Fintech Highlights - 4/9/2024
Deals and deal size in fintech. Ryan Reynolds has another exit. Smartpay raises a round. Here's what we've been watching this week 👇
Pinned to the Top
Flipkart co-founder Sachin Bansal is in talks to raise capital for his new startup, Indian fintech Navi.
Bansal is talking to investors to raise at a valuation of around $2 billion, three sources familiar with the matter told TechCrunch. One source said he is looking to raise between $200 million and $400 million.
Bansal has largely self-funded Navi up to now, and this would be the Bengaluru-headquartered startup’s first large outside fundraise since it was founded in 2018. More here ->
The BFD
Fintech-focused venture capital firms shouldn't sleep on $300- to $400 million acquisitions if they want to maximize returns, Restive Ventures says in a new data report.
Why it matters: The conventional narrative in VC is often focused on headline-grabbing, multi-billion dollar IPOs.
What they're saying: "There's this archetypal VC fund — 'we're only gunning for blockbuster IPOs or bust' — and I think this archetype struggles if they only allow for that," Restive Ventures partner Cameron Peake tells Axios.
- For funds of the right size and structure, merger and acquisition deals of a few hundred million can unlock a lot of returns.
By the numbers: The fintech sector has 10 times as many large M&A deals ($50 million+) as IPOs, according to Restive's findings.
- Since 2018, large fintech M&A transactions have averaged $403 million. Without counting 2020 given its unusual activity, the average is about $339 million.
- The median acquisition price was $193 million.
- One-third of the top 100 software acquisitions over the same period were of fintech companies, as were 20% of the top 10 acquisitions.
Zoom in: "We're at the pre-seed and seed stage, and even there, the discipline needs to be there," says Peake.
- "I'll often see founders try to optimize for the highest valuation that they can and I don't think that's always in their best interest," she adds.
- Raising too much capital at an overly high valuation could put these acquisition opportunities out of reach.
- She points to portfolio company Power Finance, which sold last year to Marqeta for $275 million but had only raised about $16 million in total funding. That's one example of great investment returns in a deal of this size.
Between the lines: Peake points to the diversity and breadth of acquirers as one explanation for the robust fintech M&A activity.
- It's creating a marketplace for these acquisitions, she says.
Yes, but: Getting $1 billion+ exits is still what Sheel Mohnot, Better Tomorrow Ventures' general partner, needs to make the math work, even as a seed investor with a $150 million fund.
- That's partly because liquidation preferences impact the cash that early investors like him get from exits.
- Still, he adds that these acquisitions are great because they typically happen sooner in a company's life. And in turn, this means getting capital back to limited partners sooner.
What we're watching: Mohnot predicts there will be more fintech IPOs (or PE exits) as the regulatory environment prevents or discourages some acquisitions.
M&A
🍁 Advent has purchased Ryan Reynolds-backed payments firm Nuvei for $6.3bn. More here ->
Linqto, a San Jose, Calif.-based investment platform for private companies, agreed to go public at an implied $700m valuation via Blockchain Coinvestors Acquisition (Nasdaq: BCSA), a SPAC that previously had agreed to buy asset digitization company Qenta. More here ->
Brera Partners bought a 70% stake in Italian insurance broker GBSAPRI Group. More here ->
Allianz agreed to sell some U.S. insurance units to Arch Insurance's North American business for $450m. More here ->
First Abu Dhabi Bank is weighing a takeover bid for Turkish lender Yapi Ve Kredi Bankasi, per Bloomberg. More here ->
Experian (LSE: EXPN) agreed to acquire Australian credit bureau Illion from Archer Capital for around A$820m. More here ->
New York Life acquired a minority ownership stake in Fairview Capital, a West Hartford, Conn.-based private investment firm. More here ->
Embedded Fintech
Smartpay, a Japanese digital embedded finance startup, raised $7m in a pre-Series A. Smartpay has integrated with 19 of Japan's largest banks and over 200 credit unions, making it accessible to 90% of Japan's population with bank accounts. More here ->
Fintech
Bumper, a London-based automotive fintech, raised £2m in Series B extension funding. The company has developed a platform that allows customers to split repair bills into interest-free installments, making it easier for car owners to manage unexpected repair costs. More here ->
