Fintech Highlights - 7/19/2022

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In 2021, fintech startups were the top recipients of venture capital globally, accounting for about 21% of dollars raised with $131.5 billion across 4,969 deals.

So far in 2022, fintech startups are earning another, less favorable distinction — accounting for the third largest number of layoffs, by percentage, globally.

As of July 1, some 3,709 employees — excluding crypto companies — have been laid off across 41 “layoff events” in the second quarter of 2022, according to an analysis by Roger Lee of Layoffs.fyi.

For context, that is 3,709 out of 36,861 startup employees laid off overall during Q2, meaning that fintech accounted for 10.1% of the total. Based on that categorization, the fintech space ranked third behind food and transportation, respectively.

However, the site classified companies such as Better.com in the “Real Estate” category. So if you include that company’s layoffs — which amounted to some 3,000 in the first quarter of 2022 — the fintech numbers inch up even higher and fintech becomes the category that saw the most layoffs by percentage — 15.4% — in the first half of 2022.

Notably, in all of 2020, 8,715 employees in fintech were laid off. And there are surely far more fintechs around today than there were back then. In 2020, fintech trailed behind the transportation and travel categories when it came to layoffs as percentage of the total, Lee told TechCrunch via email.

Remarkably, ZERO employees in fintech were laid off in the entirety of 2021, according to Lee’s analysis.

The BFD

Maybe letting customers pay for $19 sandwiches in four installments isn’t a good business model after all?!

Just one day after buy now, pay later lender Klarna announced a valuation cut of 85% in its latest funding round, two smaller rivals have canned a merger, with the acquirer saying that scrapping the deal was the best move for shareholders given the current environment.

Zip, an Australian company, said Tuesday it will no longer buy U.S. rival Sezzle. The deal was supposed to help the combined company accelerate its path to profitability.

But even the biggest comparable companies haven’t yet generated net income. Just look at Affirm, a BNPL firm with revenues more than double that of Zip’s entire market cap. The startup has become increasingly unprofitable over the past three years. Its sole source of cash is its annual issuance of debt (oh, the irony!), which approximately doubles in size every year. The stock is down 76% year to date.

Lending people money can attract demand. But is a tough business to be in.

Fintechs

Quiltt, a Dallas-based embedded finance startup focused on small businesses, raised $4m. is wrapping its warm low-code fintech infrastructure blanket around startups and small businesses that want to create financial services for their customers, but don’t have the budget resources for a big engineering team. More here ->

Apiture, a maker of front-end software for smaller banks, raised $29m led by Austin’s Live Oak Ventures. The company "delivers award-winning digital banking solutions to banks and credit unions throughout the United States. Our flexible, highly configurable solutions meet a wide range of financial institutions’ needs, from leveling the playing field with larger banks to enabling unique, digital-only brands." More here ->

FairPlay, a Los Angeles-based bank loan analysis software startup, raised $10m in Series A funding. Launched in 2020 by CEO Kareem Saleh, FairPlay provides algorithmic fairness solutions that empower lenders to identify and mitigate bias in their credit models, increasing profitability and financial inclusion.  More here ->

Pico, a New York-based provider of tech services for financial markets, has raised $200m. Founded in 2009, Pico provides services including trading cloud infrastructure hosting to financial market participants, including 24 of the top 25 banks, 36 exchanges, and a host of hedge funds and electronic trading firms. More here ->

Pebble, a Menlo Park, Calif.-based personalized investment startup, raised $5m in seed funding from Jump Capital, NextView Ventures and Cendana Capital. More here ->

X1 Card, a San Francisco-based credit cart startup, raised $25m in Series B funding.  The X1 Card is a stainless steel Visa credit card with a different origin story. When you apply for a card, instead of determining your limits based on your credit score, the company wants to see your current and future income. More here ->

Uprise, a San Francisco-based startup that aims to be a ‘family office’ for Gen Z, has banked $1.4M. Uprise takes in a user’s full financial picture, including overlooked aspects like employer benefits, and offers recommendations on where to funnel money. More here ->

