In 2013, Colombian businessman David Velez decided to reinvent the Brazilian banking system. He didn’t speak Portuguese, nor was he an engineer or a banker, but he did have the conviction that the system was broken and that he could fix it. And as a former Sequoia VC, he also had access to capital.
His gut instinct and market analysis were right. Today, Nubank announced a $750 million extension to its Series G (which rang in at $400 million this past January), bringing the round to a total of $1.15 billion and their valuation to $30 billion — $5 billion more than when we covered them in January.
The extension funding was led by Berkshire Hathaway, which put in $500 million, and a number of other investors.
Velez and his team decided now was a good time to raise again, because, “We saw a great opportunity in terms of growth rate and we’re very tiny when compared to the incumbents,” he told TechCrunch.”
Nubank is the biggest digital bank in the world by number of customers: 40 million. The company started as a tech company in Brazil that offered only a fee-free credit card with a line of credit of R$50 (about USD$10).
It now offers a variety of financial products, including a digital bank account, a debit card, insurance, P2P payment via Pix (the Brazilian equivalent of Zelle), loans, rewards, life insurance and an account and credit card for small business owners.
Nubank serves unbanked or underserviced citizens in Brazil — about 30% of the population — and this approach can be extremely profitable because there are many more clients available.
The banking system in Brazil is one of the few bureaucracies in the country that is actually quite skillful, but the customer service remains unbearable, and banks charge exorbitant fees for any little transaction.
Traditionally, the banking industry has been dominated by five major traditional banks: Itaú Unibanco, Banco do Brasil, Bradesco, Santander and Caixa Economica Federal.
While Brazil remains Nubank’s primary market, the company also offers services in Colombia and Mexico (services launched in Mexico in 2018). The company still only offers the credit card in both countries.
“The momentum we’re seeing in Mexico is terrific. Our Mexican credit card net promoter score (NPS) is 93, which is the highest we’ve had in Nubank history. In Brazil the highest we’ve had was 88,” Velez said.
The company has been on a hiring spree in the last few months, and brought on two heavyweight executives. Matt Swann replaced Ed Wible (the original CTO and co-founder). Wible continues to be an important player in the company, but more in a software developer capacity. Swann previously served as CTO at Bookings.com and StubHub, and as CIO of the Global Consumer Bank at Citi, so he brings years of experience of scaling tech businesses, which is what Nubank is focused on now, though Velez wouldn’t confirm which countries are next.
The other major hire, Arturo Nunez, fills the new role of chief marketing officer. Nunez was head of marketing for Apple Latin America, amongst other roles with Nike and the NBA.
It may sound a little odd for a tech company not to have had a head of marketing, but Nubank takes pride in having a $0 cost of acquisition (CAC). Instead of spending money on marketing, they spend it on customer service and then rely on word of mouth to get the word out.
Since we last spoke with Velez in January regarding the $400 million Series G, the company went from having 34 million customers to now having 40 million in a span of roughly 6 months. The funds will be used to grow the business, including hiring more people.
“We’ve seen the entire market go digital, especially people who never thought they would,” Velez said. “There is really now an avalanche of all backgrounds [of people] who are getting into digital banking.”
Here in the U.S. the concept of using driver’s data to decide the cost of auto insurance premiums is not a new one.
But in markets like Brazil, the idea is still considered relatively novel. A new startup called Justos claims it will be the first Brazilian insurer to use drivers’ data to reward those who drive safely by offering “fairer” prices.
And now Justos has raised about $2.8 million in a seed round led by Kaszek, one of the largest and most active VC firms in Latin America. Big Bets also participated in the round along with the CEOs of seven unicorns including Assaf Wand, CEO and co-founder of Hippo Insurance; David Velez, founder and CEO of Nubank; Carlos Garcia, founder and CEO Kavak; Sergio Furio, founder and CEO of Creditas; Patrick Sigris, founder of iFood and Fritz Lanman, CEO of ClassPass. Senior executives from Robinhood, Stripe, Wise, Carta and Capital One also put money in the round.
Serial entrepreneurs Dhaval Chadha, Jorge Soto Moreno and Antonio Molins co-founded Justos, having most recently worked at various Silicon Valley-based companies including ClassPass, Netflix and Airbnb.
“While we have been friends for a while, it was a coincidence that all three of us were thinking about building something new in Latin America,” Chadha said. “We spent two months studying possible paths, talking to people and investors in the United States, Brazil and Mexico, until we came up with the idea of creating an insurance company that can modernize the sector, starting with auto insurance.”
Ultimately, the trio decided that the auto insurance market would be an ideal sector considering that in Brazil, an estimated more than 70% of cars are not insured.
The process to get insurance in the country, by any accounts, is a slow one. It takes up to 72 hours to receive initial coverage and two weeks to receive the final insurance policy. Insurers also take their time in resolving claims related to car damages and loss due to accidents, the entrepreneurs say. They also charge that pricing is often not fair or transparent.
Justos aims to improve the whole auto insurance process in Brazil by measuring the way people drive to help price their insurance policies. Similar to Root here in the U.S., Justos intends to collect users’ data through their mobile phones so that it can “more accurately and assertively price different types of risk.” This way, the startup claims it can offer plans that are up to 30% cheaper than traditional plans, and grant discounts each month, according to the driving patterns of the previous month of each customer.
“We measure how safely people drive using the sensors on their cell phones,” Chadha said. “This allows us to offer cheaper insurance to users who drive well, thereby reducing biases that are inherent in the pricing models used by traditional insurance companies.”
Justos also plans to use artificial intelligence and computerized vision to analyze and process claims more quickly and machine learning for image analysis and to create bots that help accelerate claims processing.
“We are building a design driven, mobile first and customer experience that aims to revolutionize insurance in Brazil, similar to what Nubank did with banking,” Chadha told TechCrunch. “We will be eliminating any hidden fees, a lot of the small text and insurance specific jargon that is very confusing for customers.”
Justos will offer its product directly to its customers as well as through distribution channels like banks and brokers.
“By going direct to consumer, we are able to acquire users cheaper than our competitors and give back the savings to our users in the form of cheaper prices,” Chadha said.
Customers will be able to buy insurance through Justos’ app, website, or even WhatsApp. For now, the company is only adding potential customers to a waitlist but plans to begin selling policies later this year..
During the pandemic, the auto insurance sector in Brazil declined by 1%, according to Chadha, who believes that indicates “there is latent demand rearing to go once things open up again.”
Justos has a social good component as well. Justos intends to cap its profits and give any leftover revenue back to nonprofit organizations.
The company also has an ambitious goal: to help make insurance become universally accessible around the world and the roads safer in general.
“People will face everyday risks with a greater sense of safety and adventure. Road accidents will reduce drastically as a result of incentives for safer driving, and the streets will be safer,” Chadha said. “People, rather than profits, will become the focus of the insurance industry.”
Justos plans to use its new capital to set up operations, such as forming partnerships with reinsurers and an insurance company for fronting, since it is starting as an MGA (managing general agent).
