So much fintech M&A • TechCrunch

We are glad you are here The Interchange! If you received this in an inbox, thank for signing up and for your vote of trust. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, I’ll take a look at the hottest fintech news of the previous week. This will include everything from trends to funding rounds to analysis of particular spaces to hot takes on a company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay on top of it — and make sense of it — so you can stay in the know. — Mary Ann

Consolidation everywhere

Friday, January 13th, investment giant BlackRockIt announced that it had acquired a minority stake in the SMB 401(k), provider startup Human Interest. Terms of the deal weren’t disclosed, but it definitely caught my attention for a few reasons. For one, as one source told me, BlackRock’s investment is a show of faith in the SMB 401(k) market — one where the firm hasn’t historically played. That same source, who preferred not to be named, pointed out that “SECURE 2.0’s auto-enrollment provisions (among others), will make 401k plans more impactful at the lower end of the market, Human Interest is well-positioned to execute.”

I’ve been writing about Human Interest since March 2020, covering each of its funding rounds since then (here, here and here), and following its impressive growth. It was awarded unicorn status in August 2021. At the time, it was planning to go public. It feels like a good outcome for this startup, which was founded by Roger Lee and Paul Sawaya in 2015. Lee (a very nice person, incidentally), moved on years back, and has recently founded another startup. Comprehensive.ioTracker for launching layoffs Layoffs.FYISoon after the COVID-19 epidemic hit,

The deal was just one of many M&A deals in the fintech space that occurred last week. Here’s a rundown of some others:

  • Remote payroll startup Deel acquired fintech CapbaseThe companies shared their confidential information with me only for an undisclosed sum in a stock and cash deal. Deel was valued at $12Billion last year. Capbase’s acquisition reflects Deel’s intent to enter equity management.
  • Investment giant Fidelity acquired Shoobx, marking its first purchase in 7 Years (!). Crunchbase reports that Stephan Richter and Jason Furtado co-founded Boston’s Shoobx in 2013. The company received a total of $10 million funding from the pair. Fidelity said its purchase of Shoobx is a sign of its commitment to the private market “and will help to satisfy an increasing demand Fidelity sees from private companies to support them as they scale and grow.”
  • Vouch,An insurtech that focuses on startups acquired lending startup LevelFor an undisclosed amount. As reported by Life Insurance International: “Level has created a tech-driven underwriting process for early-stage fintech startups that is claimed to have brought new efficiency and speed to the debt-raising process. Vouch hopes to leverage Level’s expertise in developing underwriting technologies to underwrite and support complex insurance products. Level was founded by Vladimir Korshin, Asa Schachar and Molly Hogan in 2021.” In September 2021, I covered Vouch’s announcement of $90 million in new funding. Vouch and Level both are Y Combinator alums.
  • American ExpressIt has announced that it has reached an agreement to acquire Nipendo,A company that automates and streamlines business-to-business (B2B), payments processes for global companies has raised $12 million in funding. I spoke with Dean Henry (EVP of global commercial Services at Amex) and Colleen TAYLOR (President of Merchant Services, US at Amex) to gain some insight into the strategy behind buying the company. For starters, Henry said the credit card giant has been on “a multiyear journey…to really grow and expand capabilities in B2B payments.” He added: “What we’ve really tried to evolve in the last few years is into a one-stop-shop for businesses to pay anybody anywhere, using any kind of payment rails that they want to use in order to facilitate the payments….What we’re trying to do with Nipendo is add to that capability set and provide more value to suppliers who are trying to send invoices, interact with buyers and transact with data around B2B payments.” Notably, Taylor told me that American Express concluded that it would take a big company like American Express “a long time to replicate what they’ve built.” And this line was the classic motivation for all incumbents buying fintechs: “Why not just bring it in to our platform and get it to customers as quickly as possible?”

To bring some context around all this M&A, I conducted an email interview with Jonah Crane, partner at Klaros Group. Crane predicts we will continue to see a lot of fintech M&A.

He told me: “The question I have is who will capitalize on this bear market to scoop up valuable technology or talent. In particular, I’m interested in whether banks can be opportunistic. Some of the largest banks have been active already, but the rest need to question whether they are serious about innovation or digital transformation. If they are, they can’t afford to miss this moment.”

However, much will depend upon the macro picture, he said. “If we have a soft landing, and markets head back up, the true bargains may already have passed. And if we are in for a very hard landing, buyers are at risk of catching falling knives—especially in the credit sector,” Crane said. “Getting deals done in these markets is no sure thing. We’ve already seen a number of announced deals fail to close: UBS/Wealthfront, Bolt/Wyre, and now JPMC/Frank (more on that later). Ultimately, the big challenge will be whether buyers and sellers can cross the massive valuation chasm created by the bursting of the fintech bubble.”

