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
Last month, Andreessen Horowitz — one of venture capital’s largest and most prominent players — announced that its “headquarters will be in the cloud” going forward.
Founded in 2009 in Menlo Park, California, the firm — also known as a16z — has for years been a symbol of Silicon Valley investing.
Its new philosophy in this post-COVID era of remote work is that there is no longer a need for a centralized HQ. This philosophy extends to its fintech team. And let’s face it, fintech is opening so many doors in general — making a lot more things possible in terms of running a company or just operating in general, globally. Many may underestimate just how much the pandemic really pushed this acceleration in the financial services world and people are now kind of commenting, “Oh, there’s this slowdown and, like, look at how much decreased investment is in fintech.” You have to put it in perspective — we’re still way, way up from 2020 in terms of how much money is going into this space. And fintech is still taking almost a fifth of all venture capital dollars. I believe this is because it impacts everyone on a daily basis. If financial services are easier to access or if it’s easier for a business to operate or make payments or accept payments, then that’s all because of fintech.
I sat down (virtually, that is) with a16z general partners Angela Strange and Anish Acharya to learn more about why the pair believes we’re experiencing the “unbundling of Silicon Valley,” what sectors of fintech have the most potential and how the new era of remote work has led to so.much.opportunity for financial technology startups.
Read more here.
Reporter’s note: The interview with Angela and Anish interview took place weeks prior to publication, and I learned after publication that a recent analysis reportedly revealed that of the firm’s fintech portfolio of 42 companies, only four had female co-founders. I have reached out to the partners on the topic this weekend but I had not heard back at the time of this newsletter going live. Of course, it is the weekend so I was not expecting a response quite so soon. If I hear back, I’ll update you next weekend!
Weekly News
My fintech partner in crime, the oh-so-talented Natasha Mascarenhas, ended the week with a scoop about Stripe laying off some of the employees that support TaxJar, a tax compliance startup that it acquired last year. According to Natasha: “The layoffs – conducted over the last month – are related to Stripe’s decision to wind down TaxJar-focused go-to-market efforts in late July. Sources estimate the number of employees impacted by the workforce reduction is between 45 to 55 folks, at least a portion of whom were invited to take 30 days to apply to internal jobs at Stripe…According to LinkedIn, TaxJar’s co-founder Matt Anderson left Stripe in July, followed by folks in the sales, marketing and partnerships teams.” Read more here.
The world of expense management just got (even more) competitive. Corporate spend and cash management company Rho announced that it is adding expense management to its offerings with “custom controls designed to make expenses less painful.”
Via email, the company told me it believes that “offering the full suite” is crucial in the world of fintech today. Specifically, a spokesperson said: “When looking at the landscape, there are ten different providers for every individual process: spend management (ex. Brex), expenses (ex. Expensify), and banking services (ex. Mercury). Cobbling together different platforms for these separate functions creates friction for finance users. Rho believes in the power of integrating spend management and business banking services. Each corporate finance process — AP, commercial banking, spend management/cards, treasury management — works better when they work together in a single, connected view.”
The startup in December raised a $75 million Series B funding round led by Dragoneer Investment Group.
Speaking of spend management, Airbase announced the appointment of Philip Lacor as its chief revenue officer. Lacor most recently served as CRO for no-code platform company Unqork, where he handled all go-to-market efforts, including sales, pre-sales consulting, customer success, revenue operations and channel partners. He also led the company’s expansion into APAC. Before that, he was CRO at Envoy.
Mexican fintech Covalto, which serves Mexican SMEs and was formerly known as Credijusto, has agreed to publicly list on a U.S. stock exchange via a SPAC at an estimated pro-forma valuation of $547 million. The transaction is believed to be the first time a Mexican fintech has agreed to publicly list on a U.S. stock exchange. In a press release, the company said it was merging with LIV Capital Acquisition Corp. II, a special purpose acquisition company launched by Mexico City–based fund LIV Capital. Upon closing of the transaction, LIVB will be renamed Covalto and remain listed on Nasdaq under the new ticker symbol “CVTO.” The company said originations grew at a 152% CAGR from 2015 to 2021. More here.