It’s also working on building out its products such as apps, its back end and internal operations tools as well as designing all its processes for underwriting, claims and finance. Justos’ data science team is also building out its own pricing model.
The startup will be focused on Brazil, with plans to eventually expand within Latin America, then Iberia and Asia.
Kaszek’s Andy Young said his firm was impressed by the team’s previous experience and passion for what they’re building.
“It’s a huge space, ripe for innovation and this is the type of team that can take it to the next level,” Young told TechCrunch. “The team has taken an approach to building an insurance platform that blends being consumer centric and data driven to produce something that is not only cheaper and rewards safety but as the brand implies in Portuguese, is fairer.”
Penfold, a startup that offers a full-stack pension in a smartphone app, has closed an $8.5 million (£6 million) funding round, $4 million of which was from a crowdfunding campaign. The company is now approved by the FCA to operate a pension itself rather than relying on third parties and is aimed at freelancers who rarely save. The round was led by Bridford Group.
Penfold says it built the back-end infrastructure “from scratch,” CEO Pete Hykin told me. He said legacy providers are built up from “100s of consolidated schemes” and are often still paper-based and require an army of people to administer. Thus a tech-driven approach means fewer overheads and the ability to make an attractive offer to freelancers.
Hykin continued: “I was self-employed for two years so had no pension. I tried five times to set one up with Scottish Widows, Standard Life, AJ Bell, etc. I gave up, as all of them forced you to print something, call them or speak to an IFA. At a previous company, I set up a workplace pension for 70 staff and none of them engaged. Many left money on the table as a result.
“We rebuilt the entire back end of pensions so all processes can happen instantly, quick, flexibly and at a low cost. Then we put an amazing UX on it via a great app and amazing human customer service.” Features include search, track and consolidate old pensions, among others.
Hykin said users download the app, enter bare minimum legal details for KYC, choose one of five investment plans based on age/risk appetite, choose how to fund (recurring direct debit, open banking top up or transfer another pension). Then they receive HMRC 25% top ups until retirement.
A “Find my pension” tool is possibly the most powerful feature of this startup, where you put in the name of your old employer and it tracks down your old pension pot.
Its competitors include traditional providers such as Standard Life, Scottish Widows, Aviva and AJ Bell.
Pensions are definitely heading to apps. PensionBee recently arrived on the London Stock Exchange, for instance. PensionBee also recently announced self-employed offering.
Users will be charged an annual percentage fee on their pension balance (0.75%), but with no other fees. The other founders are Chris Eastwood (co-founder and co-CEO) and Stuart Robinson (co-Founder and CTO).
The relationships between banks and fintechs are multi-faceted.
In some cases, they partner. In many cases, they compete. In other cases, one acquires or invests in the other.
Well, today, an announcement by global payments giant Visa is aimed at helping facilitate banks and fintechs’ ability to work together.
Specifically, Visa said today it has expanded its Visa Fintech Partner Connect, a program designed to help financial institutions quickly connect with a “vetted and curated” set of technology providers.
I talked with Terry Angelos, senior vice president and global head of fintech at Visa, to understand just exactly what that means.
“Global fintech investment last year was $105 billion,” Angelos said. “There were about 2,861 deals in venture, PE and M&A. So literally over $100 billion is going into fintech, which is more than the combined tech budgets of every bank in the U.S. As a result, a lot of innovation that is occurring in fintech is funded by venture dollars. We’re trying to bring that innovation to our clients, whether they are banks, processors or other fintechs.”
The program initially launched in Europe in November of 2020, and now is available in the U.S., Asia Pacific, Latin American and CEMEA (Central Europe, Middle East and Africa). Visa has worked to identify fintechs that can help banks and financial institutions (that are clients of Visa’s) as well as other fintechs “create digital-first experiences, without the cost and complexity of building the back-end technology in-house.”
Local teams will run programs in the respective regions, and vet and manage partners in the following categories: account opening, data aggregation, analytics and security, customer engagement and new cardholder services and operations and compliance.
So far, Visa has identified about 60 partners that offer a range of technologies — from back-office functions to new front-end services, according to Angelos. Those partners include Alloy, Jumio, Argyle, Fidel, FirstSource, TravelBank, Canopy, Hummingbird and Unit21, among others. Twenty-four are located in the U.S.
“So much of fintech focus and coverage is about disrupting existing banks. Everyone is trying to disrupt everyone, including fintechs like PayPal,” Angelos told TechCrunch. “Venture numbers are certainly very large. What we’re realizing is there is a significant opportunity to pair up a lot of venture-backed companies with our existing clients. It runs a little bit against us versus them approach you typically hear about.”
Visa clients can get in touch with program partners via the Visa Partner website and get benefits such as reduced implementation fees and pricing discounts.
“The Fintech Connect program is about both helping to identify and curate interesting fintech companies and then create a favorable commercial partnership for our clients so they can engage with these Fintech Connect partners,” Angelos said.
So, what does Visa gain from all this?
“Our goal is that all of our clients are in a position to build better digital experiences for their consumers,” he told TechCrunch. “We would love it if every bank had the latest tools in order to onboard clients and build digital experiences.”
One of its partners, for example, is virtual card startup Extend.
“There are fintechs that provide this today such as TripActions, Ramp and Divvy,” Angelos points out. “But what Visa is doing is looking at ‘How can we enable our banking clients to do something similar?’ So we’re bringing innovation into our ecosystem so that anyone can take advantage.”
It can also help companies such as TripActions, Ramp or Divvy with other complementary technologies for security posture, for example.
“The net beneficiary is to hopefully move more spending onto those rails,” Angelos said. “For example, if you look at B2B spend, there’s about $120 trillion of it annually. We believe about $20 trillion of that is card eligible. Today, Visa captures about $1 trillion of that. So, another $19 trillion is available for Visa to capture through our partners if our banks and fintechs can build these kinds of solutions to enable B2B payments.”
To be clear, Visa also invests in startups from time to time. But this initiative is distinct from those efforts, although a couple of its partners have been recipients of funding from Visa.
Amount, a company that provides technology to banks and financial institutions, has raised $99 million in a Series D funding round at a valuation of just over $1 billion.
WestCap, a growth equity firm founded by ex-Airbnb and Blackstone CFO Laurence Tosi, led the round. Hanaco Ventures, Goldman Sachs, Invus Opportunities and Barclays Principal Investments also participated.
Notably, the investment comes just over five months after Amount raised $86 million in a Series C round led by Goldman Sachs Growth at a valuation of $686 million. (The original raise was $81 million, but Barclays Principal Investments invested $5 million as part of a second close of the Series C round). And that round came just three months after the Chicago-based startup quietly raised $58 million in a Series B round in March. The latest funding brings Amount’s total capital raised to $243 million since it spun off from Avant — an online lender that has raised over $600 million in equity — in January of 2020.
So, what kind of technology does Amount provide?
