Fintech Highlights - 8/8/2023

Shopify announced a new offering. Ribbit Capital Raises $800 Million Fund. Petal, the consumer credit card startup, raised $20m.Here's what we've been watching this week….👇

Pinned to the Top

Last week, Shopify announced a new offering — Shopify Credit, a business credit card designed exclusively for its merchants.

The new product marked Shopify’s first pay-in-full business credit card, said Shopify president Harley Finkelstein. It is powered by Stripe and issued by Celtic Bank, “and accepted everywhere Visa is,” he added.

Shopify insists it would charge no fees — no late fees, no foreign transaction fees, and no interest. But upon further digging into the fine print, as fellow fintech enthusiast Sar Haribhakti tweeted about, it turns out that Shopify is also describing the new offering as a “pay in full credit card.”

So, merchants have 25 days after the close of their monthly billing cycle to pay their balance. And if they don’t? Well, according to Shopify’s website, the card will be locked and the merchant won’t be able to make any new purchases until the balance has been repaid. That explains how/why the company is not charging any interest!

The BFD

Ribbit Capital, the Silicon Valley venture capital firm behind credit card startup Brex and the stock trading app Robinhood, has raised $800 million for its tenth fund, according to a regulatory filing.

Ribbit, which focuses on financial businesses, was founded by longtime entrepreneur Meyer “Micky” Malka in 2012.

Why this is the BFD: The new fund is less than the $1.15 billion vehicle Ribbit raised in 2022, according to U.S. Securities and Exchange filings. Still, Ribbit’s $800 million fund is impressive given the depressed state of fintech stocks and the downturn in VC funding. Coatue Management, a New York-based investment firm, raised $331 million earlier this week for a fund that earlier targeted $500 million, The Information reported. Insight Partners and Tiger Global Management have also resized funds as limited partners’ appetites shrink.

The big picture: Ribbit first invested in Brex in 2017 at a valuation of $21 million, according to financial data firm PitchBook. Brex was later valued at $12.3 billion in a funding round announced in early 2022. When Robinhood went public in 2021, Ribbit held a stake worth $2.5 billion, though Robinhood’s stock price has fallen roughly 80% from its high two years ago.

M&A

Vijay Shekhar Sharma, chairman and CEO of listed Indian fintech Paytm, is buying a 10.3% stake in the company (valued at $628m) from an affiliate of China's Ant Financial. More here ->

Stavvy, a Boston-based digital mortgage vendor startup, acquired Culver City, Iowa-baed loan servicing platform Brace. Stavvy has raised around $67m from firms like Morningside Group, while Brace had raised around $30m from Canvas Ventures, Point72 Ventures and Crosslink Capital. More here ->

Mitsubishi UFJ Financial Group (Tokyo: 8306) will acquire a stake in U.S. Bancorp (NYSE: USB) via a $936m deal that effectively works like a debt-for-equity swap. More here ->

nib announced its subsidiary, nib Thrive, has acquired Kynd. Kynd is a digital marketplace for people who use Australia’s National Disability Insurance Scheme (NDIS). In 2022, nib raised $158.1 million to enter the NDIS through a series of plan management acquisitions, and now has ~27,000 people registered via the plan management businesses owned by nib Group. More here ->

Upgrade acquires travel-focused BNPL startup Uplift for a song (This is particularly notable considering that Uplift got acquired for far less than it raised over its lifetime.) More here ->

Fintech

Petal, an Atlanta-based consumer credit card startup, raised $20m in new equity funding from insiders and a $200m debt facility . More here ->

Knot API, a startup that aims to help fintechs and banks maintain deposits, raised $10m in Series A funding, per Axios Pro.  More here ->

Effectiv, a San Francisco-based AI payment fraud detection startup, raised $4.5m in additional seed funding. Effectiv provides a platform featuring AI-driven tools such as payment fraud detection, customer and business onboarding verification, and compliance management. More here ->

Emtech, a New York-based provider of central banking infrastructure in Africa, raised $4m in seed funding. The kit caters to fintechs and financial service providers interested in experimenting with solutions and business models based on digital currencies pioneered by central banks. More here ->

SuperFi, a U.K.-based debt prevention startup, raised $1m pre-seed funding. The company enables customers to "manage your debt in one place for the first time, understand how to become debt free and avoid falling into arrears." More here ->

