Fintech Highlights - 11/28/2023
Setting youth up for a better financial future. Wise is winding up in Austin. Alphabet "bets" on Monzo. And more. Here's what we've been watching this week 👇
Pinned to the Top
Good credit is not easy to come by, which is why some fintech companies have focused on setting children and teenagers up to succeed in this area.
For example, in August, Greenlight launched its Greenlight Family Cash Mastercard.
Now Step has one.
CEO CJ MacDonald tweeted late last week that the company launched Step Black, a rewards card for the Gen Z set to build credit without debt. Via email, MacDonald touted that the card is the “world’s first secured Visa Signature rewards card” and amassed a waitlist of over 100,000 in the past two months.
It is a 17-gram metal card with features like no minimum credit limit, $500 in annual perks and up to 8x cash back. Step announced in May a 5% interest rate on its savings account, and Step Black holders will also get that rate up to $1 million FDIC-insured.
The BFD
In case you hadn’t heard, Wise — which is known for facilitating cross-border payments — is doing pretty well these days. It recently reported that revenue grew 22% year-over-year in its fiscal second quarter — to about $314.7 million. It also saw its income climb by 51% year-over-year to about $420 million. With 16 million customers, Wise has been profitable since 2017, well before it went public in 2021.
The company has over 5,000 employees globally, 180 of whom are located in Austin, where it’s looking to boost its headcount by 50% over the next 12 months.
What's creating this success? Interestingly, Wise believes that part of the company’s success lies in the fact that it’s “never given its product for free.”
“We believe charging for your product is something you have to do — even if it’s $1,”
In addition - Wise has grown over time by moving beyond facilitating cross-border transactions to giving users the ability to hold/spend/send funds across the world.
“Now you can hold 50 different currencies at Wise, and it operates like an account product basically,” CEO Harsh Sinha said recently. “You can get your salary paid into it; you can pay your bills from it, you can do direct debits. And basically the proposition is for anybody who lives in multiple currencies that has an international lifestyle.”
He also touted the speed of Wise’s offering.
“An example of the way we move money around the world — you can do a transfer from us to Australia, and it will hit the recipient account in less than 20 seconds. I will challenge you to do that with ACH today,” Sinha said. “And we’ve done this by building a network which connects directly to local payment systems around the world. And 57% of our payments now on the network are instant, less than 20 seconds.”
Another BFD
Alphabet is expected to make a £300 million investment into UK challenger bank Monzo via their growth fund, Capital G. More here ->
This will boost Monzo’s valuation to £4 billion, a long way from the pandemic lows of £1.1 billion, and give Alphabet a sizeable stake in one of the UK’s biggest banks.
Tell us more: There’s a lot going on at Monzo. It recently announced the creation of a UK holding company, as speculation mounts of its imminent IPO.
Now, rumours are circulating that Alphabet is about to inject at least £300 million into the bank. This has been tapered back from a reported £500 million a week ago.
For context, Monzo has had over 20 funding rounds in its 8-year existence with the most recent coming in 2021 where it raised £500 million, but this is one of the most high-profile investments to date.
What's Next: It could just be a straightforward investment for profit move from Alphabet, looking to pounce in a year when Monzo has passed the 8 million customer mark and made moves to expand into the US market. But the daydreamers out there will be pondering the potential collaboration between the UK’s biggest digital bank and one of the world’s biggest tech firms, generating some exciting hypotheticals.
This strategic move by Capital G to potentially lead the investment underscores the growing interest in fintech solutions and digital banking platforms that have disrupted traditional banking services by offering user-friendly, tech-driven financial services.
