A nine-figure raise in fintech? Oh my
Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. 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 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 make sense of it — so you can stay in the know. — Mary Ann
Hi, since we had a little break last weekend, this edition of The Interchange is going to include news from the past two weeks. And there was a lot of it! But before we get there, let’s talk about something I haven’t had reason to write about for a long while: a nine-figure funding round.
Clear Street, which says it is building “modern infrastructure” for capital markets, raised $270 million at a $2 billion valuation in the second tranche of a Series B raise. The extension was essentially raised at a flat valuation (the company was valued at $1.7 billion when it raised the first tranche of the round in May of 2022). Nonetheless, its ability to raise so much capital during such a challenging fundraising environment is impressive. Add to that the fact that it did not raise it at a lower valuation, and we’re doubly impressed (you can hear me, Alex, and Natasha riff more about that on the Equity Podcast here).
A few things that are particularly notable about this:
Two years ago, we wouldn’t have even blinked at this funding amount, or valuation. In fact, we might have yawned. Now it’s a standout round.
It’s infrastructure. While infrastructure is not exactly sexy, it is resilient — meaning that we have consistently seen startups working on it faring better than many other fintechs. Case in point: Pismo, a Brazilian banking and payments infrastructure provider whose $108 million raise we covered here, is rumored to be courted by the likes of Visa and Mastercard in a purported $1 billion deal.
Clear Street is growing. While the company’s execs declined to provide hard revenue figures, they noted that over the past year, the company has seen the number of institutional clients on its platform increase by 500%. Meanwhile, its daily transactional volume increased by more than 300%, and its financing balances increased by nearly 150%, they said.
Anyway, it felt like a blast from the past to cover such a large raise and it only proves that my, how things have changed.
Daylight update
After mentioning the shocking allegations against LGBQT+ focused fintech Daylight a couple weeks back, the company reached out to me with a statement from CEO and co-founder Rob Curtis, who struck back at former employees. Essentially, Curtis said the company “regrets” that “some former employees felt disappointed” that the company “would not go beyond the scope” of its mission and invest its “resources in addressing systemic, societal issues affecting LGBTQ+ people.” He added: “We’re equally sad that we could not meet their personal expectations of start-up culture and continue to wish them the best in the future.”
He added: “Unfortunately, some of our former employees who were upset at being let go have since threatened the company with multi-million dollar settlement demands based on fabricated claims surrounding their employment. We disagree wholeheartedly with their negative characterization of our business, and Daylight is fully prepared to address these concerns in court.”
It’s another case of he said/she said, which is sadly becoming all too common in fintech startup land. Another example of this, as reported by Banking Dive, involves Current, a New York City–based neobank that raised a $220 million Series D in 2021 (which TC’s Sarah Perez covered here) and “is being sued for sex, race and age discrimination by its former head of talent, who claims the fintech fired her shortly before she was set to return from medical leave.” Damn. Allegations of discrimination for any reason are not good. But in this case, Isabelle Mitura says she was discriminated against for multiple reasons. Not surprisingly, a spokesperson for the company told Banking Dive that the allegations in the lawsuit were “unfounded.”
Weekly News
Seen on TechCrunch
Reports Ivan Mehta: “Twitter has partnered with the investment platform eToro to show real-time information about stocks and crypto prices. This expands upon the social network’s Cashtag feature, which provided info about a limited number of stocks and crypto coins through TradingView data. The social media company first introduced the feature in December, letting users search for a ticker or coin symbol like $TSLA, $APPL or $ETH to get prices directly in search results.” More here.
Reports Paul Sawers: “Visa is partnering with a host of financial service and payment companies for a new interoperable peer-to-peer (P2P) payment offering, one that allows people to transfer money to friends even if they use a different payment service. While digital payments have inarguably transformed the world of commerce, the sheer number of payment apps out there has hindered people’s ability to send money to other people without a little friction. If they’re both using PayPal, things work well. But if they’re not, then they either have to do a bank transfer or juggle multiple different P2P payment apps. Visa+, as Visa’s new service is called, is designed to solve that problem.” More here.
As reported by me: “Redfin has laid off 201 employees, the third time the Seattle-based real estate company has reduced its workforce since June. The layoffs, which represent about 4% of its workforce, was first reported by GeekWire. A company spokesperson confirmed the layoffs and told TechCrunch in an email that the roles were primarily in ‘real estate support’ and were ‘due to the housing downturn and economic uncertainty.’” More here.
Also in the world of proptech, TechCrunch learned last week that Austin-based Homeward conducted its third layoff since last August. The company said that this time 38 people, or 13% of the workforce, were impacted. Homeward had let go of 20% of its staff in August and then another 25% in November. A company spokesperson told TechCrunch that the first two cuts were “mainly about rightsizing” its operations team to reflect its “current contract volume with the changing housing market.” The rep added: “This time, though, we were primarily reorganizing our team to best support our new products, reduce redundancy and get closer to our goal of profitability.” TechCrunch covered Homeward’s 2021 $136 million Series B raise here.
Reports Ingrid Lunden: “Stripe, the payments and fintech giant currently valued at $50 billion, sometimes feels like it has been forever on the brink of a public listing. But in the absence of any concrete IPO moves and the transparency that the listing process brings with it, it published an annual update with a few new numbers that paint a picture of where the company is standing right now.” More here.
Meanwhile, Adyen also issued its 2022 annual report here. We didn’t get a chance to dive in there but Better Tomorrow Ventures’ Sheel Mohnot tweeted some interesting insights here.