Micro Connect, a Hong Kong-based microfinance platform, raised $458m in Series C funding at a $1.7b post-money valuation from undisclosed investors.  More here ->

Finda, a South Korean loan comparison platform, raised $37m in Series C funding. With the new funds, Finda hopes to advance its platform with the addition of new product offerings such as mortgage loan repayment, deposit and insurance comparison, and brokerage services, scheduled to launch at a later date. It also aims to establish an artificial intelligence fraud transaction detection system (AI-FDS), and a specialised alternative credit rating model. More here ->

Toss Bank, a South Korean online lender, is in talks to raise $154m in new funding at a $2.1b valuation. The internet-only bank benefits from its association with Viva Republica, which has about 26 million users and 15 million monthly active users overall. Viva Republica provides an array of financial services such as banking, money transfer, mobile-based stock trading, credit scoring, P2P lending and more in an all-in-one app, Toss. More here ->

Pockit, a British prepaid credit card startup, raised $10m. The company is an app that offers financial services to people “underserved by traditional banks." More here ->

Bloom Money raised £1M to digitize finance for ethnic communities. Often referred to as “rotating savings and credit association” (ROSCA), the model varies in the details around the world, but usually, it involves an informal gathering of people from a certain community who act as a bank, collecting and saving money that members can withdraw. More here ->

Crypto

Orbital, a European crypto payments startup, raised £5m. Orbital provides traditional and crypto business accounts for enterprise to integrate blockchain payments into their normal financial workflows including stablecoins, major cryptocurrencies and traditional currencies. More here ->

a16z-backed Eco unveils Beam, a P2P crypto transfer service aiming to be a ‘global Venmo.' More here ->

Insuretech

Converge Insurance, a New York-based cyber risk management and underwriting startup, raised $15m in Series A funding. Founded in 2021, Converge is a modern managing general agent (MGA) that combines cyber insurance and risk mitigation – it provides cyber risk solutions to SMBs.  More here ->

Functional Finance, an SF-based provider of data and reporting automation for insurance companies, raised $8m in seed funding (plus $2m in SAFE notes). The company enables clients to "unify and automate all of your financial operations, workflows and servicingwithout replacing your current infrastructure." More here ->

Lula, a "Stripe for insurance," raised $35.5m in Series B funding  More here ->

Proptech

Inspectify, which sells software for property inspection services, lands $5.7M More here ->

From the Stash

Cash App Drives Block Revenue Growth - Block’s revenue grew 26% year over year, to $5.5 billion, during the second quarter, driven by a 36% increase in revenue from the fintech firm’s Cash App payments app, which reached $3.6 billion. Cash App saw a 43% jump in revenue from subscriptions and services, which includes transaction fees from Cash App’s debit card and quicker deposits for users. Cash App’s monthly active users grew to 54 million in June, a 15% year over year increase. - Revenue from Block’s Square unit, which helps businesses accept payments from consumers, rose 12%, to $1.93 billion. Block trimmed its net loss by 41%, to $123 million. Shares fell 6% in after hours trading. More here ->

Wealthfront announced on X that the rate on its “Cash Account” is increasing to 4.80% APY (annual percentage yield) - up from 4.55% through its partner banks. If you refer a friend, you get 5.30% APY. Perhaps an interesting note is the up to $5 million FDIC insurance (and $10 million for joint accounts) being offered. Not to be outdone is Robinhood, which also announced via X that it was offering 4.9% APY on accounts that were FDIC-insured up to $2 million through program banks. More here ->

Mercury Financial secures $200M for its credit card business expansion - More here ->

Revolut to Halt U.S. Crypto Services Due to Regulatory Climate  - U.K.-based fintech company Revolut is ending crypto trading for U.S. customers due to the uncertain regulatory climate around crypto in the country, a spokesperson told The Information.”We’ve taken the difficult decision, together with our U.S. banking partner, to suspend access to cryptocurrencies through Revolut in the U.S.,“ the spokesperson said, who added that the decision only affects 1% of the London-based company’s crypto customers. Crypto services will still be available to users outside of the U.S. More here ->

Bank of America explores new payments channel - Bank of America may be joining Citi, TD, Chase and other U.S. financial institutions to offer pay by bank, an account-to-account payments channel, amid an increase in real-time payments usage.   The $3.2 trillion bank launched its pay by bank solution in the United Kingdom in February 2022 with British payments fintech Banked. More here ->

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