Fintech Highlights - 1/16/2024
We apologize for the break in publishing cadence.
The good news? The notepad is full of goodies.
So today and tomorrow we’ll fire it all over - and get back on track on Tuesday 1/30.
Here's what we've been watching for the last couple of weeks 👇
Pinned to the Top
Klarna launched a subscription service on Wednesday that eliminates fees users pay on some purchases and offers extra rewards points and discounts. The service, called Klarna Plus, costs $7.99 per month.
The app is part of the buy now, pay later firm’s effort to get consumers to view it as a shopping portal. Klarna is also working on an automated shopping assistant that will be able to find and purchase items based on a user’s instructions, The Information previously reported.
Klarna appears poised to hold its initial public offering this year. The company’s CEO, Sebastian Siemiatkowski, suggested in an interview with Bloomberg on Tuesday that the company will go public in the near future, though he didn’t offer a specific timeline. Sky News had previously reported that Klarna was preparing to go public as soon as the first half of this year.
The BFD
Global Payments (NYSE: GPN) of Atlanta is considering a takeover bid for Pennsylvania-based rival Shift4 Payments (NYSE: FOUR), per Bloomberg.
Why it's the BFD: Consolidation pressures have returned to the payments tech sector, after a brief respite during the pandemic.
- And Global Payments is no stranger to the buyside, earlier this year acquiring EVO Payments for $4 billion.
Investor reax: Shift4 shares rose nearly 5% on the news, giving it a $5.84 billion market cap. Global Payments shares fell 2.6%, bringing its market cap just below $33 billion.
The bottom line: "Companies such as Global Payments and Shift4 sit at the heart of the digital economy, offering secure channels linking sellers, customers and their banks in exchange for a fee." — Bloomberg
Another BFD (from the Holiday break)
Carta yesterday decided to get out of the secondary stock trading business, as first reported by Axios and then confirmed by company CEO Henry Ward.
The move came just two days after a salesman for Carta, which provides cap table management software for most VC-backed startups in the U.S., was discovered to have used confidential customer data while trying to arrange a private stock sale.
The big picture: This is the right move by Carta, even if borne of scandal.
- The company's main competitive advantage in secondary trading was the customer data that it wasn't supposed to be leveraging for that purpose, thus eliminating that advantage if Carta was acting ethically.
- It also has existing business relationships with most private stock issuers, but the past 48 hours had significantly eroded that goodwill.
- In other words, it no longer had competitive advantage in what's still a small cottage industry with meager success rates. Yes, the margins are sweet — Carta charged 2% of transaction value to both the buyer and seller, per a document obtained by Axios — but the volume is low, particularly since most VC-backed company boards must grant approval.
But, but, but: Just because this was a relatively small business for Carta right now, both it and its investors had high hopes.
- Carta's $8.5 billion valuation was at least in part based on the promise of secondary trading growth, as was its decision to hire a slew of bankers away from Wall Street firms.
- The company's core business may remain stable, particularly now that it's stemmed the PR bleeding, but that's not necessarily what Carta's backers were buying.
Look ahead: There are still a ton of questions left unanswered.
- For example, was this really just one rogue employee or was there a systemic accessing of cap table information? Ward promised his board that there would be an investigation, per a source, but he didn't mention a word of it in yesterday's statement.
- If it was just a rogue employee, how did he access the data? And, if Carta indeed tracks and audits such things, why did it not come to light until an angry founder took to social media?
- What happens to the people Carta hired for this business? And, if being laid off with severance, will they be asked to sign NDAs that would prevent them from chatting with folks like me?
- Ward wrote in his post that "in ten years Carta has never released a data product." Hmmm .... someone had better tell Carta's data product.
The bottom line: A software vendor is nothing without customer trust, and Carta clearly saw the precipice. It just took a giant step backward, but still has a few more to go.