In simple terms, Amount’s mission is to help financial institutions “go digital in months — not years” and thus, better compete with fintech rivals. The company formed just before the pandemic hit. But as we have all seen, demand for the type of technology Amount has developed has only increased exponentially this year and last.
CEO Adam Hughes says Amount was spun out of Avant to provide enterprise software built specifically for the banking industry. It partners with banks and financial institutions to “rapidly digitize their financial infrastructure and compete in the retail lending and buy now, pay later sectors,” Hughes told TechCrunch.
Specifically, the 400-person company has built what it describes as “battle-tested” retail banking and point-of-sale technology that it claims accelerates digital transformation for financial institutions. The goal is to give those institutions a way to offer “a secure and seamless digital customer and merchant experience” that leverages Amount’s verification and analytics capabilities.
Image Credits: Amount
HSBC, TD Bank, Regions, Banco Popular and Avant (of course) are among the 10 banks that use Amount’s technology in an effort to simplify their transition to digital financial services. Recently, Barclays US Consumer Bank became one of the first major banks to offer installment point-of-sale options, giving merchants the ability to “white label” POS payments under their own brand (using Amount’s technology).
“The pandemic dramatically accelerated banks’ interest in further digitizing the retail lending experience and offering additional buy now, pay later financing options with the rise of e-commerce,” Hughes, former president and COO at Avant, told TechCrunch. “Banks are facing significant disruption risk from fintech competitors, so an Amount partnership can deliver a world-class digital experience with significant go-to-market advantages.”
Also, he points out, consumers’ digital expectations have changed as a result of the forced digital adoption during the pandemic, with bank branches and stores closing and more banking done and more goods and services being purchased online.
Amount delivers retail banking experiences via a variety of channels and a point-of-sale financing product suite, as well as features such as fraud prevention, verification, decisioning engines and account management.
Overall, Amount clients include financial institutions collectively managing nearly $2 trillion in U.S. assets and servicing more than 50 million U.S. customers, according to the company.
Hughes declined to provide any details regarding the company’s financials, saying only that Amount “performed well” as a standalone company in 2020 and that the company is expecting “significant” year-over-year revenue growth in 2021.
Amount plans to use its new capital to further accelerate R&D by investing in its technology and products. It also will be eyeing some acquisitions.
“We see a lot of interesting technology we could layer onto our platform to unlock new asset classes, and acquisition opportunities that would allow us to bring additional features to our platform,” Hughes told TechCrunch.
Avant itself made its first acquisition earlier this year when it picked up Zero Financial, news that TechCrunch covered here.
Kevin Marcus, partner at WestCap, said his firm invested in Amount based on the belief that banks and other financial institutions have “a point-in-time opportunity to democratize access to traditional financial products by accelerating modernization efforts.”
“Amount is the market leader in powering that change,” he said. “Through its best-in-class products, Amount enables financial institutions to enhance and elevate the banking experience for their end customers and maintain a key competitive advantage in the marketplace.”
Egypt has a population of over 100 million people. The country has a high mobile and internet penetration necessary for a young and tech-savvy population with 61% below 30. But despite its youthful population, two out of every three individuals are currently unbanked in Egypt. It’s the same situation in MENA, where only 40% of the population have access to a bank account.
Digital banks have enormous potential in the region. Today, a newly launched one, Telda is announcing a $5 million pre-seed round to digitize how Egyptians save, send, and spend money.
Two weeks ago, we reported that Egyptian e-commerce fulfillment startup Flextock had raised the largest pre-seed in MENA. But that has changed today with Telda’s fundraise surpassing that record with a considerable margin in both MENA and Africa (Autochek’s $3.4 million) for now.
Telda was launched last month by CEO Ahmed Sabbah and CTO Youssef Sholqamy. Before Telda, Sabbah was the co-founder and CTO of Egypt’s ride-hailing company Swvl, and Sholqamy, a former senior engineer in Uber’s infrastructure team. Sabbah said he and his co-founder had been looking at the fintech space at their former workplaces. However, after his experience using N26 while visiting a friend in Berlin in 2015, his eyes opened to the possibilities of digital banking in Egypt.
“I was fond of the idea, and it was coming from a huge pain of payments we had in Egypt and the region. And for me, I was kind of like waiting for this to happen in Egypt, or if not, I thought I’ll tap into the opportunity someday,” he told TechCrunch. “Youcef and I have been like watching out the space for a while when the first digital bank started like six years ago, and watching how they grew in markets where we think banking is more mature than this region. So imagine an opportunity in a region like Egypt where banking is even way, way less mature.”
The North African country is one of the highest consumer spending markets in Africa. Its private consumption accounts for nearly 85% of its nominal GDP, and only 4% of its overall GDP is cashless. In essence, Egypt is heavily cash reliant, and card usage in the country is very much in its infancy. Disheartened by the non-customer-centric banking experiences, Telda was launched to provide an alternative.
Image Credits: Telda
Like any digital bank globally, Telda enables customers to create a free account to send and receive money. And also a card to use online, in stores, make withdrawals and pay bills. But while the service is currently live, Telda cards are yet to be distributed to existing and new customers.
Telda affirmed that it is the first company to receive a license from the Central Bank of Egypt (CBE) under its new regulations to issue cards and onboard customers digitally. And by doing so, the one-month-old company has made major progress in a relatively short time, even though obtaining that license took lengthy dialogue with regulators.
“First movers will usually have to make all the effort with the regulators and with the bank and try to pave the way. So this was one of the hardest parts — convincing regulators to trust and regulate our banking business and to provide payment financial services to our consumers,” the CEO said. But because Telda’s proposition aligns with the CBE’s vision of digitizing payments in the country, it had little choice but to grant them the license.
A different issue the company has faced was finding a partner bank to provide these services. And to do that, Telda had to convince the bank that their services were complementary and wouldn’t entirely overlap.
“That means basically trying to be as much independent as possible from the infrastructure of the bank. This was quite crucial for us to be able to move right and as fast as a startup, not as slow and pretty much tied to the pace of the bank’s technology and operations,” he continued.
Due to the founders’ experience in Swvl and Uber, the importance of building a great team cannot be overemphasized. There’s barely any blueprint to look at in launching a digital bank in Egypt, so Telda is building how it knows best: hiring exceptional talent. According to the CEO, the team comprises Egyptians who returned to the North African country to build Telda after working for corporations like Facebook, Microsoft, Uber, Noon, and McKinsey.
MENA appears to be ripe for a digital banking experience. Per GSMA Intelligence, 280 million people in the region are mobile internet users, and growth is not slowing down. The frustration with traditional banks is particularly acute with the younger generation, who crave a simple, user-friendly, and transparent experience. Telda has been able to onboard an impressive list of investors, including Sequoia Capital, for this reason.
The giant US VC firm led the pre-seed round as Berlin-based Global Founders Capital (GFC) and emerging markets-focused fund Class 5 Global participated.
