Welcome to The Exchange! If you received this in your inbox, thank you for signing up and your trust. If you read this as a post on our site, please subscribe here so that you can receive it directly in the future. Every week I check out the latest 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 on top of it – and understand it – so you stay informed. — Mary Ann
Hey hey Mary Ann here I feel sorry for myself for having COVID for the first time when I should be thankful it took me so long to get it right? Fortunately, you can’t catch my germs through a computer or phone screen. You’ll be fine, but as a result… you’re stuck with yet another slightly abridged version of this newsletter! Big credit and gratitude to Kyle Wiggers from australiabusinessblog.com, who again saved the day by writing all the blurbs here (and there were a lot to cover). Kyle, you are the best.
Since Thanksgiving is less than a week away, I take this opportunity to say how grateful I am for being given the confidence to create this newsletter and for all of you taking the time to read and share it. I don’t take this lightly, because without your support I wouldn’t be doing this. I know there are loads of fintech focused newsletters out there so it really means everything. Okay, now that I’m done with the cringe-inducing part of this newsletter (to quote my kids), let’s get straight to the news.
Plaid announced that it has hired John Anderson, a former Meta exec, to serve as its first head of payments. The move comes as the fintech startup leans on payments, both in terms of facilitating it itself and the goal of helping others do it better and faster. Our first thought is that things took another turn at Stripe, but interestingly the two remain partners – for now. Plaid also announced that it Signal offer is out of beta with early adopters like Robinhood, Webull, and Uphold. It claims that by using Signal, companies can “instantly unlock ACH”.
Unlike crypto, some segments of the credit market seem robust – at least at the moment. Now holdingsthe Warren Buffett-backed Brazilian banking firm that offers credit cards and personal loans and is better known as Nubank, posted an almost triple jump in Q3 sales on Monday. While publicly traded Nu has seen its US stocks lose more than half their value this year, its customer base has grown to more than 70 million as a result of a dramatically expanded footprint in Mexico. Nu’s total revenue in the third quarter reached $1.3 billion, up 171%, while profits rose to $427 million, up 90%.
Five years ago, Revolut, the British fintech company with a growing portfolio of banking services, made headlines when it reached more than a million customers across Europe. That seems strange now; this week, revolution touch 25 million customers worldwide as the company prepares to expand into new markets including India, Mexico, Brazil and New Zealand. Revolut was last valued at $33 billion, but at least last year the company was not yet profitable; Revolut reported a net loss of £167 million (~$197.94 million) in 2021, its biggest ever.
Are valuations slipping and the backlog of fintech IPOs growing, as chatter on Twitter implies? Silicon Valley Bank says yes to both counts in his State of the Markets report out this week. According to the company, the strongest declines in valuation have been for late-stage fintech companies; Revenue multiples from “enterprise value” to “next 12 months” for public fintechs are down 55% since the market peak in early January. Meanwhile, the number of US fintech unicorns has grown 38% to 159 since the end of 2021 – amounting to a whopping $656 billion in total valuation, highlighting the massive backlog on the way to an exit.
According to an study according to the National Institute of Mental Health, 72% of startup founders are affected by mental health issues. Stepping out of his orbit a bit, fintech giant Brex launched a program, Catharsis, designed to provide resources dedicated to mental health. Brex says it will facilitate access to therapists through a partnership with Spring health as well as a discount on the Oura Ring that tracks sleep. It seems like a worthy goal, but part of us wonders if the effort is meant to distract from Brex’s ill-received pivot away from supporting small businesses.
Charging cards are big business. According to to Research and Markets, the segment could be worth more than $2 billion by 2026, growing from $1.96 billion this year. That is probably why banking-as-a-service was started Unit invests in it – the company launched a service on Tuesday that allows customers to build custom charge cards for their own end users. Unit handles almost all aspects of the backend, including card printing, compliance, and transaction tracking. In this way, it’s a different approach from corporate card issuers Brex and Ramp, argues Unit CEO Itai Damti, who are strictly business-to-business — Unit views its offerings as more “business-to-business-to-consumer.”
If you feel like reading material on the predicted economic woes in technology sector, Ukraine-based fintech investor Vadym Synegin wrote an excellent piece for TC+ on what founders can do to help their businesses thrive in times of crisis. Among other things, he suggests that founders double down on developing and proving the quality of their products, managing risk and looking for ways to bolster their company’s ranks with high-performing talent.
Just over a year ago, Wise — the company formerly known as TransferWise — went public in London. Now, looking for new growth opportunities, Wise inks an extensive partnership with an emerging start-up for remote hiring Part to enable companies to pay employees (supposedly) faster. Wise and Deel’s new feature allows customers to send money through Deel with just an email address, opening up new currencies in Deel’s existing payment infrastructure. To take advantage of this, Deel customers simply need to open an account with Wise and connect it to the Deel platform.
In another position for TC+, fintech consultant Greg Easterbrook explains four steps he believes fintech companies should take to be successful in the coming months. He urges startup founders to ensure their tech stacks support cutting-edge fintech, and warns of competition from traditional finance firms that offer more of a “super app” experience with strong member perks and benefits. The fintechs that outperform the market will specialize in specific services or embrace a strategy to develop compelling new products and benefits, says Easterbrook.
Despite being the world’s largest prepaid debit card company by market capitalization, Green dot usually flies under the radar. But the company has faced challenges in recent months, revealing it is in a dispute with Uber – one of its contract customers – and that “several” of its banking-as-a-service customers refused to renew their contracts this summer . In a shake it up Focused on righting the ship, Green Dot this week named a new CFO, COO and chief revenue officer and said it was focusing on technical modernization, including a move to a cloud-based core banking platform and card management system.
Fintech startup Bump and MasterCard to be to collaborate on a new card aimed at musicians and content creators (think TikTok influencers). How do you build a map for makers, you may ask? Well, in Bump’s case, they’re doing away with monthly fees and credit checks, taking into account things like a customer’s web3 assets (e.g. cryptocurrencies, NFTs) when setting credit limits. There are plenty of other cards that don’t require a credit check, and at least one startup, Spectral, is trying to create a system of web3 “credit scores.” But Bump’s offering is intriguing nonetheless.
StellarFi, a credit building service that pays bills on your behalf and passes them on to the major credit bureaus, is on the rise. Company announced this week that it has surpassed $1 million in annual recurring revenue just five months after launch and that its customer base has grown 83% in the past month. The current economic climate probably has something to do with StellarFi’s success: US inflation remains above 7% and short-term interest rates are at their highest level since January 2008.
Financing and Mergers and Acquisitions
Seen on australiabusinessblog.com and beyond
Daylight, the LGBTQ+ neobank, is raising money to launch a family planning subscription
Fiat Ventures, with $25 million for first fund, offers an ‘insider’ approach to early-stage fintech investments
Valar Ventures is leading a $20 million round in online brokerage platform Baraka
Indian fintech Lentra raises $60 million to expand lending as a service for banks
That’s it for now. I’m leaving next week and I hope many of you are too! This newsletter will appear on December 4. I wish you all the best and a safe and healthy holiday week. xoxo, Mary Ann