Kadmos, a salary payments platform for migrant workers, has raised $29.5M. Kadmos serves up a mobile app replete with e-wallet that holds workers' salaries in dollars or euros, and allows them to send money home, with predictable fees. More here ->

Bloom, a Sudan-based fintech that offers a high-yield savings account and adjacent digital banking services, has raised a $6.5 million seed round. Bloom offers fee-free accounts for users to save in dollars and buy and spend in Sudanese pounds. It also provides local and dollar cards and a feature where they can receive remittance free of charge from several countries globally.  More here ->

Penny, a Bristol based pension focused startup, has a new backer. Google’s Gradient Ventures lead a funding round of $4.8M. Through the Penny mobile app, available on Android and iOS, users are asked a few questions, such as their name, mobile number, date-of-birth, address, national insurance number, and previous jobs, and Penny takes care of the rest. More here ->

Africa-focused fintech Zazuu has raised $2M to scale its cross-border payment marketplace. To help users search various money transfer options in their region and compare rates and fees, Zazuu initially launched as a chatbot in 2020, informing users of the daily remittance rates of various platforms via Facebook and Telegram groups. More here ->

Hero, a French B2B payments startup, raised €12.4m.  Hero’s full-stack payments solution is aimed towards SMEs, which it says remain underserved by incumbent banks. The fledgling startup is building a horizontally integrated payments platform that lets business customers handle both sides of a transaction, including procure-to-pay for clients and order-to-cash for suppliers. More here ->

FPL Technologies (dba OneCard), an Indian credit card startup, raised over $100m in Series D funding at a $1.4b post-money valuation. Founded by banking veterans in 2019, OneCard operates a mobile-first credit card. Its cards, for which the startup partners with banks, come without any joining or annual fee and give customers more control and flexibility over how and where they transact. It also offers a range of personalised rewards and loans to customers. More here ->

SmartBank, a Japanese prepaid card startup, raised $20m in Series A funding. SmartBank wants to enable anyone to manage finance, “from everyday spending to planning for the future” by offering its digital finance management service B/43, which is a Visa prepaid card and personal finance management app. More here ->

Fuell, a Spanish corporate card and expense management startup, raised €1.5m. Fuell helps companies better manage and organize expenses via corporate cards and employee reimbursements. The company automates expenses management enabling employees, accountants, and CFOs to save money and time.  More here ->

Mexican fintech startup Stori has reached unicorn status with $50M equity raise. Stori launched its credit card product in Mexico in January 2020. Today, the company says it has more than 1.4 million customers in Mexico, which it claims is up “over3x” from the prior year. Its ambitious goal is to one day serve 100 million underserved customers in Latin America. Its primary target, is the region’s rising middle-class population. More here ->

Crypto

Zebedee, a Hoboken, N.J.-based payment processor for the gaming industry, raised $35m in funding. The company enables programmable payments and small transactions to power economies for virtual worlds with near-zero fees. That is, it takes the big transactions fees out of blockchain-based cryptocurrencies such as Bitcoin and enables much smaller transaction sizes. More here ->

Meow, a New York-based crypto corporate treasury company, raised $22m in Series A funding. Meow provides institutional and corporate investors with a compliant-first approach to participating in emerging cryptocurrency investment opportunities. More here ->

ZKX, a crypto derivatives trading protocol, raised $4.5m in seed funding. Founded in 2021, ZKX is a derivatives protocol built on StarkNet and powered by a decentralized autonomous organization (DAO). The protocol aims to provide an improved trading experience through gamification and its unique governance structure. More here ->

Super Mojo, a New York-based NFT financing platform, raised $6m in seed funding. Founded by CEO Amir Sarhangi and Head of Product and Engineering Craig DeWitt, two former executives at Ripple, Supermojo provides a platform that facilitates point-of-sale financing to improve the NFT purchase experience and collateralized lending for improved post-sale liquidity. More here ->

Mysten Labs, a Palo Alto-based blockchain infrastructure startup, is in talks to raise a $200m Series B round. More here ->

Gnosis Safe, a digital wallet protocol, raised $100m.  The company states that “we are on a mission to make every account in Web3 a smart contract account,” Schor continued. “By moving away from private-key accounts, we will create a web3 ecosystem that is much more secure and accessible to a wider range of users.” More here ->