Reports Manish Singh: “Amit Jain, the former head of Uber’s Asia Pacific division, revealed his new venture, Zamp Finance, that aims to simplify the process for businesses to invest their excess capital in US Treasury bills to hedge against bank failures and other uncertainties. Zamp offers a treasury management platform that enables businesses worldwide to invest surplus cash in U.S. Treasury bills and notes, partnering with BNY Mellon Pershing, which manages over $2 trillion. The platform serves businesses of all sizes, it said.” More here.
Reports Christine Hall: “When Silicon Valley Bank collapsed [in March], it sent massive waves across the banking and venture capital worlds, and beyond. Companies like Rippling, Brex and many others scrambled to secure funding to offset not being able to access funds, while companies on the payments side, like Etsy, worked to find alternative ways to process payments. Spend management company Airbase found itself straddling both of those worlds during the SVB crisis. TechCrunch+ spoke with CEO Thejo Kote about how Airbase not only had its funds with SVB but also was ‘the only spend management company that uses SVB as the payment rails for large parts of our platform.’” More here.
Reports Manish Singh: “In a move reminiscent of its successful early bet on the government-backed UPI network seven years ago, PhonePe, India’s leading mobile payments app, is now setting its sights on the e-commerce sector. The Bengaluru-based startup, backed by retail giant Walmart, [earlier this month] launched a hyperlocal commerce app, called Pincode, that is powered by the Open Network for Digital Commerce (ONDC), an Indian government initiative striving to democratize the e-commerce landscape by offering a zero-commission platform.” More here.
Reports Tage Kene-Okafor: “Verto, a London-based B2B cross-border foreign exchange (FX) and payments enabler for startups and small businesses, said it has acquired a quarter of Silicon Valley Bank (SVB) customers from Africa and the MENA region. According to the startup’s own data, SVB had nearly 250 clients operating in both regions before its collapse — the American bank provided startups with venture debt, credit cards, and term loans. Thus, it is onboarding over 60 companies and venture firms (some with headquarters in the U.S. and Europe), including Jumia, Chipper Cash and Taptap Send.” More here.
As reported by me: “The U.S. Securities and Exchange Commission charged Charlie Javice, the founder of student financial aid startup Frank, with fraud in connection with the $175 million sale of the company to JPMorgan Chase Bank in 2021.” More here.
Reports Mike Butcher: “As unease spread amongst a handful of entrepreneurs, alarmed at radical “reforms” proposed by the Benjamin Netanyahu-led government regarding the independence of the judiciary, WhatsApp groups were fired up, and were quickly flooded with volunteers from the tech industry.” For months, the country has been home to protests, “many of which were directly coordinated by Israeli tech entrepreneurs and investors. The latter have collectively become a key driver in the movement against the government’s proposals, alarmed as they are that Israel’s hallowed ‘Startup Nation’ reputation was at threat if the sacred rule of law became questioned at home and abroad.” Read more here.
A couple of weeks back, Haje Kamps wrote about how Smoakland was testing a loophole to sell cannabis by credit card. The test failed, apparently. As reported by Haje last week, Smoakland’s director of marketing and e-commerce Jeff Dillon told TechCrunch: “Upon further review, it has come to our attention that the way the process was described in the article could potentially be seen as bank fraud. As a result, our process partner has terminated our relationship,” More on that retreat here.
Other news I thought was interesting but didn’t get a chance to cover
Plaid launches new feature to speed up bank payments
Bluevine and Wise partner on cross-border bill payments for small businesses
Michiel Boere swaps his UberEats for Remote work as he joins the team as CFO
Stripe offers Affirm’s adaptive checkout to Canadian users
Dutch online bank Bunq applies for U.S. banking licence
Mercury partners with Stripe Atlas to make it faster and smoother to set up a company
Hello Alice launches business health score tool for small businesses
Guideline to lay off 48 Employees — 11% workforce
Zurp launches card and banking account aimed at Gen Z
April tax software launches with 12 partners
Funding and M&A
Seen on TechCrunch
MassMutual launches $100 million fund to invest in diverse founders
General Atlantic invests another $100 million in PhonePe
Lending startup Kala is helping Latin American banks more easily offer credit
Construction insurance company Billy raises additional $2.5 million
This fintech startup ideally wants to be ‘a lot more boring’ than Robinhood
Hyve gets a buzz going for its new social savings app
Gradient Ventures backs Axle’s ‘Plaid for insurance’ approach to data verification
Acorns acquires UK’s GoHenry, a fintech focused on 6- to 18-year-olds
And elsewhere
Finanzguru raises €13 million in a funding round led by PayPal and Scor Ventures
Field Materials raises $4.65 million to streamline construction material procurement
Assis, a virtual assistant for solopreneurs, raises $5 million in seed funding
SaaS buying platform Spendflo raises $11 million in funding led by Prosus, Accel
Navan acquires Tripeur (More on Navan, formerly TripActions, soon, btw.)
Paymerang adds KwikTag and Sypht to AP automation fold
PSA: The TechCrunch Podcast Network has been nominated for two Webbys in the Best Technology Podcast category. You can help TechCrunch win by voting for Chain Reaction, which digs into the wild world of crypto. Or Found which brings you the stories behind the startups by sitting down with the founders themselves. Please take a few moments to vote for your favorite at vote.webbyawards.com. You’ll find them in the podcast category under technology. Voting closes April 20.
Thanks for hanging in there ’til the end! And as always, thanks for your support in reading and sharing this little ol’ newsletter of mine. Have a wonderful weekend!! xoxo, Mary Ann
A nine-figure raise in fintech? Oh my by Mary Ann Azevedo originally published on TechCrunch