IPO's
Circle, the Boston-based stablecoin issuer that once tried to go public via SPAC, filed confidential IPO papers. The company has raised over $1b from firms like General Catalyst, Goldman Sachs, IDG Capital, BlackRock, Fidelity, Marshall Wace, Bitmain, DCG, and Fin Capital. More here ->
Smith Douglas Homes, a Woodstock, Ga.-based homebuilder, raised $162m in its IPO. The company priced 7.7m shares at $21 (top of range), and will list on the NYSE (SDHC). The company reports $59.5m of net income on around $350m in revenue for the first half of 2023. More here ->
M&A
HSBC (LSE: HSBA) completed the sale of its France retail banking business to Crédit Commercial de France, a unit of My Money Group. More here ->
HSBC (NYSE: HSBC) submitted an indicative takeover offer for Tesco Bank, which also is believed to have bids from Barclays and Lloyds, per Sky News. More here ->
KindCard (OTC: KCRD) agreed to acquire banking platform OpenTransact, a New York-based banking and payments integrator backed by Trousdale Ventures. More here ->
Robinhood (Nasdaq: HOOD) agreed to buy Chartr, a British media startup focused on data visualization and newsletters. More here ->
Obra Capital acquired Unified Life Insurance Co., an Overland Park, Kan.-based carrier with around 100k active policy holders. More here ->
Travelers successfully completed US$435 million acquisition of Corvus, bolstering their cyber capabilities. More here ->
National insurance provider Inszone Insurance Services has successfully concluded the acquisition of LPL Insurance Agency, Inc. (hat tip to Lightyear Capital here) More here ->
Lennar has acquired proptech Veev, which bombed after raising $600M. More here ->
Corsair acquired MJM, a Polish commercial insurance broker, from Posella Ltd. and Solter Capital. More here ->
TA Associates invested in CSI, a Paducah, Ky.-based financial software provider. Centerbridge Partners remains majority shareholder, while Bridgeport remains as a minority backer. More here ->
Great Hill Partners is seeking to sell One, a Folsom, Calif.-based digital payments software provider that could fetch more than $1b, per Fortune. More here ->
Pan-American Life Insurance Group (PALIG) has successfully concluded the acquisition and merger of Encova Life Insurance Company, marking a significant development in the realm of life, accident, and health insurance services. More here ->
Verisk has announced the completed the acquisition of Rocket Enterprise Solutions GmbH, an insurtech provider based in Germany specialising in the property claims sector. More here ->
Fintech
Vestwell, a New York-based workplace savings platform, raised $125m in Series D funding at around a $1b valuation. Vestwell is a digital savings platform redefining the way workplace plans are powered today for the benefit of advisors, employers, and employees alike. More here ->
Backer, an SF-based startup focused on tax-advantaged 529 savings plans, raised $9.5m in Series A funding. The company’s consumer app aims to modernize how families engage with 529 savings plans. More here ->
Pier, a fintech building ‘Stripe for credit,’ has rasied $2.4m. The company wants to provide a way for companies to automate their own credit products. More here ->
Crew, a Lehi, Utah-based banking startup focused on families, raised $2.5m in pre-seed funding. Crew aims to revolutionize banking through a new app built around how families manage finances. More here ->
Payzli, a Tampa, Fla.-based payments company, raised $6m. Payzli provides cloud-based software, point of sale solutions, business management software, web enablement & payment services. More here ->
Fimple, a U.K.-based core banking startup, raised $3.5m. Fimple drives the core functions of the banks and non-banks Fıs. More here ->
Bumper, a London-based auto repair financing company, raised $18m. The startup also secured $30m in debt. It helps owners to pay online, and in-store, or spread the costs over monthly installments interest-free. More here ->
Revfin, an Indian electric vehicle lending startup, raised $14m in Series B funding. Revfin is "an award-winning digital lender, formed to make loans convenient and accessible to financially excluded individuals." More here ->
SalarySe, an Indian credit startup, raised $5.2m in seed funding. SalarySe specializes in developing buy now, pay later (BNPL) products tailored for the salaried class. More here ->
Komunal, an Indonesian P2P lending platform, raised $5.5m in Series A extension funding. Komunal operates a crowdfunding platform in the area of Direct Marketplace Lending that offers financing to business owners. More here ->
Solva, a Kazakhstani provider of working capital to SMEs, raised $20m. More here ->
Conta Simples, a Brazilian expense management and corporate card startup, raised $41.5m in Series B funding. It ended the year reaching breakeven and obtained a license from the Brazilian Central Bank to operate as a "Direct Credit Society." More here ->
Cleva, a Nigerian banking platform that lets users open USD accounts to enable international payments, raised $1.5m in pre-seed funding. More here ->
Prometeo raised $13M (from PayPal, Samsung and more) to bring open banking to Latin America. More here ->
Investtech
Dispatch (fka OneAdvisory), a Miami-based RIA software provider, raised $8m in seed funding. Dispatch is a wealthtech data orchestration company, which works to sync client data across the advisor’s tech stack and to free wealthtech companies from the burden of continually building and maintaining integrations.More here ->
Zilo, a British provider of asset and wealth management software, raised £25m in Series A funding. Their global transfer agency system is purpose built for custodians, asset managers, transfer agents, ACDs, and their customers. More here ->
AbbeyCross, a London-based wholesale FX platform, has raised $6.5m in seed funding. More here ->
Grip Invest, an Indian fixed-income investment platform, raised $10m in Series B funding. More here ->
