Fintech Highlights - 8/9/2022

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Here’s what’s worth watching this week….. 👇

Really Pinned to the Top

Robinhood's popularity took another hit last quarter as market volatility scared investors away.

The stock trading platform shed nearly 2 million monthly active users during the second quarter.

And despite average revenue per user growing from $53 in the first quarter to $56 in the second quarter, it's still down from last year when the company saw $112.

Oh and yeah - this happened: the company laid off 23% of its staff— just 3 months after letting go of 9% of its workforce. Besides the fact that the company has shed about 1,000 workers this year alone.

Pinned to the Top

Insurance startups are eyeing the climate space as historical models struggle to keep up, but experimental underwriting models may not be a silver bullet.

Why it matters: Insurance models have struggled to keep up with the pace of climate-related claims, but there's no clear sailing for new insurance concepts.

Context: Traditional insurance coverage for businesses and individuals relies on historical data to predict the likelihood of a qualifying event and adjust the policy accordingly.

Insurance companies themselves are insured through reinsurance, which helps distribute the underlying risk to preserve solvency during large qualifying events.

State of play: Those historical models are less reliable in a world with increasingly severe weather events due to climate change, so some insurance startups have opted to explore alternative models.

Sensible, for example, provides something akin to a guarantee product for consumers via a refund should a severe weather event damage an asset.

This is what Aon Securities CEO Paul Schultz calls a parametric approach to risk diversification, where either the qualifying event happens or doesn't.

It's a common model in less-mature markets as well, Schultz explained, due to the unreliable nature of historical data.

Yes, but: Inflation is taking its toll on the insurance industry broadly, and young startups with lines of credit may not be able to keep up with the more established groups.

Asset prices are increasing faster than insurance policies are revised, meaning a company could end up paying out more than it collects should a qualifying event hit a rapidly appreciating asset.

Credit markets are tight on the heels of yet another interest rate hike, and early-stage insurance startups may not be able to convince investors to overlook the underlying business costs for an unproven model.

And those that can get credit face increasing costs, pushing margins even lower.

The bottom line: Experimental models do not insulate startups, and investors by extension, from the risky future ahead.

The BFD

Earlier this year, Apple revealed it’s buy now, pay later feature, Apple Pay Later, that has reportedly now drawn the attention of the Consumer Financial Protection Bureau (CFPB), reports 9to5Mac. According to the publication, CFPB director Rohit Chopra said that Apple Pay Later raised “a host of issues,” with antitrust concerns. The Financial Revolutionist points out that “while Apple’s move into BNPL will leverage the Apple Pay network and Apple’s reach through hardware to scale quickly, this combination of software and hardware is what makes Apple Pay Later a potential privacy risk.”

M&A

Rêv Worldwide, Inc., an Austin-based fintech company, entered into a definitive agreement to acquire the Netspend consumer business from Global Payments in an all cash transaction valued at $1 billion. In 2013, Netspend was acquired by global payment services company TSYS for $1.4 billion. In turn, TSYS was acquired by Global Payments in 2019 for $21.5 billion. More here ->

Plastiq, an SF-based B2B payment platform for SMBs, agreed to go public at an implied $480m valuation via Colonnade Acquisition Corp. II (NYSE: CLAA), a SPAC led by real estate execs Joseph Sambuco and Remy Trafelet. Plastiq has raised over $144m in VC funding, most recently at a $575m post-money valuation in 2019. More here ->

Fintechs

Savana, a Malvern, Pa.-based provider of customer engagement and account servicing software for banks and fintechs, raised $45m in Series A funding. More here ->

Compliance.ai, an SF-based financial and insurance reg tech startup, raised $6m. The company provides innnovative regulatory change management (RCM) solutions for banking, financial services and insurance industry professionals. More here ->

Infima, a mortgage-backed security prepayment prediction engine, raised $5m in seed funding. The company provides “prepayment prediction driven by deep learning” and “performance-boosting edges for market participants. More here ->

Mosey, an SF-based payroll compliance platform, raised $18m in Series A funding. Mosey offers customers automation tools designed to help U.S.-based companies hire workers remotely and stay compliant, leveraging a database of reporting requirements for all 50 states. More here ->

ZayZoon, a Canadian earned wage access startup, raised US$12.5m.  ZayZoon’s platform allows small- and medium-sized businesses to implement what’s known as an earned wage access (EWA) program. EWA gives employees access to some of their accrued wages before the end of their payroll cycle. More here ->

Kontempo, a Mexico City-based BNPL startup focused on B2B, raised $6.5m in equity funding (plus $25m in debt). The company offers buy now, pay later (BNPL) and interest-free installment plans to business-to-business (B2B) customers. More here ->

Twid, an Indian rewards-based payments startup, raised $12m in Series A funding.  Twid allows customers to pay at offline and online stores using their existing loyalty and reward points from banks, fintech platforms and e-commerce websites. More here ->

NG.cash, a digital money management app focused on Brazil’s Gen Z, raised $10m co-led by Andreessen Horowitz. More here ->

Nano, a Vietnamese financial and benefits platform for low-income workers - aka an Earned Wage Access (EWA) provider, raised $6.4m in seed funding. More here ->