Telda is Sequoia’s first venture in Africa, MENA, and the wider GCC region. Eight years ago, the VC giant led an infamous seed investment in Latin American digital bank Nubank before it began to go full throttle. Now with more than 38 million customers, Nubank is the world’s largest digital bank with a valuation of $25 billion. Sequoia will be looking for a similar success story in Telda.
“There are many parallels between Brazil and Egypt. Both countries boast a large, young, talented, and tech-savvy population with a strong appetite to innovate,” said Sequoia Partner George Robson of the investment. “We are delighted to partner with Telda and earmark our first investment in the region.”
Telda intends to fast-track its card production and distribution with this new funding. The company said it currently has more than 30,000 signups already, with half of that already requesting cards. It also plans to capitalize on Sequoia’s name for hiring and expansion, the CEO continued.
“I think hiring is key for us. We want to scale the team into a world-class team that’s willing to tap into the opportunity. What we aspire for is basically growing in Egypt, start to deliver cards for the early adopters, and we see ourselves reaching close to a million cards in our first year.”
Investments in Egypt have been growing in leaps and bounds over the past three years, accompanied by a growing, vibrant ecosystem. Egypt recorded the largest number of investment deals last year per Partech Africa. With 86 deals completed, the country contributed 24% to the total number of deals made on the continent.
GFC partner Roel Janssen referring to the budding ecosystem in his statement, said: “We are highly impressed by Sabbah and Sholqamy and love their vision for building the region’s leading digital banking app, and we are proud to be part of their journey. It is GFC’s first investment in Egypt, and we see that Egypt has the potential to become an important hub in the global tech ecosystem.”
Class 5 global managing partner Youcef Oudjane said, “Money has become a medium of self-expression — a form of identity — not solely a store of value. Telda has done a remarkable job of embedding their culture and values in the product, in both functionality and design.”
Update: An earlier part of this article stated that Sequoia had made a few Sub-Saharan African investments in startups like Healthlane and OPay. However, those investments were executed by Sequoia China (a subsidiary of Sequoia) and a Sequoia scout, respectively.
Australian security software house Click Studios has told customers not to post emails sent by the company about its data breach, which allowed malicious hackers to push a malicious update to its flagship enterprise password manager Passwordstate to steal customer passwords.
Last week, the company told customers to “commence resetting all passwords” stored in its flagship password manager after the hackers pushed the malicious update to customers over a 28-hour window between April 20-22. The malicious update was designed to contact the attacker’s servers to retrieve malware designed to steal and send the password manager’s contents back to the attackers.
In an email to customers, Click Studios did not say how the attackers compromised the password manager’s update feature, but included a link to a security fix.
But news of the breach only became public after Danish cybersecurity firm CSIS Group published a blog post with details of the attack hours after Click Studios emailed its customers.
Click Studios claims Passwordstate is used by “more than 29,000 customers,” including in the Fortune 500, government, banking, defense and aerospace, and most major industries.
In an update on its website, Click Studios said in a Wednesday advisory that customers are “requested not to post Click Studios correspondence on Social Media.” The email adds: “It is expected that the bad actor is actively monitoring Social Media, looking for information they can use to their advantage, for related attacks.”
“It is expected the bad actor is actively monitoring social media for information on the compromise and exploit. It is important customers do not post information on Social Media that can be used by the bad actor. This has happened with phishing emails being sent that replicate Click Studios email content,” the company said.
Besides a handful of advisories published by the company since the breach was discovered, the company has refused to comment or respond to questions.
It’s also not clear if the company has disclosed the breach to U.S. and EU authorities where the company has customers, but where data breach notification rules obligate companies to disclose incidents. Companies can be fined up to 4% of their annual global revenue for falling foul of Europe’s GDPR rules.
Click Studios chief executive Mark Sandford has not responded to repeated requests (from TechCrunch) for comment. Instead, TechCrunch received the same canned autoresponse from the company’s support email saying that the company’s staff are “focused only on assisting customers technically.”
TechCrunch emailed Sandford again on Thursday for comment on the latest advisory, but did not hear back.
Weav, which is building a universal API for commerce platforms, is emerging from stealth today with $4.3 million in funding from a bevy of investors, and a partnership with Brex.
Founded last year by engineers Ambika Acharya, Avikam Agur and Nadav Lidor after participating in the W20 YC batch, Weav joins the wave of fintech infrastructure companies that aim to give fintechs and financial institutions a boost. Specifically, Weav’s embedded technology is designed to give these organizations access to “real time, user-permissioned” commerce data that they can use to create new financial products for small businesses.
Its products allow its customers to connect to multiple platforms with a single API that was developed specifically for the commerce platforms that businesses use to sell products and accept payments. Weav operates under the premise that allowing companies to build and embed new financial products creates new opportunities for e-commerce merchants, creators and other entrepreneurs.
Left to right: Co-founders Ambika Acharya, Nadav Lidor and Avikam Agur; Image courtesy of Weav
In a short amount of time, Weav has seen impressive traction. Recently, Brex launched Instant Payouts for Shopify sellers using the Weav API. It supports platform integrations such as Stripe, Square, Shopify and PayPal. (More on that later.) Since its API went live in January, “thousands” of businesses have used new products and services built on Weav’s infrastructure, according to Lidor. Its API call volume is growing 300% month over month, he said.
And, the startup has attracted the attention of a number of big-name investors, including institutions and the founders of prominent fintech companies. Foundation Capital led its $4.3 million seed round, which also included participation from Y Combinator, Abstract Ventures, Box Group, LocalGlobe, Operator Partners, Commerce Ventures and SV Angel.
A slew of founders and executives also put money in the round, including Brex founders Henrique Dubugras and Pedro Franceschi; Ramp founder Karim Atiyeh; Digits founders Jeff Seibert and Wayne Chang; Hatch founder Thomson Nguyen; GoCardless founder Matt Robinson and COO Carlos Gonzalez-Cadenas; Vouch founder Sam Hodges; Plaid’s Charley Ma as well as executives from fintechs such as Square, Modern Treasury and Pagaya.
Foundation Capital’s Angus Davis said his firm has been investing in fintech infrastructure for over a decade. And personally, before he became a VC, Davis was the founder and CEO of Upserve, a commerce software company. There, he says, he witnessed firsthand “the value of transactional data to enable new types of lending products.”
Foundation has a thesis around the type of embedded fintech that Weav has developed, according to Davis. And it sees a large market opportunity for a new class of financial applications to come to market built atop Weav’s platform.
“We were excited by Weav’s vision of a universal API for commerce platforms,” Davis wrote via email. “Much like Plaid and Envestnet brought universal APIs to banking for consumers, Weav enables a new class of B2B fintech applications for businesses.”
Weav says that by using its API, companies can prompt their business customers to “securely” connect their accounts with selling platforms, online marketplaces, subscription management systems and payment gateways. Once authenticated, Weav aggregates and standardizes sales, inventory and other account data across platforms and develops insights to power new products across a range of use cases, including lending and underwriting; financial planning and analysis; real-time financial services and business management tools.
