Fintech Highlights - 3/7/2023
Coinbase buys One River. SVB has a tough week. Varo raises a down round. Here's what we're watching this week.. 👇
Sorry we're late this week. That’s on us. We’ll do better on March 14 :)
Pinned to the Top
Crypto exchange Coinbase said on Friday it has bought One River Digital Asset Management, a crypto asset manager for institutional investors.
It’s Coinbase’s latest bid to build out more stable sources of revenues as crypto trading has plunged.
Coinbase did not disclose the terms of the deal. One River will operate as a wholly-owned subsidiary of the crypto exchange as Coinbase Asset Management, and One River’s founder Eric Peters will serve as the unit’s CEO and chief investment officer. One River was valued at $186 million in 2021 when it raised money from Coinbase and Goldman Sachs, according to Bloomberg. Coinbase ended 2022 with $5.5 billion in cash and cash equivalents.
Revenue that isn’t directly tied to Coinbase’s trading volume, which tends to rise and fall along with crypto prices, has become more important for the crypto exchange. Total subscription and services revenue, which includes staking services, custodial fees, and interest income, accounted for nearly 47% of revenue in the fourth quarter of 2022, up from less than 9% one year prior. Asset managers typically charge fees based on the funds they oversee, which makes their business less volatile than trading. Coinbase said in February that it aimed to stabilize its financial performance, setting its sights on “positioning the company to generate adjusted Ebitda in all market conditions.”
THE BFD
SVB Financial shares cratered more than 60% yesterday after the company, which caters to the venture capital industry through Silicon Valley Bank, announced a plan to raise over $2 billion in fresh capital.
- Following on the heels of today's liquidation announcement by crypto-friendly bank Silvergate Capital, SVB's move further demonstrates the risk to banks in a rising rate environment.
Between the lines: In an attempt to avoid a bank run, SVB CEO Greg Becker sought to reassure venture clients on a call today about the bank's health, TechCrunch reported.
M&A
Elevate Credit, a Fort Worth-based provider of online credit solutions, was acquired by Park Cities Asset Management for $67M. The company went public in 2017 at a valuation of $257M. More here →
Fintech
Varo, the SF-based neobank with a national charter, is raising $50m led by Warburg Pincus at a $1.9b valuation (down from $2.5b in mid-2021). More here →
Candidly, a New York-based student debt and savings optimization platform, raised $20.5m in Series B funding. Candidly, previously known as FutureFuel, partners with entities, including employers, financial institutions, retirement and wealth management firms, to embed artificial intelligence-driven student debt and savings optimization products into employee benefits engines. More here →
Pagos, a Hermosa Beach, Calif.-based payment intelligence infrastructure startup, raised $34m in Series A funding. Made up of payment experts with backgrounds from Braintree, PayPal and Stripe, Pagos turns disparate digital payments data into actionable insights without requiring customers to change their payment processors. More here →
Quantifind, a Palo Alto-based provider of financial crimes risk management software, raised $23m. The company enables banks to maximize their risk screening and investigations performance, realize 40% productivity gains, and focus the talents of their teams on the highest risks. More here →
Archway, a Seattle-based banking platform for community and regional banks, raised $15m. The company helps “banks across the U.S. control their journey and create innovative digital services in weeks, not years.” More here →
Marco, a Miami-based trade finance platform for LatAm exporters, raised $8.2m in equity funding. The company is building technological products and& infrastructure to abstract away the complexities of pricing risk and accessing liquidity for SMEs. Marco processes payments, runs marketplaces, detects fraud, and helps entrepreneurs access liquidity for their business from anywhere in the world. More here →
Growfin, a finance CRM for B2B companies, raised $7.5m in Series A funding. The company offers “accounts receivable software purpose-built for streamlining and automating receivables process across teams, collaboratively.” More here →
Ramp, a London-based provider of forecasting analytics for finance teams, raised $5m in seed funding. The company focuses on “automating revenue forecasting, at unmatchable speeds and accuracy.” More here →
Abound, a British open banking startup, raised £500m in equity and debt funding. Abound’s technology combines open banking data and machine learning algorithms to build what Abound believes is a better “credit score” for applicants. To complement its direct-to-consumer offer in the U.K., Abound also plans to expand as a B2B service in Europe, which has been building out its own open banking framework, PSD2. More here →
Insuretech
Highway Benefits, a Manhattan Beach, CA-based provider of an employee benefits platform, raised $3.1M in Seed funding. Highway Benefits provides an employee benefits platform that makes it easy for employers to make tax-free contributions directly to their employees’ student loans. More here →