Crypto
Umoja, an Atlanta-based DeFi startup, raised $2m. Umoja is advancing a DeFi’s first asset risk management primitive – enabling anyone to insure their market losses just as hedge funds would.More here ->
Finoa, a German crypto custodian, raised $15m. Finoa "fulfills the high standards of operational security and anti-money laundering practices expected of regulated financial institutions." More here ->
Insuretech
🚑 Devoted Health, a Waltham, Mass.-based health insurtech focused on Medicare Advantage, raised $175m in Series E funding. Devoted Health is a healthcare company serving seniors and giving them a health care plan with personal guides and world-class technology. More here ->
Rainbow, a small-business insurance underwriter, raised $12m in seed funding. More here ->
Lemonade has officially introduced its car insurance product in Washington, marking the seventh state where it is available. More here ->
Hi.health, a Vienna-based health insurtech, raised €6m in pre-Series A funding from SpeedInvest and Calm/Storm. More here ->
DigitalOwl has raised US$12 million investment from Reinsurance Group of America, Incorporated (RGA), a leading global life and health reinsurer. More here ->
hyperexponential has raised US$73 million in capital in its Series B funding round. The company enables clients to “achieve superior combined ratios with hx Renew – the only rating engine that moves at the speed of our market." More here ->
Korr, a New York-based insurance management platform, raised $3.2m in seed funding. More here ->
Proptech
Here, a fractional short-term vacation rental marketplace we first reported on in 2022, has shut down its investment platform after just over two years of operation. More here ->
Downpayments, a real estate fintech with the mission of helping investors purchase new properties with interest-free down payments, has rasied a round. More here ->
And….have a look at Overmoon, which also has a unique model that is a hybrid of Airbnb and hotels — but with the best of both worlds. More here ->
From the Stash
SEC Approves Spot Bitcoin Exchange-Traded Products - The Securities and Exchange Commission on Wednesday granted approval to several spot bitcoin exchange-traded products after a lengthy battle with cryptocurrency companies. The approval means institutions and the general public will now be able to invest in the popular cryptocurrency more easily. More here ->
Thoma Bravo-Owned MeridianLink Lays Off 9% Of Employees - Thoma Bravo-backed MeridianLink, which sells software to financial institutions like regional banks and credit unions, is laying off 9% of its staff, according to a regulatory filing Thursday. The cuts followed a sharp slowdown in MeridianLink’s revenue growth and a 69% drop in its operating income in the first nine months of last year. More here ->
Deal Dive: A Stripe secondary deal worth paying attention to: There apparently has been a flurry of buyers looking to get shares in the company in recent months. More here ->
Top payments trends for 2024 - Industry experts predict adoption of real-time payments as well as the increased use of FedNow and digital wallets in 2024 as consumer demand for instant payments continues to grow. “We are now seeing a major shift in this direction for real-time payments and can expect to see this continue into 2024,” More here ->
Bank of America adds data insights to CashPro - Bank of America added data insights to its CashPro platform as corporate and commercial clients asked for real-time treasury management functionality. CashPro is Bank of America’s global digital banking platform and is used by more than 40,000 commercial and business clients, Jennifer Sanctis, managing director and CashPro product executive at Bank of America, told Bank Innovation. More here ->
Citizens Pay innovation pipeline 2024 - Citizens Financial Group’s Citizen Pay is developing a new product offering to further enhance the platform’s ability to facilitate secure transactions as demand for contactless payments and digital wallets continues to tick up for e-commerce. The $226 billion bank’s Citizens Pay platform allows business clients to finance large purchases through a combination of buy-now-pay-later offerings. More here ->
Mitra Chem looks to Arc’s financing marketplace for debt financing - Digital bank Arc launched a venture debt financing platform to fill a gap in the market that surfaced during the 2023 banking crisis. When Silicon Valley Bank collapsed in March, the venture debt marketplace was left underserved, which “unlocked this market opportunity for [Arc],” Chief Executive Don Muir told Bank Automation News. More here ->
Arc wants to make venture debt popular again: Arc is taking on the $30 billion venture debt industry with a new marketplace for startups. More here ->
GenAI could make KYC effectively useless: There’s no evidence that GenAI tools have been used to fool a real “know your customer” system — yet. But some relatively convincing deepfaked ID images are cause for alarm. More here ->
More from the stash:
Alex Johnson
Louis Thompsett
Anna Hrushka
PYMNTS
Reports / Webinars
PLAID - 5 things fintech users want you to know - What do people want from your fintech app? We spoke to thousands of consumers so you don’t have to. From building trust to AI to payments, stay tuned for bite-sized insights over the next few weeks.
11:FS - How has the world of payments evolved - In this episode of Spotlight, 11:FS’ David Barton-Grimley sits down with Abdulaziz Al Jouf, CEO & Founder of PayTabs Group, to discuss the challenges of expanding a payments company internationally and how transformative it can be for a country when they get it right.
11:FS - Our 2024 fintech predictions - As we kick off the new year, 11:FS CEO David Brear is joined by fellow 11s Kate Moody and Ross Gallagher to predict what 2024 has in store for fintech, covering everything from financial wellbeing to big money acquisitions.
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