M&A
Blackstone is in pole position to acquire a $17b portfolio of commercial property loans from bankrupt Signature Bank, via an FDIC sale process, per Bloomberg. More here ->
Barclays (LSE: BARC) is considering an acquisition of Tesco's (LSE: TSCO) banking unit, per Reuters. More here ->
First Financial (Nasdaq: THFF) agreed to buy Tennessee-based SimplyBank for $73.4 million in cash. More here ->
Figure, the fintech company led by former SoFi CEO Mike Cagney, is prepping an IPO for its lending arm at a valuation of between $2b and $3b, per Bloomberg. More here ->
Petal, a New York-based credit card startup valued by VCs like Valar Ventures at $800m in 2022, is seeking a buyer, per Fortune. More here ->
TPG is seeking to sell its 35% stake in Singapore Life Holdings (Singlife) at around a US$3b enterprise value, per Bloomberg. More here ->
Vencora, a Toronto-based fintech acquisition platform, agreed to acquire Crealogix (Swiss: CLXN), a Swiss banking software provider, for $95m. More here ->
Bullish, a crypto exchange led by former NYSE president Tom Farley, acquired crypto media outlet CoinDesk from Digital Currency Group. More here ->
Fintech
Tanda, the platform that provides financial resilience and community ties through collective savings, has raised a $4.5M seed round. Tanda uses the Rotating Savings and Credit Association model and goes a step further to offer the service to small businesses as a way to retain employees, reduce turnover and minimize burnout. More here ->
Kiwi, an Indian credit card fintech, raised $13m in Series A funding. Kiwi aims to become a leading issuer of RuPay credit cards by leveraging the Credit on UPI feature introduced by the National Payments Corporation of India (NPCI). More here ->
Knight Fintech, an Indian banking tech startup, is in talks to raise $25m led by Accel, per the Economic Times. Knight FinTech offers an AI enabled Treasury Management and Credit Assessment Platform for banks and financial institutions. More here ->
Phare Health, a London-based developer of hospital finance software, raised £2.5m in seed funding. he company develops AI products to help hospitals better understand the state of their finances and have better intelligence on costs and cash flow. More here ->
Fence, a Spanish provider of debt management software, raised €1.8m in pre-seed funding. Fence is a SaaS platform to automate debt facility operations like reporting and payments between lenders and borrowers. More here ->
Auquan Ltd., a startup that offers an artificial intelligence-powered analytics engine for financial services companies, said today it has closed on a $3.5 million seed funding round. The startup has ambitious plans to help financial services providers make sense of the vast amounts of unstructured data they deal with. More here ->
Happy Money, a provider of personal loans, announced that TruStage Ventures and others are entering into a “strategic transaction” to help fund the next phase of Happy Money’s growth and advance the company’s mission. The company added that this TruStage-led strategic transaction will enable a path to profitability. More here ->
Investtech
Panoptic, a DeFi protocol for perpetual options, raised a $7m seed round. Panoptic protocol is an innovative perpetual options protocol deeply integrated into the DeFi ecosystem, designed to surmount the various technical limitations and obstacles faced by existing on-chain options protocols. More here ->
Proptech
Craftwork, a Charlotte, N.C.-based home services platform, raised $6m in seed funding. Less than a year into formal existence, Craftwork is working to make home services jobs like painting or home repairs easy to plan and order, while maintaining pricing transparency and quality More here ->
Dwellsy’s consumer-first rental search earns $11.5M seed round Dwellsy is the largest residential rental listing marketplace in the U.S. More here ->
From the Stash
Fintech funding: Mega rounds increase 50% QoQ - Global fintech funding dropped marginally in the third quarter sequentially, but deals worth more than $100 million substantially increased as funding remained below 2019 levels. As global fintech funding reached $7.4 billion in Q3, it was down 46% year over year, according to CB Insights’ State of Fintech Q3 report published last month. More here ->
Ramp’s new integration with Copilot - Microsoft’s brand of generative AI technologies. The spend management company said that now, Microsoft Teams users can use natural language to access Ramp’s smart AI assistant from their workspace. More here ->
Other items we are reading:
Alex Johnson
Mark Matousek
Emily Mason
Matt Egan
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