Equisoft, a Montreal-based provider of insurance and investment software, raised C$125m. The company partners with customers to solve problems of the wealth management and insurance variety. Equisoft’s core offering is centered on back office and policy administration tools for life insurance customers, but the company also sells frontend solutions to complement its bread-and-butter software lineup. More here →
Born of drone tech, insuretech Flock raises $38M Series B to nudge commercial drivers towards safety. Flock says its use of telematics allows customers to understand risk and identify high-risk drivers and routes. This helps them reduce crash frequency by as much as 10%. Thus safer driving is then rewarded with lower insurance premiums. More here →
From the Stash
Remitly is closing Passbook, the immigrant-focused digital banking platform it launched in 2020 - CEO and co-founder Matt Oppenheimer announced during the fintech’s fourth-quarter earnings call last week, citing the firm’s mission to narrow its focus on core customers. More here →
BMO advances digital strategy in Q1 - BMO Financial Group continued to enhance its digital strategy in the first quarter of 2023 via new digital card options, investment in AI capabilities and other automated solutions. More here →
February’s 10 top rounds: Real estate and AI startups score big - February may be the shortest month of the year, but it can still fit in some large rounds. Six startups raised a quarter-billion dollars or more, with artificial intelligence helping push some big numbers. Dreamscape and SandboxAQ lead the way. More here →
This New York Times article does a great job of examining how buy now, pay later may be a “victim of its own success.” -“The industry is now facing an existential crisis, as profits remain elusive, valuations plummet, competition increases and regulators ask tough questions about the lending practices behind B.N.P.L.” More here →
Twitter is working to introduce payments on the social media platform and has begun applying for regulatory licenses - New boss Elon Musk is pushing Twitter to create new streams of revenue as it faces a drop in advertising income, following his $44-billion takeover of the company in October.” More here →
Apple Pay Later service - that Apple has in the works is set to launch ‘soon.’ More here →
First Fidelity Bank, Episode Six launch BaaS solution - Oklahoma City-based First Fidelity Bank launched a banking as a service solution (BaaS) Tuesday in development with global payments and banking infrastructure fintech Episode Six. The solution supports embedded finance with low cost, quick to deploy architecture and real-time payment offerings. More here →
Citigroup Cuts Hundreds of Jobs, Including in Investment Banking and Mortgage Units - The cuts amount to less than 1% of Citigroup’s 240,000-person workforce, according to people familiar with the matter, who asked not to be named discussing personnel information. Staffers across the firm’s operations and technology organization and US mortgage-underwriting arm are also among those affected. More here →
Klarna the Swedish payments giant revealed that despite a large ($1 billion) operating loss in 2022, it expects to return to profitability this year. - The news around Klarna has been negative for some time. “Now that we have the company’s financial data, we can take a more detailed look at how it performed amid all the noise.” More here →
DoorDash is launching its first-ever credit card with Chase. The DoorDash Rewards Mastercard will provide cardholders the opportunity to earn cash back on delivery and every other purchase made with the card…The launch of the new credit card indicates that DoorDash is looking for ways to drive customer loyalty and keep its platform at the forefront of its users’ minds. The move also gives DoorDash the ability to offer additional perks for users while opening up new revenue streams.” More here →
Hatch Bank was hacked - the digital-first bank that provides infrastructure for fintech companies offering their own brand credit cards, confirmed hackers exploited a zero-day vulnerability in the company’s internal file transfer software that allowed access to thousands of customer Social Security numbers.” More here →
Citi, Walmart launch digital lending for suppliers - Citi is partnering with retail giant Walmart to offer digital lending platform Bridge, that will connect the retailer’s 10,000 U.S.-based small business suppliers with lenders. The $1.7 trillion bank will give suppliers access to a single loan request form that will connect them with 70 lenders that could provide loans up to $10 million - More here →
Reports
Innovation in the homebuying space has been slow, but the opportunity is massive
There's an estimated $200 trillion of residential property value worldwide with people spending more than ever on the biggest purchase of their lives. Despite the potential, a combination of legacy tech, regulatory hurdles, and complex processes have got in the way of innovation and solving customer's problems.
In this breakthrough report, brought to you by the experts in the 11:FS Ventures team, we put the homebuying process under the microscope and start answering the big question: how do we fix it?
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