For the last few years, there’s been a rise of API companies, as well as openness in the financial system that’s largely been focused on consumers, Lidor points out.
“For example, Plaid brings up very rich data about consumers, but when you think about businesses, oftentimes that data is still locked up in all kinds of systems,” he told TechCrunch. “We’re here to provide some of the building blocks and the access to data from everything that has to do with sales and revenue. And, we’re really excited about powering products that are meant to make the lives of small businesses and e-commerce, sellers and creators much easier and be able to get them access to financial products.”
In the case of Brex, Weav’s API allows the startup to essentially offer instant access to funds that otherwise would take a few days or a few weeks for businesses to access.
“Small businesses need access as quickly as possible to their revenue so that they can fund their operations,” Lidor said.
Brex co-CEO Henrique Dubugras said that Weav’s API gives the company the ability to offer real-time funding to more customers selling on more platforms, which saved the company “thousands of engineering hours” and accelerated its rollout timeline by months.
Clearly, the company liked what it saw, considering that its founders personally invested in Weav. Is Weav building the “Plaid for commerce”? Guess only time will tell.
Click Studios, the Australian software house that develops the enterprise password manager Passwordstate, has warned customers to reset passwords across their organizations after a cyberattack on the password manager.
An email sent by Click Studios to customers said the company had confirmed that attackers had “compromised” the password manager’s software update feature in order to steal customer passwords.
The email, posted on Twitter by Polish news site Niebezpiecznik early on Friday, said the malicious update exposed Passwordstate customers over a 28-hour window between April 20-22. Once installed, the malicious update contacts the attacker’s servers to retrieve malware designed to steal and send the password manager’s contents back to the attackers. The email also told customers to “commence resetting all passwords contained within Passwordstate.”
Manager haseł PasswordState został zhackowany a komputery klientów zainfekowane.
Producent informuje ofiary e-mailem.
Ten manager haseł jest "korporacyjny", więc problem będzie dotyczyć przede wszystkim firm… Auć!
(Informacja od Tajemniczego Pedro) pic.twitter.com/PGHhmEKpje
— Niebezpiecznik (@niebezpiecznik) April 23, 2021
Click Studios did not say how the attackers compromised the password manager’s update feature, but emailed customers with a security fix.
The company also said the attacker’s servers were taken down on April 22. But Passwordstate users could still be at risk if the attacker’s are able to get their infrastructure online again.
Enterprise password managers let employees at companies share passwords and other sensitive secrets across their organization, such as network devices — including firewalls and VPNs, shared email accounts, internal databases, and social media accounts. Click Studios claims Passwordstate is used by “more than 29,000 customers,” including in the Fortune 500, government, banking, defense and aerospace, and most major industries.
Although affected customers were notified this morning, news of the breach only became widely known several hours later after Danish cybersecurity firm CSIS Group published a blog post with details of the attack.
Click Studios chief executive Mark Sanford did not respond to a request for comment outside Australian business hours.
Today’s children and teens want more power and control over their spending.
And while there are a number of financial services and apps out there aimed at helping this demographic save and invest money (Greenlight being among the most popular and well-known), one startup is coming at the space from another angle: helping younger people also better manage their spend.
Till Financial describes itself as a collaborative family financial tool that aims to empower kids to become smarter spenders. The New York-based company’s banking platform is designed to encourage “open and honest” discussions between parents and their kids. And it has just raised $5 million to help it advance on that goal.
A slew of investors put money in the round, including Elysian Park Ventures, Melinda Gates’ venture fund Pivotal Ventures with Magnify Ventures, Afore Capital, Luge Capital, Alpine Meridian Ventures, The Gramercy Fund, SM Ventures (the family office of the founders/CEOs of Stadium Goods) and Lightspeed Venture Partners’ Scout Fund. Also participating were angel investors such as the founders of fintech Petal, the founders of alcohol marketplace Drizly, the president of Transactis, and the president of 1800Flowers.
Part of Till’s goal is to help kids “learn by doing” and gain confidence in spending decisions. It arms them with a bank account, digital and physical debit card and goal-based savings. For example, say a teen wants to buy an iPad, they can set up an account that they can save toward that iPad and give family members (such as grandparents, for example) the opportunity to pitch in the same amount, or more. They can also set up recurring payments for things like Netflix or Spotify subscriptions so they can get a taste of what it’s like to pay regular bills.
“Parents and the current banking options miss the point when they just focus on savings. We need to first prepare kids to be Smarter Spenders, supported by savings and investing,” said Taylor Burton, who founded the company with Tom Pincince. “On Till, kids learn to spend with intention and purpose, while parents gain confidence and trust based on transparency and accountability.”
To Pincince, the market is clearly underserved.
“The legacy banks really don’t care about this young person and the early digital players are really missing the mark,” he said.
And despite the plethora of apps targeting the demographic, Pincince believes there’s plenty of room for the right players.
“The reality is you’re talking about a swath of kids under the age of 18 and over the age of eight that is the single largest unbanked population,” he said. “We’re not fighting to be the top of your son’s wallet. We’re fighting to be the first product into that wallet.”
Indeed, it’s a big market — the average middle-class family in the U.S. spends $284,570 per child by the time they turn 18.
The platform is free to all families and, early on, attracted the attention of Peggy Mangot, operating partner/COO of PayPal Ventures. She invested personally in Till in its pre-seed rounds. Prior to PayPal, Mangot ran development of Greenhouse, Well Fargo’s fee-free mobile banking app that aimed to help younger users build responsible spending habits.
Mangot has three kids and recalls that when they were shopping online, she’d give them her credit card. Or, if they were going to the corner store or meeting with friends, she’d give them cash.
“But that way, the money is meaningless to them. They didn’t really know how to understand what things cost and there was no sense of ownership,” she said. “It was just me handing over cash or a card.”
What attracted her the most about Till, Mangot said, was the team’s approach to treat younger people “with respect and agency.”
She also believes that by helping children and teens understand important financial lessons at a younger age, the world will ultimately be full of more responsible adults.
“By putting these tools in the hands of these young people early, they’ll have years and years of experience before they’re more independent and have to manage their paycheck and bills,” Mangot told TechCrunch. “Once you have mass adoption, it’s going to create a much more financially literate, confident and in control set of young adults than we’ve ever had.”
Besides making money on interchange fees, Till aims to earn revenue by partnering with merchants to offer rewards to users. It also plans to earn referral fees by referring the teens to other financial institutions when they get older and have different needs.
“It’s not our intention to be your son or daughter’s forever bank. It’s our intention to be the first bank,” Pincince said. “So, they hit the age of maturity, we’re actually giving them a high-five off of our platform and introducing them to maybe their first college loan or their first credit card.”
Africa’s fintech space has gained proper attention over the past few years in investments but it is not news that startups still battle with offering high-quality products. However, they seem to be doing quite well compared with traditional banks that face challenges like legacy cost structures and a major lack of operational efficiency.