Constantinople, an Australian banking software provider, raised A$50m in Series A funding. The company provides an all-in-one solution that manages infrastructure and operational aspects for client banks, including customer experience, bankingproducts, operations, servicing, and compliance. More here ->
Coadjute, a London-based homebuying data-sharing platform, raised £10m. The platform connects variousstakeholders in the property market, includingestate agents, conveyancers, mortgage brokers, and lenders, allowing them to share data and collaborate more efficiently. More here ->
Brim Financial, a credit-card-as-a-service startup, raised US$85m in Series C funding. Founded in 2016 and based in Toronto, Brim has been focused on helping banks of all sizes, as well as fintechs and large brands, modernize their credit card infrastructure More here ->
Bavest, a German B2B fintech, raised €1.1m. Bavest's core infrastructure provides access to a wide range of financial data and alternative data, such as sentiment data, ESG (Environmental, Social, and Governance) data, and climate data. More here ->
Electronica Finance, an Indian provider of micro and SME loans, raised $48m. The company aims to address the credit gap faced by Indian MSMEs, estimated at $530 billion. EFL's loans play a vital role in financial inclusion and climate resilience for small business owners. More here ->
SingeInterface, a Singaporean provider of SaaS to help offline businesses get online, raised $30m. More here ->
Mimo, a London-based B2B payments platform, raised £15.5m. More here ->
More Fintech Funding news
Jeff Burt
Josh Scott
Investtech
Merkle Trade, a decentralized trading platform, raised $2.1m in seed funding. It specializes in offering leveraged trading for cryptocurrencies, forex, and commodities. And allows users to trade with leverage up to 1,000x, making it appealing for both novice and experienced traders. More here ->
Crypto
Blockmetrix, a Dallas based crypto mining platform intended to support professional crypto transactions, raised $5.62 million of venture funding. The company has raised $97.5 million to date. More here ->
Mezo, a Bitcoin scaling network, raised $21m. The platform has already attracted around 12,000 users who have deposited approximately 2,376 BTC, valued at about $160 million. More here ->
Ellipsis Labs, a crypto exchange developer, raised $20m in Series A funding. More here ->
OpenTrade, an institutional crypto lending platform, raised $3.2m in seed funding. Founded in 2023, the company has quickly established itself in the decentralized finance (DeFi) sector, focusing on offering institutional-grade lending and yield products backed by investment-grade financial assets. More here ->
Zoth, a Singaporean stablecoin and yield company, raised $2.5m. Founded in 2023, Zoth aims to tokenize real-world assets (RWAs) to provide liquidity and high, sustainable yields, particularly for small and medium-sized enterprises (SMEs) in emerging markets. More here ->
Auradine, a Santa Clara, Calif.-based bitcoin miner maker, raised $80m in Series B funding. Founded in 2022, it specializes in developing advanced hardware and software solutions aimed at enhancing the efficiency and sustainability of Bitcoin mining operations. More here ->
Insuretech
Honey Insurance, an Australian home insurance startup, raised A$108m in Series A funding. More here ->
Akad, a Brazilian insurtech, raised $22.5m in Series A funding. The firm specializes in digital insurance solutions, primarily focusing on B2B insurance products and services. Recently, Akad has gained attention for its innovative approach, leveraging artificial intelligence (AI) and machine learning to streamline insurance processes and enhance efficiency. More here ->
Proptech
CountertopSmart, a countertop purchasing experience startup, raised $1.75 million in seed funding. More here ->
Guesty, a New York-based provider of property management software for the short-term rental and hospitality markets, raised $130m in Series F funding. More here ->
Leasecake, a Winter Park, Fla.-based provider of lease and location management software for multi-unit operators, raised $10m in Series A extension funding. More here ->
Alpine Investors launched Guardian Restoration Partners, a home restoration platform, via the acquisitions of DryLux Restoration (Arizona), Dry Kings (California), and Midwest Restoration (Wisconsin). More here ->
From the Stash