Tartan, a Mumbai-based payroll and workforce management startup, raised $4.5m. Founded in June 2021, Tartan provides a white-labeled application programming interface (API) suite for financial institutions to access their consumers' payroll data with their consent to verify income and employment status.  More here ->

Tabby, a Dubai-based BNPL startup, secured a $150m credit facility. Tabby is the Gulf’s largest buy-now, pay-later provider and competes with companies including Tamara in the region. It has so far raised $275 million in capital, including a Series B round this year, and has partnered with firms including H&M Hennes & Mauritz AB and Nike Inc. More here ->

Cardless, a startup that helps consumer brands launch credit cards “very quickly and easily” by handling the program creation, card underwriting, lending, issuance and customer service for brands - has announced plans to launch co-branded credit cards on the American Express network. The move follows Amex Ventures’ investment in the three-year-old San Francisco–based startup’s $40 million Series B round that was announced in July of 2021. More here ->

Ready Life, a new fintech backed by Figure Technologies, has developed what it describes as a “revolutionary mortgage lending model” that relies on good rental payment history to qualify buyers for home purchases. Despite many many believing that the modern-era consumer credit score system is broken, locking millions of potential homeowners out of the American dream. “We are rewriting the rules for homeownership,” says Ready Life CEO Ashley D. Bell, a corporate finance attorney and a former White House policy advisor for Entrepreneurship and Innovation, in a press release. When the Ready Life platform launches this fall, consumers who pay their rent on time using the Ready Pay Visa Debit Card will qualify for mortgages without a credit score review, the company says. More here ->

Balance, a company co-founded by former PayPal employees Bar Geron and Yoni Shuster that supports B2B e-commerce merchants and marketplaces by digitizing those capabilities through one-click checkout payment tools (so companies can get paid instantly, process any payment method and offer flexible terms) has raised $56m in Series B funding. More here ->

Islamabad-headquartered startup Dbank said on Thursday it has raised $17.6 million in a seed round, the largest in Pakistan, co-led by Sequoia Capital Southeast Asia, the recently unveiled $1 billion fund, and Kleiner Perkins. Dbank is a fintech startup that will attempt to expand the reach of financial services in a “transparent and friendly” manner in Pakistan, taking on the informal credit system that tends to exploit those in need with exorbitant and unpredictable interest rates, said Tania Aidrus, co-founder of Dbank. More here ->

Pogo - a "Honey for the real world” has raised a $12.3M seed round. Here’s how it works: When a user joins the app, they are invited to send their data to the company. Once Pogo is connected with different sources of information, it begins to show rewards for purchases or recommendations to “act on” to save money. More here ->

Crypto

Ledger, a Paris-based crypto hardware wallet provider, is in talks to raise at least $100m in new funding, per Bloomberg. It would be at a higher valuation than the $1.5b at which the company raised in mid-2021. More here ->

Galoy, a bitcoin-native banking software startup, raised $4m. Co-founded in 2019 by Nicolas Burtey and Chris Hunter, Galoy provides a suite of tools that enable merchants and consumers to use the Lightning network for payments and create tools for bitcoin-native banking services.  More here ->

Insuretechs

Lami, a Kenyan digital insurer, raised $3.7m in new seed funding led by Harlem Capital. Right from the launch of its first product in 2020, the company has set out to increase insurance penetration in Kenya and the rest of Africa. More here ->

Raincoat has raised $4.5M in seed funding. Raincost’s climate parametric-based insurance solutions aim to provide financial institutions, governments, and insurers automated, end-to-end products for protecting individuals and small businesses affected by natural disasters like hurricanes, earthquakes, and floods. More here ->

Mulberri, a pioneering insurtech and business insurance platform for modern PEOs and brokers, has announced that it has raised a $4m seed round. “For far too long, business insurance has been stuck in the 20th century, and that has had major ramifications for PEOs and brokers who wanted modern solutions, but lacked access to them,” said Hamesh Chawla, CEO. More here ->

Proptechs

Milestones, the all-in-one homeowner portal making it easier for consumers to buy, move, sell, and manage their home, raised $10.3 million in Series A funding. Updater, the national leader in moving technology, led the investment round. More here ->

From the Stash

Lemonade Sells Metromile’s Enterprise Business Solutions Platform to EIS — www.insurtechinsights.com Insurers should continue to embrace technological change, writes Laurent Rousseau, CEO of SCOR in French newspaper Les Echos...

Chubb: Transforming the world’s insurance industry — www.insurtechinsights.com A truly global commercial and consumer insurer, Chubb is driving digital transformation across the digital and insurance marketplace global...

What's brewing in web3 during the crypto winter? — content.11fs.com We’re in a bear market. But don’t despair - it could pave the way for some innovative DeFi solutions.

Looks like (some) neobanks will be OK after all — techcrunch.com There's some good financial news brewing for neobanks: new data indicates that at least some of the larger and better-known neobanks are going to be OK after all.

Watch

What is the cost of living? with Kate Moody — www.youtube.com It's virtually impossible to open up a newspaper or turn on the news without being confronted with the fact that we're currently facing a global cost of livi...

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