Fintech Highlights - 4/27/2022

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Breaking News

Robinhood to lay off 9% of full-time employees — techcrunch.com Robinhood’s layoff announcement comes days before the company is expected to report its Q1 2022 financial performance.

Pinned to the Top

William Hockey in 2012 co-founded Plaid, a fintech company that's since raised over $700 million and was recently valued at $13.4 billion. Now he's back with a new startup called Column, but doesn't want any venture capital investment.

• Hockey stepped down as Plaid's president and chief technology officer in 2020, but remains on its board of directors.

Why it matters: Hockey has seen hypergrowth up close, and thinks there may be a better way.

"One of the terrible things Silicon Valley has done is convince founders that the only way to build a big company is by raising lots of money and hiring people constantly," Hockey tells me. "And it can cloud your perspective, like it maybe did with Fast, because you think you've made it just because you have VC money, even if you don't have many customers paying you."

• Hockey continues: "I can't go buy a $5 billion company, but I don't think that inhibits our growth. In many ways, it makes us go faster and be more aggressive because we don't have a giant cash cushion to fall back on."

What it does: Column, which Hockey co-founded with his wife Annie, is banking infrastructure for fintech apps.

• It bought a nationally chartered bank called NorCal for around $50 million last year and has been rebuilding its core tech from scratch — quietly going live around six months ago as an alternative to middleware providers and core processors, for fintechs or shadow banking firms that are otherwise prohibited by Fed rules from providing banking services to users.
• Hockey claims the company is already profitable, with clients like Plaid, Brex and Oxygen. It has around 65 employees.

As an aside: Neither co-founder sounded too concerned about the potential complications of a spousal founding team, arguing that their incentives are inherently aligned.

• "We've known we wanted to start a company together since the beginning of our relationship," Annie Hockey says. "Our weekend hikes were filled with ideating companies and ideas."

The bottom line: Column is a bet not only on the future of fintech, but also on the future of unicorn creation.

The BFD

N26’s challenges with AML compliance seem to be continuing.

In 2021, the Germany-based neobank paid a ~$5 million fine and agreed to an order limiting it to opening 50,000 new accounts per month.

And now...it is threatened with new trouble: customers are outraged because their N26 account was terminated abruptly.

No transfers, no cash withdrawals: The Handelsblatt is aware of 40 cases of users based in Germany who have not had access to their accounts since last Thursday. There are also numerous complaints from customers in France and Italy on Twitter.

N26 seems to be cleaning house by aggressively closing customer accounts, citing “irregularities” or suspicious transactions. While some users have been able to recover the funds in their closed accounts, many received emails with a request to “send proof of the origin of funds through appropriate receipts.”

M&A

Robinhood agreed to buy Ziglu, a British electronic money institution and cryptoasset firm that raised over $40M from crowdfunding and firms like Bigspace Investments and Seedrs. www.ziglu.io

WonderFi, a Canadian DeFi firm backed by Shark Tank celeb Kevin O'Leary, agreed to buy Toronto-based crypto trading platform Coinberry for $38.3M in stock. The deal will put about one-third of Canadian registered crypto trading platforms under its wing with more planned acquisitions to come

Featured Fintech

Braid is a group-financing platform that aims to untangle pooling money with friends. Founded in 2019, group-financing platform Braid is trying to make transactions work for various entities, from shared households to side hustles to creative projects. It recently launched a new twist on consumer payment links: People can set up a Braid Pool around any effort — a fund for this summer’s Italy trip, shared car gasoline expenses, or a kitty to put toward monthly book club snacks — and then send a link to friends who want to put cash in. More here ->

Embedded Fintech

OneVest, a Canadian embedded wealth management platform for fintechs and financial institutions, raised C$5M. Through its newly launched, turn-key “wealth-as-a-service” platform, the company claims that OneVest’s financial services industry customers can bring digital investing experiences to consumers “in a matter of weeks.” More here ->

Fintechs

Copper, a Seattle-based banking and crypto investing app for teens, raised $29m in Series A funding. Coppermhas attracted more than 800,000 users in less than three years.  More here ->

Welcome Tech, a startup aiming to build “an operating system” for immigrant families in the U.S., has raised $30 million in new capital to help these individuals not only adjust to but feel comfortable and “thrive” in their new environment. More here ->

Stem, an L.A.-based distribution and payments platform for musicians and labels, raised $20M. Stem says that the new round of investment will help fund the next phase of its growth as it launches a “range of tools to artists and labels who want to gain greater control and transparency in their finances, no matter who they choose as a distribution partner”. More here ->

NovoPayment, a Miami-based full-stack banking API provider founded in 2007, raised $19M. NovoPayment had been bootstrapped since inception until it raised its Series A round earlier this year. More here ->

Ellis, a neobank for international students studying in the U.S., raised $5.6M in seed funding. Ellis works by collecting basic documents, like a passport, Form 1-20 or DS-2019, and then using the information to give immigrants a phone plan, international checking account and a debit card before they move to the U.S. The same information is also used to create an immigration profile that automates all paperwork, including applying for a Social Security card, filing non-resident tax returns, building credit profiles, renewing visas and petitioning for work authorization. More here ->