No doubt the venture slowdown and practically dead IPO and SPAC markets have contributed to the surge in M&A activity.

“VCs are telling their portfolio companies they should be prepared to shelter in place for 18 to 24 months, and many have laid off a lot of staff. But what’s the end game? What are you aiming to achieve that will allow you to raise at a reasonable valuation when markets are fully reopened?” Crane asks. “Those who don’t have a clear bridge to the other side of that chasm will be looking for buyers (if they’re smart).”

All I know is if we have more weeks like this one, you’re going to have one exhausted fintech journalist on your hands!

check pen

Weekly News


Reports Jagmeet Singh: “Greenlight, a fintech startup offering debit cards to kids, has laid off 104 employees — or over 21% of its total headcount of 485 employees — to “better align with ongoing operating expenses” amid the economic slowdown. TechCrunch was informed about the layoff earlier this week by its employees. The startup later confirmed the development over an email.” More here.

Digital mortgage platform BlendLast week, the company announced it was slashing its U.S. workforce in half, or 340 jobs in its fourth layoff in less that a year. The company also stated that the president was being fired. Tim MayopoulosIn the first quarter, he will be retiring from his position but will continue to serve as a board member. Evidently, the rise of mortgage interest rates has taken its toll. Continue reading here.

Online lending platform that is publicly traded Lending ClubReports state that 14% of its workforce is being cut. This will have an impact on 225 employees. MarketWatch, “as higher interest rates discourage demand for loans, and the company forecast fourth-quarter revenue that was below expectations.”

In other news

Public.comLast week, a platform for investing with more than 3,000,000 members, announced that it had begun rolling out Treasury accountsThrough a partnership agreement with fintech startup Jiko. According to the two companies, the accounts allow members to invest their cash in U.S. Treasury bills that “are automatically reinvested at maturity and can be sold at any time.” A spokesperson told me that Public’s Treasury accounts “offer members similar flexibility to a high-yield savings account, but are currently offering even higher yields.”

Platform for equity management CartaThis week was difficult. As TC’s Connie Loizos reported on January 11: “The 11-year-old, San Francisco-based outfit whose core business is selling software to investors to track their portfolios, has sued its former CTO, Jerry Talton, who the company says was fired ‘for cause’ almost three weeks ago, on Friday, December 23.” The case is a bit of a sordid one, considering that “toward the end of Carta’s long list of accusations against Talton, Carta says that Talton both sent and received ‘sexually explicit, offensive, discriminatory and harassing messages with at least nine women including during work hours and on Carta’s systems.’” For his part, Connie also wrote that Talton was put on administrative leave in October of last year after submitting a letter to Carta’s board of directors, flagging various “problems” with the company’s culture. Later that day, Natasha reported that the company, last privately valued at $7.4billion, had been sold. cut 10% of its staff.

It seems that many institutions and banks are still struggling to offer technology-enabled services.

One Goldman Sachs GroupLast Thursday, it was reported that it had lost $3.03 billion on its platform solution business which houses financial technology and transaction banking businesses. Reuters reports: “The disclosure did not provide separate numbers for its direct-to-consumer business, Marcus, which was moved into its asset and wealth management arm. Marcus also lost money and failed introduce a checking account. Swati Bhatia, the leader of this group, was also involved. stepped down earlier this month, according to an internal announcement seen by Reuters.”

Meanwhile, Wells FargoCNBC is taking an important step back from mortgages. CNBC reported: “Instead of its previous goal of reaching as many Americans as possible, the company will now focus on home loans for existing bank and wealth management customers and borrowers in minority communities.” Interestingly, in an interview with CNBC, CEO Charlie Scharf acknowledged that the bank “will need to adapt to evolving conditions” while remaining confident about its competitive advantage. Specifically, he said: “Given the quality of the five major businesses across the franchise, we think we’re positioned to compete against the very best out there and win, whether it’s banks, nonbanks or fintechs.” To me, it feels like the move to shrink back from the housing market might open up more opportunities for fintechs.

Forbes, as mentioned above, is the final stop. reportedAn absolutely insane account of JPMorganEssentially, being conned by the founders of a start-up FrankIt acquired the assets for $175 millions. Here’s an excerpt from the Forbes piece detailing a lawsuit filed by the banking giant, which claims that founder and former CEO Charlie Javice “pitched JP Morgan in 2021 on the ‘lie’ that more than 4 million users had signed up to use Frank’s tools to apply for federal aid. When JP Morgan asked for proof during due diligence, Javice allegedly created an enormous roster of ‘fake customers’ — a list of names, addresses, dates of birth, and other personal information for 4.265 million ‘students’ who did not actually exist.” In reality, according to the suit, Frank had fewer than 300,000 customer accounts at that time.” Oof. Is this the end of due diligence??