Appzone is a fintech software provider. It is one of the few companies that builds proprietary solutions for these financial institutions and their banking and payments services. Today, the company is announcing that it has closed $10 million in Series A investment.
Typically, African financial institutions rely on using foreign technology solutions to solve their problems. But issues around pricing, flexibility to innovate, and a lack of local tech support always come up. This is where Appzone has found its sweet spot. The company based in Lagos, Nigeria, was founded by Emeka Emetarom, Obi Emetarom, and Wale Onawunmi in 2008.
Appzone clearly plays a different game from other African fintechs. One clear differentiator is that the company functions as an enabler (at payment rails and the core infrastructure) within banking and payments.
It commenced as a services firm to provide commercial banks with custom software development services. In 2011, the company launched its first core banking product targeting microfinance institutions. The following year, Appzone launched its first product (branchless banking) for commercial banks. It went live with its mobile and internet banking service in 2016 and launched an instant card issuance product in 2017. In 2020, the company launched services catered to end-to-end automation of lending operations for banks and blockchain switching.
“We started Appzone with the intention to build out innovative local solutions for banking and payments on the continent,” CEO Obi Emetarom told TechCrunch. “The focus was to leverage our ability as an enabler to create proprietary technology for both segments.”
Image Credits: Appzone
Appzone platforms are used by 18 commercial banks and over 450 microfinance banks in Africa. Together, they amass a yearly transaction value and yearly loan disbursement of $2 billion and $300million.
Since its inception, the Google for Startups Accelerator alumnus claims to have led Africa’s fintech sector in some global firsts from the continent. First, the company says it created the world’s first decentralised payment processing network. Second, the first core banking and omnichannel software on the cloud. Third, the first multi-bank direct debit service based on single global mandates.
Emetarom likes to describe Appzone as a fintech product ecosystem with an emphasis on proprietary technology. So far, we’ve touched on two layers of this ecosystem—the digital core banking service providing software that runs financial institutions’ entire operations and interbank processing, which integrates these institutions into a decentralized network powered by blockchain.
Coinciding with this investment is the introduction and scaling of a third layer that focuses on end-user applications. Appzone, having built both banking and fintech layers, wants to connect individuals and businesses to their services. This is where most new-age fintech startups operate, and although Appzone is coming late to the party, it has a bit of an edge, the CEO believes.
“Most of these companies operating in end-user applications have to depend on services from core banking and interbank processing to be able to get their own offerings out there. For us, I think we have an advantage in terms of costs and flexibility because we are already operating in both layers,” Emeratom said in relation to what he thinks of competition.
The company is coming out to blitz scale its products and services after working in stealth mode for more than a decade. One way it wants to carry this out will be to take its pan-African expansion sternly even though a large part of its 450 clients are based in Nigeria. Other countries with a presence include the Democratic Republic of Congo, Ghana, Gambia, Guinea, Tanzania, and Senegal. Before now, Appzone lacked the resources to push into these markets aggressively even though they showed promise. But having closed its Series A, the plan is to drive growth in these countries and expand across more African countries.
Another means Appzone plans to achieve scale is by growing its engineering team — a department it takes pride in. These engineers make up half of Appzone’s 150 employees and there are plans to double down on this number. Like most Nigerian startups these days, Appzone is big on senior engineers. Still, while it might present a problem to other companies, Emetarom says the company has no issue training promising junior talent to grow in expertise.
“Our proprietary tech allows us to innovate at a fraction of a cost, and they are built by essentially the best local talent available. Because those systems are really complex and the level of innovation required is on another level, we literally seek out the to 1% of talent in Nigeria,” he remarked. “We know that even though the expertise isn’t there, we can accelerate acquiring that expertise when we train the very best talents. The more we train our engineers, the faster they grow in terms of expertise, and they will be able to deliver at the same level of world-class quality we expect.“
Obi Emetarom (Co-founder and CEO, Appzone)
Back to the round, a noteworthy event is that most investors who took part are based in Nigeria despite its size. CardinalStone Capital Advisers, a Lagos-based investment firm, led the Series A investment. Other investors based in the country include V8 Capital, Constant Capital, and Itanna Capital Ventures. New York-based but Africa-focused firm Lateral Investment Partners also participated.
Before now, Appzone closed a $2 million from South African Business Connexion (BCX) in 2014. Four years later, it raised $2.5 million in convertible debt and bought back shares from BCX in the process. But overall, the company says it has raised $15 million in equity funding.
Speaking on the investment, Yomi Jemibewon, the co-founder and managing director of Cardinal Stone Capital Advisers, said the firm’s investment in Appzone is further proof of Africa’s potential as the future hub of world-class technology.
“Appzone is building a disruptive fintech ecosystem that will be the backbone of Africa’s finance industry with products across payments, infrastructure and software as a service. The impact of Appzone’s work is multifold — the company’s products deepen financial inclusion across the continent whilst providing best-fit and low-cost solutions to financial institutions. Its emphasis on premium talent also helps stem brain drain, rewarding Africa’s best brains with best in class employment opportunities,” he added.
Appzone’s funding continues the fast-paced investment activities witnessed by Africa’s fintech space after a slow January. In the last two months, more than eight fintech startups have secured million-dollar rounds. This includes very large rounds by South African digital bank TymeBank ($109 million) in February and African payments company, Flutterwave ($170 million) in March.
While Nigeria and Kenya have been at the forefront of African fintech innovation, activities in Egypt are beginning to shape up nicely. Right now, Egypt is home to a burgeoning fintech startup ecosystem, and today, one of its biggest players, Paymob announced that it has completed an $18.5 million Series A round.
In July 2020, Paymob raised $3.5 million as its first tranche of Series A investment. An additional $15 million was raised from the same investors led by Dubai-based VC firm Global Ventures. Other investors include Egyptian investment fund A15 and Dutch development bank FMO.
The total raise of $18.5 million is the largest Series A round in Egypt yet and one of the largest equity rounds in North Africa.
“We are delighted to lead this momentous fintech fundraise in the region. Paymob has a perfect combination of high-quality technology, product customers increasingly cannot do without, and an outstanding management team, “Basil Moftah, general partner at Global Ventures, said of the investment. “Their market opportunity is also huge; Egypt’s transformation to a cashless society is being enabled by the unique products Paymob has built.”
Paymob was founded in 2015 by Alain El Hajj, Islam Shawky, and Mostafa El Menessy. The platform helps online and offline merchants to accept payments from their customers via several products and solutions. It offers a payment gateway that merchants can plugin into their sites or mobile application using its APIs. For offline merchants, Paymob has a POS solution where they can receive in-store card payments.
The company also has a payment links feature where merchants share links with their customers to receive payments that are received using mobile wallets. And according to the company, 85% of mobile wallets transactions carried out in Egypt is processed by its infrastructure. It also claims to be the largest payment facilitator in the country.