While we’re on the topic of public markets, something interesting is happening with fintech stocks, according to F-Prime’s Fintech Index. The Index has picked up a 41% increase, compared to EMCloud’s 19.5%, Nasdaq’s 15.6%, and S&P’s 12.2% increases. Notably, it said, Affirm is leading the pack and is up 67%. Insurance stocks are up 46% overall, led by Lemonade and Oscar Health. Payment stocks are up 44% driven by Wise and Mercado Libre. Wealth and asset management stocks are also up 32%, driven by Coinbase and Bakkt Holdings. Meanwhile, banking and lending stocks are up 24%.
Speaking of Affirm. The buy now, pay later giant announced an expanded, multiyear partnership with BigCommerce that “makes Affirm the preferred and recommended pay-over-time partner for BigCommerce’s tens of thousands of merchants,” according to the two companies. As a result of this partnership, BigCommerce’s merchants can activate Affirm as a payment option at checkout directly within the BigCommerce merchant dashboard.
On August 12, PayPal announced that “all eligible PayPal account holders in the U.S. can now transfer, send and receive cryptocurrency with PayPal.” TechCrunch had reported that the move would be taking place in early June.
Robinhood rolled out a couple of new features last week. For one, it launched advanced charts, with the goal of “giving all customers customizable, quick, simple and in-depth analysis right in the app.” The company said that advanced charts were “the number one most requested feature” from its active customers. The company also launched Cash Card Offers, a new benefit that allows all Cash Card customers to earn cash back “automatically” when spending at retailers such as Chevron, Nike, Five Guys, Macy’s, and others.
From PitchBook on payments: “The accelerated digitalization of financial services, as well as the shift to online services, has benefited fintech startups over the last few years. The COVID-19 pandemic helped speed up these trends as consumers turned to digital financial services in lieu of face-to-face interactions…Digital payments, one of the earliest financial segments to go digital, has continued to see rapid disruption during this period. Checkout platforms have benefited from demand for online and contactless transactions, remote working has driven a need for payroll software providers, and corporate credit card providers like Ramp and Brex have reportedly seen revenues surge.”
Hello Alice, which says it is “helping over 1,000,000 small businesses grow,” has announced a new Small Business Mastercard. The card was launched on August 16 in partnership with Mastercard and First National Bank of Omaha, and offers small business owners features such as a rewards program featuring the ability to earn points by completing “business-advancing activities” on the Hello Alice platform. The company says it recently completed a Small Business Capital Access Study and found that 78% of owners claim access to capital is limiting their ability to manage their day-to-day operations, with Black (84%) and multiracial (82%) owners overindexing on this claim. In its words, Hello Alice designed the card “to meet the needs of small business owners where they are, breaking longstanding barriers for those who have traditionally been denied access.”
Funding and M&A
Seen on TechCrunch
Pomelo exits stealth mode with $20M seed to rethink international money transfer
Tiger Global doubles down on Indian savings and investments app Jar
Pastel, a Nigerian bookkeeping and digital platform for merchants, raises $5.5M led by TLcom
Highbeam inks $7M to shine light on e-commerce-specific banking needs
Funding Circle co-founder unveils new Super Payments fintech venture with $27M investment
Rocketplace raises $9M in seed funding to build the ‘Fidelity for crypto’
Social investment platform eToro to acquire fintech startup Gatsby for $50M
YC-backed Arc, a digital bank for ‘high-growth’ SaaS startups, lands $20M Series A
Seen elsewhere
Payments company AtoB raises $155M in Series B to ‘modernize trucking industry’
Ecuadorian ‘unicorn’ Kushki buys finance service startup in Mexican expansion. TechCrunch covered the company’s $100 million raise at a $1.5 billion valuation in June.
Closinglock announces $4M in funding led by LiveOak Venture Partners
ICYMI: Digital credit fintech Kapital raises $30 million in debt and equity to grow in Mexico and Colombia
Another busy fintech week down in the books. Thanks, as always, for your support in reading and sharing this newsletter of mine! Have a wonderful week ahead. xoxo, Mary Ann