the well-known QR code to check in, but also to call up the menu, share bills and pay directly via the app. Thanks to Luca, the payment fees for restaurateurs would drop and the waiters would have more time for their guests, according to the sales argument. The start-up earns money from the fees.
The plans that Hennig and his team presented to the investors at the time were big: the team wanted to achieve sales of more than 100 million euros by 2023. With a business that had sales of zero euros at the beginning of this year. This is proven by documents that are available to Finance Forward and with which Luca wooed investors before the financing round in April. The start-up also writes about a leap beyond the German borders in the presentation.
A stark contrast to reality
However, many of the announced plans did not materialize – around a year later. When looking for investors, the company advertised that it could convince new customers with particularly low marketing costs. The start-up presented the “use of the existing user base” as a growth plan for its potential financiers. For this reason, the advertising costs per new customer would only be roughly 70 cents, the company boasted.
However, today’s reality is very different: Of the 40 million user accounts, not a single one was left when the restart took place. “The user data encrypted as part of the contact tracing was earmarked and was completely deleted when the contact tracing ended,” confirmed the company at the request of Finance Forward. The background is a passage in the General Data Protection Regulation: According to this, companies are only allowed to use their users’ data for the initially agreed purposes. If the purpose of an app changes, users must give their consent again.
It was the same with Luca: if you wanted to continue using the app after the relaunch, you first had to revive it with a few clicks. When asked why the start-up advertised so aggressively with its reach, it left open. “As a matter of principle, we do not comment on internal presentations, especially if, as in this case, it is apparently in a non-final state,” said a spokeswoman.
And the discount campaigns of ten to 20 percent for restaurant visits are exceptionally high, even for the fintech scene – instead of the promised 70 cents, customers are now apparently being lured with easy 15 euros on a restaurant bill.
150 restaurants instead of 9200
The growth in the restaurants did not go as planned either. Around 150 locations can be found in the app. According to the business plan, the company should already have 9,200 restaurants by December. Restaurateurs such as star chef Tim Mälzer and Torsten Petersen praised the Luca app as testimonials in the investor presentation. Petersen, who runs one of the largest German chain restaurants with his Enchilada Group, speaks of a “game changer”, Mälzer enthuses about a “new level of personal experience”. In the overview of the restaurants, however, Mälzers and Petersen’s own brands cannot be found to this day. Apparently, the “Game Changer” didn’t convince her herself.
Despite the comparatively small number of restaurants, Luca is likely to process high volume payments with some stores. You don’t even have to register for the app to pay with Luca. After scanning the QR code, customers are redirected to payment options such as Paypal. It is quite questionable whether this model will last for a long time – especially if Luca’s marketing coffers should soon be empty. Because then customers could simply pay directly with a credit card, Girocard or even Google and Apple Pay. Only, unfortunately without the nice Luca discount.
Collaboration: John Hunter
The article first appeared on Finance Forward