Welcome to The Switch! If you got this in your inbox, thank you for signing up and trusting us. If you’re reading this as a message on our site, please sign up here so you can get it right away in the future. Every week I watch the hottest fintech news from the past week. This includes everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay up to date – and understand it – so you stay informed. Let’s go! † Mary Ann
I’ve been mostly off this past week, so this edition of The Interchange may be a little less busy than usual. Some observations. We saw fewer layoffs, but also less fintech-related news in general. Things have generally been pretty calm and not filled with as much controversy as the past few weeks. Frankly, we really want this quarter to end so we can dig deeper into the numbers to see how much the funding landscape has changed compared to 2021. Until then, we’ve looked at some recent numbers.
Fewer deals, bigger rounds – but still much lower
My best friends and co-hosts on the Shares PodcastAlex and Natasha, last week discussed the fintech finance market not once, but twice – here and here. Meanwhile, it felt like there was a bump in fintech-related funding announcements. That made me curious enough to contact my old friends on crunch base to get some data on how many fintech startups have raised in the past few weeks. (Keep in mind that it’s preliminary and there’s also a slowdown – so more deals and dollars will definitely be reported in the future for the same time periods.) I was mainly expecting a rise in numbers. And I did, sort of. Here’s what the data showed: Global funding was up very slightly in terms of dollars raised, but deal volume was significantly lower last week compared to the weeks before. Notably, Crunchbase found that from June 16 to June 23, fintech startups raised $1.5 billion in 39 deals, compared to $1.4 billion raised in 53 deals and $1.2 billion in 59 deals the week before. two weeks earlier. This tells us that more early stage deals were closed earlier this month, while last week we saw far fewer deals, but bigger rounds.
We saw a similar trend here in the US. According to Crunchbase, fintech startups in the United States raised $400 million in 10 deals from June 16 to June 23. 17 offers 2 weeks in advance.
But remarkable, and perhaps even more shocking, is the difference between these numbers compared to June 2021. Globally, fintech startups raised a total of $8.2 billion in 272 deals between June 1 and 23, 2021. 151 deals in the same period this year. Meanwhile, US-based startups raised $1.9 billion in 101 deals from June 1-23, 2021. That compares to a total of $1 billion in 41 deals over the same period this year. Wow. That’s nearly half of the dollars raised both globally and in the US. So while this is just a small snapshot, it’s still indicative of what we all know is happening: a global funding slowdown and proof that fintech isn’t immune.
For the record, Crunchbase defines fintech as companies that integrate technology into financial services.
Takeaway: Fewer financing deals are being made in the fintech space, and at least during the month of June, investors seemed to bet more on late-stage companies, so dollars raised rose as the month went on. This means it’s likely to get harder and harder for early-stage companies to win over VCs, who reportedly perform more due diligence and demand more traction than they did in the whirlwind of 2021.
The buy now† pay later (BNPL) market, which is estimated to be worth $120 billion in 2021, has grown significantly in recent years. But for most of its rise to fame at the virtual cash register, BNPL has largely focused on everyday consumer goods like Urban Outfitters or a Peloton clothing. Now the credit method goes beyond the roots of e-commerce. In recent months, large companies have entered the BNPL market, hoping to quickly approve consumers for installment loans as well. Rebecca Szkutak digs in here.
Speaking of BNPL, Swedish Klarna has (finally) launched a new loyalty card feature in its app, which allows users to save and access all of their physical loyalty cards as digital versions, eliminating the need to carry physical cards when shopping in-store. The company is clearly working on increasing its user base as the valuation has reportedly been slashed from $45 billion to $15 billion, a cut our own Alex Wilhelm finds “sufficiently steep.”
Scoop: Three more senior executives of digital mortgage lender Better.com has resigned, I reported last week. Those three executives are Jillian White, general manager of the affiliates of Better, better known as Better+, which consists of the title/settlement, insurance and home inspection divisions; Megan Bellingham, who was senior vice president of sales and operations; and John Moffatt, who served as vice president of sales.
Brex issued a mea culpa this week after last week’s shocking announcement to stop working with SMEs. Pedro Franceschi, founder and co-CEO, spoke about the stumbling block in a blog post titled “About Last Week’s Announcement”. In the post, Franceschi expressed regret at the “poor explanation of this decision, which has eroded some of the valuable trust” Brex had built over the years. He also outlined the criteria a company must meet in order to be eligible to remain a Brex customer.
Speaking of Brex and SMBs, Tillful — a free business credit app built by VC-backed startup Flowcast – announced last week that it is launching a new feature for its users via a direct collaboration with Experian in an effort to better inform business credit scores in SME loans. The startup claims it is a “first of its kind partnership” between a fintech and a major credit reporting agency “in an effort to make credit risk assessment more ‘open’.” Flowcast has developed AI-based credit models for lenders and is backed by ING Ventures and BitRock Capital. since Tillful was launchedstates that more than 50,000 small businesses have signed up to help manage and build their business credit.
Here’s where things get even more interesting in light of recent Brex news: Flowcast’s latest move, a spokesperson told australiabusinessblog.com, reflects the “doubling of SMBs.” Brex, the spokesperson added, was actually one of its partners, but Flowcast hadn’t heard from them for quite some time as they stopped interacting with the company months ago: “We also haven’t received any communication from them for a long time. time Brex cardholder and lender partner, but we are moving off their platform and will use our own card instead.
Meanwhile, Mercury — a digital bank focused on startups — claims it has already seen hundreds of new accounts on its platform following the Brex announcement and is “seeing more every day,” a spokesperson told australiabusinessblog.com on June 24.
Brazilian digital real estate agent QuintoAndar launched last week in Mexico City, the startup’s first expansion from its home country. It will operate in the country under the brand “Benvi”, which will be the international name of the proptech. Last August, QuintoAndar announced it had raised $120 million at a valuation of $5 billion. In April, the company 160 people firedor 4% of the workforce, making it one of the few highly regarded Brazilian startups to cut jobs.
Speaking of LatAm . to haveBrazilian digital bank Neon announced that it has hired a Silicon Valley technology veteran who has held positions at Google, Snap and Coinbase as its new chief technology officer. Andre Madeira is the former co-founder and CEO of Meemo, which was acquired by Coinbase last year.
Financing and M&A
Seen on australiabusinessblog.com
Ghana-based fintech Fido raises $30 million to roll out and expand new products across Africa
Neobank Stashfin Raises $270 Million, Surpasses $700 Million Valuation
Fintech Kasheesh wants financially tense clients to say ‘goodbye’ to BNPL
SumUp raises $624 million at a valuation of $8.5 billion, with its payments and business technology now used by 4 million SMEs
Well, that’s it for this week. Thanks again for reading – enjoy the rest of your weekend! Until next time. xoxo, Mary Ann