Fintech Highlights - 9/6/2022

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Just how lucrative is the buy now, pay later (BNPL) market?

This was recently asked by TechCrunch+ editor Alex Wilhelm.

“New data from Klarna and recent earnings results from Affirm make it clear that building a global business in the fintech space is far from inexpensive. The two companies, Affirm American and Klarna Swedish, are among the most valuable players in the BNPL market today. They’re both now nearly equal in value. And both recently reported financial results.”

So what did the data show?

It’s could be lucrative. But then again it’s an expensive business to grow.

Klarna recently reported a dramatic jump in losses in the first half of 2022, adding to a deluge of negative news for the "buy now, pay later" pioneer. It generated revenues of 9.1 billion Swedish krona ($950 million), up 24% from a year ago.

But the company also racked up hefty losses. Klarna's pre-tax loss soared more than threefold year-on-year to nearly 6.2 billion krona. In the first half of 2021, Klarna lost around 1.8 billion Swedish krona.

The company's ballooning losses highlight the price of its rapid expansion after the onset of the Covid-19 pandemic. Klarna has entered 11 new markets since the start of 2020, and took a number of costly gambits to extend its foothold in the U.S. and Britain.

Big expansions cost a lot of money. And Affirm and Klarna are paying for it right now.

The BFD

UBS no longer will pay $1.4 billion in cash to buy Palo Alto, Calif.-based robo-adviser Wealthfront. The mutual termination comes eight months after the merger was announced, with UBS now to invest $69.7 million via a convertible note deal at around the same valuation.

Why it's the BFD: It's a big setback for the Swiss lender's efforts to broaden its client base, particularly in the U.S.

Cap table: Prior to the new investment from UBS, Wealthfront had raised around $200 million from Index Ventures, Ribbit Capital, Launch Fund, Social Capital, Tiger Global, Spark Capital, Dragoneer, DAG Ventures and Greylock.

Backstory: A source familiar with the situation says the deal collapse came suddenly, as reflected by Friday night's terse announcement, with unspecified regulatory concerns being raised in just the past several weeks.

The bottom line: A merger collapse is hardly novel in 2022, but this one is a bit surprising in that Wealthfront is the rare tech company whose business benefits from rising interest rates. A unicorn, if you will....

Fintechs

Solid banks $63M for easier deployment of embedded fintech products — techcrunch.com By utilizing APIs and a few lines of code, Solid enables customers to embed fintech products and get them up-and-running quickly.

Wealth Management Tech Startup VRGL Raises $15M to Help Firms Acquire Clients, Manage Proposals — s24806.pcdn.co Founded in 2021, Dallas-based VRGL is an automated data and analytics platform for wealth management firms. Aimed at streamlining time to revenue and increasing initial check sizes, the platform can present a "complete and transparent view" of a prospect's entire portfolio within minutes—serving a need that's "ripe for innovation and disruption," one investor said. “The VRGL team quickly took a one-firm product and turned it into a platform every advisor can use,” two other investors added in a joint statement.

tapNpay, a payment technology designed to simplify the collection of tolls from untagged vehicles, raised $1.5M of venture funding from undisclosed investors. More here ->

Fintech startup Alloy leans on fraud prevention to land new $1.55B valuation — techcrunch.com When Alloy was founded in 2015, its mission was to help banks and fintechs make better identity and risk decisions using its single API service and SaaS offering.

Duplo, which digitizes payment flows for African B2B enterprises, gets $4.3M seed funding — techcrunch.com Duplo enables African enterprises to collect payments from their clients and partners and make payments to their suppliers and vendors, has raised $4.3 million in seed funding.

Nigerian YC-backed startup Anchor comes out of stealth with $1M+ to scale its banking-as-a-service platform • TechCrunch — techcrunch.com In 2015, the emergence of fintechs such as Flutterwave and Paystack changed the game for online businesses in Africa by making it easier to integrate payments into customer interfaces without building those features from the ground up or merging with tacky foreign software.

Nigeria’s Grey raises $2M for cross-border payments play and regional expansion — techcrunch.com The provision of virtual foreign bank accounts has become a common strategy for fintechs to enable Nigerians and Africans to facilitate international transfers. In the latest development, Grey, a fintech in this category that provides virtual international bank accounts to African freelancers and remote workers, is announcing that it has raised $2 million in seed funding.

Crypto

Proof Raises $50M, Plots Token and Moonbirds NFT Expansion - Decrypt

Proof, an NFT collective founded by Kevin Rose, aims to debut a token and new Moonbirds collection next year, plus it revealed a sizable Series A round led by Andreessen Horowitz.

Insuretechs

Insurtech startup Fairmatic raises $42 million to innovate commercial auto insurance — www.insurtechinsights.com The company, co-founded and headed by Israeli Jonathan Matus, has developed AI-powered risk and pricing models that have been trained...

iCover Raises $5 Million in Pre-Series A Funding — www.insurtechinsights.com The company will use the funds to expand technical staff, sales and marketing, and R&D for its AI underwriting framework and private...

Proptechs

Zippy, a home loan application platform for manufactured homes, raised $15.6M venture funding from undisclosed investors, per Pitchbook. The company has raised $18.7M to date. More here ->

Landa can make you a landlord with just $5 — techcrunch.com Landa is emerging from stealth with $33 million in funding "to provide a simple, convenient, affordable way for everyday people to invest in real estate."

Wreno, a Scottsdale, Ariz.-based labor platform for the real estate market, raised $5m in seed funding. More here ->

Singapore-based Propseller uses data to take the hassle out of real estate transactions — techcrunch.com Propseller will use its Series A to scale its business model, expand its offerings and enter overseas markets.

Justhome, a Berlin-based financing platform for first-time homebuyers, raised €3.3m led by Target Global. More here ->

RentSpree Secures $17.3M to Expand Rental Management Tools Rental management software startup RentSpree has raised $17.3 million in a Series B round to expand its product offerings for both renters and agents.

From the Stash

Buckle enters into MGA agreement with auto insurance specialists InsureScan | Insurtech Insights — www.insurtechinsights.com Buckle, the financial services company providing auto insurance solutions for the gig economy, and InsureScan, an upcoming auto insurance...

Block launches Cash App Pay beyond the Square network — techcrunch.com Block’s (formerly known as Square) Cash App is now letting users make payments on e-commerce sites outside the Square network. Until now, users could only make payments using Cash App Pay on Square terminals or online Square merchant partners.

Reports / Webinars

Webinar: The errors in the claims process that are losing you customers? — www.insurtechinsights.com Today over 80% of the data received by underwriters is unstructured, residing in the form of emails, PDFs, forms, and images...

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