5 questions with … Bank of America’s Allison Shonerd - Allison Shonerd, managing director and head of Global Digital Disbursements in the Global Payments organization of Global Transactions Services at Bank of America, is focused on meeting the growing demand for payment solutions through innovation. The $3.2 trillion bank’s noninterest expenses in the fourth quarter of 2023, which include technology spend, increased 14% year over […] More here ->
Citizens streamlines with Blend ahead of falling interest rates - Citizens Bank is expanding its use of cloud-based banking platform Blend to offer bank customers easier access to credit through the tech provider’s credit card solution. The $222 billion bank is preparing for high consumer demand for credit when interest rates start to fall. More here ->
3 ways AI is shaking up UX in financial services - As AI becomes more integrated into our daily lives, what impact will it have on financial services and how people interact with them? In this episode of 11:FS Explores, Joe Colchester, Head of Product at 11:FS Pulse, delves into this question using best-in-class examples from our 11:FS Pulse library of user journeys. More here ->
TD Bank deploys virtual reality for training - TD Bank is experimenting with virtual reality to build practical skill sets through controlled customer simulations, leading to improved employee training. “TD has been experimenting with different immersive experiences for colleagues and customers,” TD Product Manager Kerry Narduzzi told Bank Automation News. “This is a new technology and we want to really understand it and […] More here ->
Fintech funding slid by 16% quarter-over-quarter during the three-month period ended March 31 - according to CB Insights’ Q1 2024 State of Venture Report. But even more troubling than the double-digit dip was the fact that the $7.3 billion raised globally by fintech startups in the three-month period marked the lowest level the sector has seen since early 2017. On the plus side, there was a 15% uptick in equity deal-making last quarter, which “means investors continue to show interest in fintech solutions — particularly payments tech,” according to a CB Insights spokesperson. During the three-month period, 904 investments were made into fintech startups, which was higher than 786 in the previous quarter, signaling smaller deal sizes. More here ->
3 criteria for innovation at Citigroup - Financial institutions are looking to new technology, growing their innovation teams and investing in AI and generative AI. Citigroup goes beyond the technology when starting innovation projects, looking to its clients and existing capabilities. More here ->
Morgan Stanley installs AI chief - Morgan Stanley, acknowledging the growing importance of AI in the financial services industry, has named Chief Analytics and Data Officer Jack McMillan to the newly created position of head of companywide AI. McMillan is responsible for identifying and prioritizing AI implementation across business units and infrastructure throughout Morgan Stanley, he told Bank Automation News. More here ->
Truist parts ways with another CIO - The shakeup at Truist Financial continues. Truist Financial Chief Information Officer Scott Case has left the Charlotte, N.C.-based bank, a source close to the matter told Bank Automation News. Case took on the role of enterprise CIO at Truist in December 2019, according to his LinkedIn profile. More here ->
Fintechs push for data access - The free flow of consumer data and information would spark innovation in their industry, fintech leaders say. “If you had the right to move and transport your data, I think we would see a lot more innovation there,” Matt Janiga, director of regulatory and public affairs at fintech Trustly, said. More here ->
Wells shrinks branches as mobile usership jumps - Wells Fargo pulled back on its branch footprint as digital and mobile banking adoption climbed in the first quarter. “Our branches are becoming more advice-focused … [and] we are modernizing and optimizing our branch network,” Chief Executive Charlie Scharf said today during the bank’s Q1 earnings call. More here ->
More from the Stash:
💳 PayPal wins a lawsuit against disclosing digital wallet fees. Link → More here ->
🍏 Amazon pull the plug on its cashierless grocery store system. Link → More here ->
Reports / Webinars
See how you can automate critical business tasks in financial services with AI21 Labs’ models in Amazon Web Services (AWS).
Attend this Spotlight Series event to get guidance on generating accurate documents, such as investor updates and loan agreements. You’ll also see a demo on how to generate accurate, error-free term sheets.
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