Asides from Egypt, Paymob is also present in Kenya, Pakistan, and Palestine. CEO Shawky says the company has plans to expand into more Sub-Saharan African countries. However, that will come after focusing on the Gulf Cooperation Council (GCC) to gain a large market share.
Regional expansion (with an imminent entry into Saudi Arabia this year) is one of Paymob’s objectives following this raise. Per a statement released by the company, it will also use the investments to expand its merchant network, meet increasing demand, and improve product offerings.
The pandemic presented one of the best opportunities for fintechs all over the world to achieve massive growth. For Paymob, it claims to have grown its monthly revenue over 5x last year. The company also recorded a total payment volume of more than $5 billion from over 35,000 local and international merchants like Swvl, LG, Breadfast, and Tradeline.
This growth allowed the fintech company to raise the second tranche of investment after closing just $3.5 million initially. Shawky told TechCrunch that the deal materialized after the company’s investors and management witnessed an “unprecedented growth” driven by the pandemic “in addition to the new initiatives launched by regulators, which encouraged them to increase their investment to meet our increasing demand.
As earlier iterated, fintech is on the rise in Egypt with startups like Moneyfellows, NowPay, Raseedi, Flick providing lending, payments, wealth and personal finance management services, etc.
The Egyptian fintech ecosystem also got a major boost when incumbent fintech Fawry became a publicly-traded unicorn for the first time. Since launching in 2007, Fawry has been the largest online payment platform in the country and offers a variety of services ranging from mobile wallet to banking services. Will Fawry’s longstanding presence pose a challenge to Paymob’s quest to become a dominant fintech as well? Shawky doesn’t think so.
“Paymob’s major competitor is cash. With only a small percentage of the economy operating in digital forms, we believe the opportunity of truly transforming cash into digital is yet to be unlocked,” he said.
TrueLayer, the London startup that offers a developer-friendly platform for companies, including other fintechs, to utilise open banking, is disclosing $70 million in new funding.
The Series D round is led by new investor Addition. Existing investors, including Anthemis Group, Connect Ventures, Mouro Capital, Northzone and Temasek, also participated. New investors include Visionaries Club, Zack Kanter (CEO Stedi), Daniel Graf (ex-Uber, Google, Twitter) and David Avgi (ex-CEO SafeCharge, CEO UniPaaS).
TrueLayer says the Series D brings the total investment to date to $142 million. The injection of capital will be used to continue scaling its open banking network, which brings together payments, financial data and identity to enable companies to build new products that improve “how we spend, save, and transact online”.
This will include further development of premium open banking-based services that go beyond simply accessing open banking APIs and will enable more innovation across financial services, including embedded finance and payments more generally.
To do this, and to support what it says is growing demand, TrueLayer is expanding its engineering, product and commercial teams. In the past 12 months, the fintech has expanded its services across 12 European markets.
Over the years, TrueLayer CEO and co-founder Francesco Simoneschi and I have often pontificated on what open banking’s killer use case or use cases may turn out to be. We may finally have our answer: payments.
That’s because one aspect of open banking is payment initiation, which lets an authorised third party initiate the transfer of money out of your bank account on your behalf as an alternative to card payments, which were never built with online payments in mind.
“We believe open banking payments will become the default way to pay online, replacing other payment methods in the next five years,” says Simoneschi. “Open banking is digitally native and mobile-first, moving money at a fraction of the cost, securely and conveniently, while also delivering a vastly better consumer experience”.
The past year has also exposed some of the problems with existing payments methods, as people have turned to digital channels to manage every aspect of their lives. “The problem is cards,” says the TrueLayer CEO, “which weren’t designed for online and have been retrofitted into current online payment flows. Newer digital approaches such as Google Pay or Apple Pay paper over those cracks but don’t change the fundamentals”.
Simoneschi says the company has seen the use of its payments API grow rapidly as more consumers embrace instant bank payments. Volumes grew by 600x over the last year, driven by more and more companies adopting open banking payments, including the likes of Revolut, Trading 212, Freetrade and Nutmeg.
“We typically see that 1 in 3 customers choose the open banking payment option after trying it once,” he notes, revealing that for some clients, closer to 70% of their customers are using open banking as the primary payment method.
“There are a number of reasons why it makes sense for customers. For one, they don’t need to remember card details. Instead, they authenticate with their face or fingerprint on their mobile device, instantly and securely. Plus, they’ll never need to update stored details if their card is lost, stolen or expires”.
Open banking payments as a checkout option benefits merchants too, argues Simoneschi. “These payments typically convert 20% better than cards (and up to 40% with our flows) and have success rates higher than 95%, equating to millions or hundreds of millions in recovered revenue at the end of the year,” adds the TrueLayer co-founder.
Avant, an online lender that has raised over $600 million in equity, announced today that it has acquired Zero Financial and its neobank brand, Level, to further its mission of becoming a digital bank for the masses.
Founded in 2012, Chicago-based Avant started out primarily as an online lender targeting “underserved consumers,” but is evolving into digital banking with this acquisition. The company notched gross revenue of $265 million in 2020 and has raised capital over the years from backers such as General Atlantic and Tiger Global Management.
“Our path has always been to become the premier digital bank for the everyday American,” Avant CEO James Paris told TechCrunch. “The massive transition to digital over the last 12 months made the timing right to expand our offerings.”
The acquisition of Zero Financial and its neobank, Level (plus its banking app assets), will give Avant the ability to offer “a full ecosystem of banking and credit product offerings” through one fully digital platform, according to Paris. Those offerings include deposits, personal loans, credit cards and auto loans.
Financial terms of the deal weren’t disclosed other than the fact that the acquisition was completed with a combination of cash and stock.
Founded in 2016, San Francisco-based Zero Financial has raised $147 million in debt and equity, according to Crunchbase. New Enterprise Associates (NEA) led its $20 million Series A in May of 2019.
Level was unveiled to the public in February of 2020, created by the same California-based team that founded the “debit-style” credit card offering Zero, according to this FintechFutures piece. The challenger bank was created to target millennials dissatisfied with the incumbent banking options.
Zero Financial co-founder and CEO Bryce Galen said that Avant shared his company’s mission “to challenge the status quo by bringing innovative financial services products to consumers who might otherwise be unable to access them.”
Avant, notes Paris, uses thousands of AI-driven data points to determine credit risk. With this acquisition, that lens will be expanded with data, such as a deposit customer’s cash flow, how they manage their finances and whether they pay their bills on time.
“This will allow us to make credit decisions faster and deliver personalized options to help underbanked consumers gain financial freedom, at any and every stage of their financial journey,” Paris told TechCrunch. “It will also build long-term engagement and loyalty and help grow our reach beyond the 1.5 million customers we’ve served to date.”
Like a growing number of fintechs, Avant operates under the premise that a person’s ability to get credit shouldn’t be dictated by a credit score alone.
