The German fintech CM Equity offers fintechs a platform for crypto trading. In 2021, founder Michael Kott (LinkedIn) did decent business with it – and rewarded himself with an unusually high bonus of €7.5 million.
High earnings are ordinary among managers in the startup scene, especially in finance. According to the European Figures. Figures. hr, database, which calculates average gross annual salaries depending on the industry and position in a startup. C-level representatives in fintechs can earn around €125,000 in 2023. This includes the base salary and fixed bonus payment.
How much CEOs and founders are paid depends on their success, growth phase, startup location, and calculations.
However, as a fintech founder, paying a bonus of €7.5 million out of a total profit of eleven million euros can raise doubts. That’s precisely what Michael Kott, CEO of Munich-based banking platform CM Equity, did after the end of the 2021 financial year, according to a report in the industry magazine Finance Fwd. Kott did not want to comment on the reasons. Nevertheless, the case remains unusual: How is such a thing possible?
As a financial services provider, the Munich-based company earns money similar to Solaris by providing other fintechs with digital infrastructure for investment transactions and cryptocurrency trading. Through the platform, customers of neo banks like Vivid gain access to equity and crypto tokens, digital capital stored in a decentralized manner on a blockchain. In the process, customers do not become shareholders of the securities but receive dividends through the purchase of partial actions. Thus, private investors handle their investments via CM Equity, but the banks appear as intermediaries to the outside world.
Most recently, the Munich-based company worked strategically with the world’s largest crypto exchange Binance, with the now insolvent bitcoin trading venue FTX, and with Volksbank Raiffeisenbank Bayern Mitte, in addition to Vivid. To that end, the fintech, founded 20 years ago, holds several banking licenses in Germany. According to Finance Fwd, Kott‘s company could turn over three million euros through financial services in 2021, most of which as a licensor for customers without a license.
His investments explain how Kott ended up with a profit of eleven million euros. According to Finance Fwd, the former banker invested in Li-Cycle, a manufacturer of lithium batteries from Canada. This company went public via a Spac deal, which brought CM-Equity large profits. Kott relies less on external investors; he owns around 90 per cent of his company.