Quadrata, a Marina del Rey, Calif.-based blockchain identity startup, raised $7.5m in seed funding.  More here ->

Insuretechs

Wefox has raised a new round. The company snagged $400M at $4.5B valuation to buck the insurtech downturn trend. Wefox sells various insurance products through a combination of in-house and external brokers, bypassing the direct-to-consumer model of insurtech competitors. More here ->

Proptech

Stake, a startup that provides cash back and banking services to renters, today announced that it raised $12 million in a Series A round. Stake uses a “behavioral science” algorithm to suggest to property owners how much in cash back they should reward renters who pay rent on time or sign a lease renewal early. More here ->

Here, a fractional investment platform for vacation rentals, raised $5m in seed funding. Here’s model works like this: the company acquires a property and makes it “vacation rental ready” through its own investments. Then it lists it in an IPO to investors at a price inclusive of all those expenses. All properties adhere to the rule of $1 = 1 stock of the property. Once all shares are sold out, Here puts it on different vacation rental portals like Airbnb, Homeaway, and Booking.com for stays. More here ->

Spruce, an Austin, Tx.-based residential home services startup, raised $26m in Series B funding. Led by newly appointed CEO Steven Pho*, Spruce currently offers Housekeeping, Chores, Pet Care, and Laundry to residents at more than 2,300 select apartment communities throughout the country. Through the app, customers are able to quickly book services from certified, insured, and background-checked professionals. More here ->

From the Stash

Here Are The Startups Eyeing Solutions For High Housing Costs — news.crunchbase.com One doesn’t have to scroll far to find alarming headlines about the cost of housing. We take a look at some of the startups aiming to provide affordable solutions.

Wave, a Stripe-backed African fintech valued at $1.7 billion, cut 15% of its staff in June – TechCrunch — techcrunch.com Wave is the first unicorn out of Senegal and the overall Francophone Africa region. It just laid off about 15% of its workforce.

The bright side of fintech funding results — techcrunch.com Despite seeing declines in the second quarter, fintech continues to account for a significant share of global venture capital funding.

Plaid adds read-only support for leading crypto exchanges — techcrunch.com Plaid, the data network powering major fintech websites and apps, has added read-only support for crypto exchanges including Binance, Kraken, and Gemini.

Stripe is the latest fintech to falter, taking a 28% internal valuation cut — techcrunch.com Payments giant Stripe cuts internal valuation amid broader market downturn for fintechs

The Market Minute: Why Are Tech Companies Being Hit So Hard By The Downturn? — news.crunchbase.com While late-stage startups have been hit the hardest by layoffs, it seems like public tech companies are starting to ramp up layoffs as well.

Crypto Funding Numbers Fall During Bumpy First Half Of Year — news.crunchbase.com The crypto winter is not descending upon just holders of digital currency—but also those startups looking for funding.

Why are banks so scared of changing their tech? — content.11fs.com Banks’ failure to change their tech is leaving them in the dust. Here’s what they need to do better.

Goldman hires Google exec to co-head applied innovation unit — www.reuters.com Goldman Sachs has hired Jared Cohen, who founded technology incubator Jigsaw at Google, to co-head its newly created applied innovation unit, an internal memo showed, as the Wall Street powerhouse invests in technology expertise.

Marqeta welcomes Simon Khalaf as Chief Product Officer — www.marqeta.com Marqeta announces Simon Khalaf, previously of Twisto, as its new Chief Product Officer and key member of its executive team.

Bank of America invests $800M in tech in Q2 — bankautomationnews.com Bank of America’s efforts to boost its digital tools are paying off, and the $3.1 trillion bank plans to continue its technology investments amid increased customer adoption of the bank’s digital tools. The bank invested in and implemented $800 million in technology in the second quarter, Chief Financial Officer Alastair Borthwick said during today’s earnings

Reports / Webinars

The Leadership In Insurance Product Special — preview.mailerlite.com We are sharing an exciting episode this week, our second panel episode in our new monthly series...for July we bring you 'The Leadership In Insurance Product Special'.

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