Fintech Highlights - 5/21/2024
The prospects for troubled banking-as-a-service (BaaS) startup Synapse went from bad to worse last week. Aflac has agreed to buy around a 40% stake in private credit firm Tree Line Capital Partners. And more….
Here's what we've been watching this week 👇
Pinned to the Top
The prospects for troubled banking-as-a-service (BaaS) startup Synapse went from bad to worse last week when a U.S. Trustee filed an emergency motion asking to convert the company’s debt reorganization Chapter 11 bankruptcy into a liquidation Chapter 7 due to “gross mismanagement” of its estate.
Apparently, up to 20 million fintech depositors are at risk as a result of the bankruptcy.
As Fintech Business Weekly’s Jason Mikula reports, “Numerous end users of fintechs that have had their ability to access their funds frozen shared the devastating impact it has had on their lives with the court and the hundreds of attendees dialed in to the hearing [on Friday].” Sadly, the fallout from Synapse’s collapse continues.
The BFD
Aflac (NYSE: AFL) has agreed to buy around a 40% stake in private credit firm Tree Line Capital Partners, per the WSJ.
Why it's the BFD: This reflects the quickening consolidation of alt asset managers and insurers, but also stands apart because most prior deals have involved the former buying the latter.
Details: Aflac reportedly is paying around $100 million, with sellers including both company management and Stone Point Capital.
- Tree Line was founded 10 years ago in San Francisco, and focuses on small and mid-sized companies.
The bottom line: "Tree Line's loans are mostly made to private-equity-backed companies and come with collateral protection for the lenders in case things go wrong. ... By owning 40% of the firm, Aflac will also be able to earn income from dividends and benefit if the company grows in value." — Alexander Saeedy, WSJ
M&A
The only major U.S. IPO expected this week is from Bowhead Specialty, a New York property and casualty insurer backed by Gallatin Point Capital. More here ->
Go Digit, an Indian insurance startup, raised $141m as part of an IPO launch. Backers include Fidelity, Goldman Sachs, Morgan Stanley, ADIA, Bay Pond, Mirae Asset Management, Steadview Capital, and HSBC. More here ->
Berkshire Hathaway disclosed a $6.7b stake in insurer Chubb (NYSE: CB). More here ->
AIG (NYSE: AIG) agreed to sell a 20% stake in Corebridge Financial (NYSE: CRBG) to Japan's Nippon Life Insurance for $3.8b. More here ->
Fintech
Veda, a German payroll-as-a-service provider, raised €17m from CIBC Innovation Banking. axios.link/4ai0CZ2 More here ->
Yendo, a Dallas-based credit card platform powered by the value of your car, raised $15m in equity funding led by FPV Ventures, plus $150m in debt led by i80 Group. The company has raised $260.06 million to date More here ->
Aeropay, a provider of pay-by-bank solutions for businesses that started out helping cannabis retailers and gaming companies with their payments, is now entering into Visa’s and Mastercard’s territory by innovating the payment networks. And it’s just raised $20 million in a Series B round. More here ->
Kudos, which uses artificial intelligence to figure out consumer spending habits so it can then provide more personalized financial advice, recently raised a round. More here ->
Buy now, pay later services have become so ubiquitous that BNPL may as well just be another way to say “debt.” But in Mexico, where BNPL platform Aplazo operates, a large underbanked population makes BNPL more like an alternative to cash. A recent $45 million Series B round led by QED Investors should help it further expand its reach, both virtual and physical. More here ->
Insuretech
Cover Genius, a New York embedded insurance startup, raised $80m in Series E funding, per Axios Pro. Spark Capital led, and was joined by Dawn Capital, King River Capital, and G Squared. More here ->
Maritime technology startup Vanguard has successfully secured US$1 million in new funding aimed at advancing its automated insurance underwriting platform for maritime operations. More here ->
Norwegian flood risk startup, 7Analytics, has announced a successful funding round of €4 million from Scale Capital, a prominent investment firm. More here ->
Vitesse, a U.K. payments and treasury management company for insurers, raised $93m in Series C funding led by KKR, with Hoxton Ventures, Octopus Ventures, and Hannover Digital Investments also participating. More here ->
Proptech
Honey Homes, a Lafayette, Calif., membership service for home upkeep and maintenance, raised $9.3m in Series A-1 funding. Era Ventures led, and was joined by insiders Khosla Ventures and Pear VC. More here ->
PayHOA, a previously bootstrapped Kentucky-based startup that offers software for self-managed homeowner associations (HOAs), is an example of how real-world problems can translate into opportunity. It just raised a $27.5 million Series A round in an environment where nearly $30 million Series A rounds are no longer common. More here ->
From the Stash
Clearcover Partners With Ada To Deploy Customer-Facing AI Solution - The leading insurtech aims to uplevel its customer service experience with the integration of the generative AI-powered tool into its platforms. More here ->
Qover Partners with bunq to Introduce Travel Insurance Across Seven Markets - In a move aimed at enhancing user experience and bolstering its service offerings, bunq, the second largest neobank in Europe, has joined forces with leading insurtech Qover. More here ->
AXA Partners with Universal Postal Union to Drive Inclusive Insurance Solutions Worldwide - In a landmark move aimed at extending financial security to lower to middle-income households and small businesses, AXA has forged a strategic partnership with the Universal Postal Union (UPU), a pivotal agency of the United Nations dedicated to coordinating global postal policies. More here ->
The Consumer Financial Protection Bureau (CFPB) is suing SoLo Funds - a fintech company that enables peer-to-peer lending, alleging that the company used “digital dark patterns” to deceive borrowers and illegally took fees while advertising to consumers that there were no fees. More here ->
75% of global banks unprepared for open banking - Most financial institutions are not ready for open banking, but the tedious task of prepping bank platforms can be streamlined with AI. Three-quarters of banks are not operationally ready for open banking, according to the 2024 Digital Banking Experience Report released May 16 by Sopra Banking’s IT services provider, Sopra Steria More here ->
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