More news

Research from Utility BidderThere are currently 700 active unicorn companies in America, 132 of them in the fintech industry. The firm’s new studyIt has been revealed that the fastest growing global fintech companies have reached $1 billion in value. Proptech PacasoIt took just six months for unicorn status to be achieved, which is the top of the list. Other companies on this list include Pipe, Clara and Brex. The firm was also ranked the most valuable fintech companies. This is the leader StripeThis is what it really just got another internal valuation cut laid off over 1,100 workers last November. Ironically, many other startups that made the top 10, including Plaid Brex, Chime, and Brex, also had layoffs in these past months. Are you wondering why Utility Bidder cares so much about fintech? I was, too. Here’s what a spokesperson told me: “Utility Bidder [is] a price comparison site for energy and utility rates, so they have a focus on business finances as well as energy as a whole.”

Platform for identity decision making and fintech unicorn AlloyIt was recently released its annual State of Fraud Benchmark Report. The report found that 70% lost over half a billion dollars to fraud last year, while 27% lost more than $1million to fraud in the previous 12 months. Additionally, 37% of fintech firms and 31% regional banks estimate losing between $1 million and $10 millions to fraud.

A Morgan Stanley spokesperson reached out to me last week after seeing our coverage of Fidelity’s acquisition of Shoobx to let me know that “Morgan Stanley at Work has invested a lot of time and resources” in its Private Markets business, “and continues to see it as an area of growth — especially as we recently just saw an astounding uptick in liquidity events during Q4 2022, which further supports the idea that private companies/startups need an effective software solution to handle these complex transactions.” The firm acquired Solium, a cap table management solution platform now called ShareworksIn 2019.

Oracle RetailLast week, the new spokesman was announced. Oracle Retail Payment Cloud Service. Via email, a spokesperson told me: “This new service equips retailers with a fixed rate model and the ability to accept all major contactless payment options including credit/debit cards and mobile wallets — all without hidden fees, long-term contracts or minimum monthly requirements. These benefits enable increased flexibility, agility and greater transparency for retailers of all sizes and industries…”

Mesh PaymentsIt has been a great help. Daniel Ochoaas its first SVP of Global Sales. Ochoa, who is based in Austin, was most recently VP of customer success and sales at TripActions. Mesh co-founder and CEO Oded Zehavi told TechCrunch via email that Ochoa was brought on “to leverage a surge in customer demand” as the company builds out “new services to meet the needs of larger companies who are more than ready to move off of legacy spend management solutions.” Sounds like Mesh, like competitor Brex last year, is going after more enterprise customers.

Speaking of Brex, here’s a fun tweet thread from former CRO and current Founders Fund partner Sam Blond about “the best outbound campaign” Brex ever ran.

GettyImages 640267784

Image credit to Getty Images: Bank sign on glass wall in business center

Funding and M&A

TechCrunch: Seen

From cloud computing to proptech: DigitalOcean co-founders raise $29M for Welcome Homes

Backed by Tiger Global, Mayfair emerges from stealth to offer businesses a higher yield on their cash

Vista Equity Partners to acquire insurance software company Duck Creek for $2.6B

And other places

Dubai-based social investing startup InvestSky picks up $3.4M pre-seed 

Proptech that offers fractional home ownership to wealthy individuals raises $30M in debt and equity

Pagaya Technologies announces acquisition of Darwin Homes

Canadian fintech Nuvei will acquire Atlanta-based payments firm Paya for $1.3B

40Seas secures $11M in equity, $100M in credit to grow cross-border trade financing platform 

Butter raises $22M led by Norwest Venture Partners to end accidental payment churn

Other stories I wrote this past week:

These 5 companies bootstrapped their way to big businesses while VCs came knocking

Sam Bankman-Fried launches Substack: ‘I didn’t steal funds, and I certainly didn’t stash billions away’

And, Equity Pod was also recorded by me and my amazing co-hosts Natasha Mascarenhas & Rebecca Szkutak Frank-ly, the Kardashian method won’t work for SBF

Whew. This was one of the busiest weeks we’ve seen in a while. Hope those of you in the U.S. have a good and restful long weekend, and if you’re outside of the U.S., I hope you have a good and restful weekend as well. Good luck and take care until next time. xoxoxo — Mary Ann

Source link

[Denial of responsibility! is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.]

Leave a Reply

Your email address will not be published. Required fields are marked *

Previous Post

Researchers Examine Reproduction Issues in Healthcare with AI; A 2021 review revealed that health-related AI models perform particularly poorly when it comes to reproduction (Emily Sohn/Nature).

Next Post

Twitter may have deliberately blocked third-party clients, such as Tweetbot

Related Posts