MetaLend, a Santa Monica, Calif.-based web3 banking startup, raised $5M in seed funding. Led by Sudjeev Singh and Nikhil Bhardwaj, MetaLend is the bank of the new digital economy—currently enabling users in the GameFi sector to take out loans by using their NFTs as collateral. More here ->

Fi, an Indian neobank, is in talks to raise around $100m at a $700m valuation. Fi is a two-year-old startup consisting of payments and other consumer tech executives from Google, Netflix and PayPal. More here ->

Union54, a Zambian card issuing startup, raised $12m in new seed funding. Union54 founders launched the company last year when they went through painstaking processes to issue debit cards for their previous startup and challenger bank, Zazu. More here ->

Kinara Capital, an Indian MSME fintech, raised $50m in Series E funding. Kinara offers both a fully digital process with its myKinara app and doorstep customer service with 110+ branches serving small business entrepreneurs across 90+ cities in India. With the advanced use of AI/ML, the company’s vernacular-friendly myKinara app can take MSME applicants from loan decision-to-disbursement within 24-hours. More here ->

Abhi, a Pakistani financial wellness startup, raised $17m in Series A funding. Abhi has teamed up with two of the biggest banks in Pakistan – United Bank Limited and Bank Alfalah – and has also expanded its product offering to business financing, meaning it is now B2B and B2C. More here ->

Zenda, a UAE-based school bill payment startup, raised $9.4M in seed funding. Through its app, Zenda allows parents to pay fees directly to schools, all while streamlining collections by enabling schools to accept and manage payments online. More here ->

Financepeer, an Indian educational and P2P lender, raised $31M. Founded in 2017, Financepeer caters to both offline and online education providers including pre-schools, K-12, colleges, universities, offline test prep, ed-tech, and skilling. The company currently engages with around 3 million students and has around 130,000 transactional customers on its platform. More here ->

Crypto

EPNS, a decentralized communication layer for crypto, raised $10.1M. EPNS is a Web3 communication protocol that aims to enable on-chain communication. The project also helps users receive push notifications for alerts like Ethereum Naming Service (ENS) domain expiration, vault liquidation on Oasis and various on-chain snapshots among others. More here ->

Flipside Crypto, a Boston-based blockchain analytics startup, raised $50m at a $350m valuation. More here ->

Hedge, a lending protocol on the Solana blockchain, raised $3.7M. Hedge is a DeFi platform that enables instant, interest-free loans in Hedge’s stablecoin, USH, on Solana. The site will allow users to borrow up to 90% loan-to-value ratio, meaning borrowers only need to deposit 10% of the total value desired in order to receive a loan.  More here ->

Insuretechs

🚑 Sika, a New York-based startup focused on FSA/HSA payments, raised $6.2m in seed funding. Sika's customers are companies that sell health-related products but struggle to capture customers' FSA and HSA dollars because of the multitude of pain points associated with the process. More here ->

TheGuarantors, a New York-based rental property insuretech startup, raised $50m in Series C funding.  The company offers two flagship products that help to create a smart, fair, and human rental experience for customers: 1) Lease Guarantee allows renters access to the homes they might not otherwise qualify for, and 2) Security Deposit Replacement acts as a direct and highly affordable substitute to a cash security deposit. More here ->

Proptech

Leasecake, an Orlando, Fla.-based provider of lease and location management software, raised $12M in Series A funding. Leasecake allows tenants, brokers and landlords to manage location-related services, from lease management and lease accounting to insurance agreements and franchise operations. Leasecake’s platform provides centralized access to lease and location information, integrating data from multiple sources to serve as a single source of truth for organizations on both sides of the market. More here ->

PropertyAxe, a San Antonio based startup that "speeds up homeowners' ability to protest property taxes" - has recently emerged from beta. The service's software compares the value of other homes in the area and uses data to help customers develop a more appropriate tax evaluation. More here ->

From the Stash

Fintech Roundup: The gloves are off in the spend management space — techcrunch.com If it feels like we’ve been over-indexing on expense/spend management news, it’s because there has just been so darn much of it.

Bank of America bumps up tech initiatives budget to $3.6B — bankautomationnews.com Bank of America did not shy away from technology during its first-quarter earnings presentation today. Photo by Bloomberg Mercury Digital metrics were strong for the $3.24 trillion bank, reflecting successful technology investments and a bankwide drive toward digitization. The Charlotte, N.C.-based banking giant has spent heavily on technology over the past 12 years, and chief

Goldman Sachs’ tech and communication spend climbs 13% YoY — bankautomationnews.com Goldman Sachs spent $424 million on technology and communications during the first quarter, a 13% year-over-year increase and 1% decrease from the fourth quarter of 2021. Photographer: Nicky Loh/Bloomberg Quarterly non-compensation expenses at the $1.6 trillion bank were $3.6 billion, up 7% YoY thanks to continued investments, “particularly in technology,” that will enhance its infrastructure

Reports / Webinars

The Fintech Effect: Fintech’s Mass Adoption Moment | Plaid — plaid.com Fintech has now reached mass adoption–with 88% of U.S. consumers now using digital apps and services to manage their finances. Download Plaid's latest report.

FT Partners: Q1 Insights Report — ftpartners.docsend.com

Fintech-focused investment bank FT Partner’s Q1 insights report is out, building on its month-to-month analysis. Definitely worth a skim for those looking to understand broader trends in fundraising, liquidity events, and M&A activity in fintech.

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