“A significant amount of Americans have poor, bad or no credit at all. For these people, accessing credit isn’t exactly easy and often comes with extra fees,” Paris said. That’s why, he added, Avant has focused on providing options for such consumers with “transparent, rewards-driven products.”
Level’s branchless, all-digital platform offers things such as cashback rewards on debit card purchases, a “competitive APY” on deposits, early access to paychecks and no hidden fees, all of which are especially beneficial for consumers on the path to financial freedom, according to Paris.
Since its inception in 2012, Avant has connected more than 1.5 million consumers to $7.5 billion in loans and 400,000 credit cards. The company launched its credit card in 2017 and over the past two years alone, it has grown its number of credit card users by 170%.
Although the round is still ongoing, Pipe has reportedly raised $150 million in a “massively oversubscribed” round led by Baltimore, Md.-based Greenspring Associates. While the company has signed a term sheet, more money could still come in, according to the source. Both new and existing investors have participated in the fundraise.
The increase in valuation is “a significant step up” from the company’s last raise. Pipe has declined to comment on the deal.
A little over one year ago, Pipe raised a $6 million seed round led by Craft Ventures to help it pursue its mission of giving SaaS companies a funding alternative outside of equity or venture debt.
The buzzy startup’s goal with the money was to give SaaS companies a way to get their revenue upfront, by pairing them with investors on a marketplace that pays a discounted rate for the annual value of those contracts. (Pipe describes its buy-side participants as “a vetted group of financial institutions and banks.”)
Just a few weeks ago, Miami-based Pipe announced a new raise — $50 million in “strategic equity funding” from a slew of high-profile investors. Siemens’ Next47 and Jim Pallotta’s Raptor Group co-led the round, which also included participation from Shopify, Slack, HubSpot, Okta, Social Capital’s Chamath Palihapitiya, Marc Benioff, Michael Dell’s MSD Capital, Republic, Alexis Ohanian’s Seven Seven Six and Joe Lonsdale.
At that time, Pipe co-CEO and co-founder Harry Hurst said the company was also broadening the scope of its platform beyond strictly SaaS companies to “any company with a recurring revenue stream.” This could include D2C subscription companies, ISP, streaming services or a telecommunications companies. Even VC fund admin and management are being piped on its platform, for example, according to Hurst.
“When we first went to market, we were very focused on SaaS, our first vertical,” he told TC at the time. “Since then, over 3,000 companies have signed up to use our platform.” Those companies range from early-stage and bootstrapped with $200,000 in revenue, to publicly-traded companies.
Pipe’s platform assesses a customer’s key metrics by integrating with its accounting, payment processing and banking systems. It then instantly rates the performance of the business and qualifies them for a trading limit. Trading limits currently range from $50,000 for smaller early-stage and bootstrapped companies, to over $100 million for late-stage and publicly traded companies, although there is no cap on how large a trading limit can be.
In the first quarter of 2021, tens of millions of dollars were traded across the Pipe platform. Between its launch in late June 2020 through year’s end, the company also saw “tens of millions” in trades take place via its marketplace. Tradable ARR on the platform is currently in excess of $1 billion.
Coming in to finance the new challenger bank are six of the seven largest U.S. Banks and the payment technology developers Mastercard and Visa.
That’s right, Bank of America, PNC, JPMorgan Chase, Wells Fargo, and Truist, are backing a bank co-founded by a man who declared, “I’m with the revolutionary. I’m with the radical policy,” when stumping for then Presidential candidate Sen. Bernie Sanders.
Joining the financial services giants in the round are FIS, a behind-the-scenes financial services tech developer; along with the venture capital firms TTV Capital, SoftBank Group’s SB Opportunity Fund, and Lightspeed Venture Partners. Sports investors Quality Control and All-Pro NFL running back Alvin Kamara also came in to finance the latest round.
Atlanta-based Greenwood was launched last October by a group that included former Atlanta mayor Andrew Young and Bounce TV founder, Ryan Glover.
“The net worth of a typical white family is nearly ten times greater than that of a Black family and eight times greater than that of a Latino family. This wealth gap is a curable injustice that requires collaboration,” said \ Glover, Chairman and Co-founder of Greenwood, in a statement. “The backing of six of the top seven banks and the two largest payment technology companies is a testament to the contemporary influence of the Black and Latino community. We now are even better positioned to deliver the world-class services our customers deserve.”
Named after the Greenwood district of Tulsa, Okla., which was known as the Black Wall Street before it was destroyed in a 1921 massacre, the digital bank promises to donate the equivalent of five free meals to an organization addressing food insecurity for every person who signs up to the bank. And every time a customer uses a Greenwood debit card, the bank will make a donation to either the United Negro College Fund, Goodr (an organization that addresses food insecurity) or the National Association for the Advancement of Colored People.
In addition, each month the bank will provide a $10,000 grant to a Black or Latinx small business owner that uses the company’s financial services.
“Truist Ventures is helping to inspire and build better lives and communities by leading the Series A funding round for Greenwood’s innovative approach to building greater trust in banking within Black and Latino communities,” said Truist Chief Digital and Client Experience Officer Dontá L. Wilson who oversees Truist Ventures, in a statement. “In addition to the opportunity to work with and learn from this distinguished group of founders, our investment in Greenwood is reflective of our purpose and commitment to advancing economic empowerment of minority and underserved communities.”
So far, 500,000 people have signed up for the wait list to bank with Greenwood.
Meniga, the London fintech that provides digital banking technology to leading banks, has closed €10 million in additional funding.
The round is led by Velocity Capital and Frumtak Ventures. Also participating are Industrifonden, the U.K. Government’s Future Fund and existing customers UniCredit, Swedbank, Groupe BPCE and Íslandsbanki.
Meniga says the funding will be used for continued investment in R&D, and in particular further development of green banking products — building on its carbon spending insights product. In addition, the fintech will bolster its sales and service teams.
Headquartered in London but with additional offices in Reykjavik, Stockholm, Warsaw, Singapore and Barcelona, Meniga’s digital banking solutions help banks (and other fintechs) use personal finance data to innovate in their online and mobile offerings.
Its various products include a software layer that bridges the gap between a bank’s legacy tech infrastructure and a modern API, making it easier to build consumer-friendly digital banking experiences. The product suite spans data aggregation technologies, personal and business finance management solutions, cash-back rewards and transaction-based carbon insights.
Meniga tells TechCrunch it has experienced a significant increase in the demand for its digital banking products and services over the past year. This has seen the fintech launch a total of 18 digital banking solutions across 17 countries.
Image Credits: Meniga
Helping fuel that demand is the need for banks to attract and retain a generation of customers that increasingly care about sustainability and the need to tackle climate change. Enter Meniga’s green banking solution: Dubbed “Carbon Insight,” it leverages personal finance data so that mobile banking customers can track and, in theory, reduce their carbon footprint.
Specifically, it lets users track their estimated carbon footprint for a given time period (which can be broken down into specific spending categories); track the estimated carbon footprint of individual transactions; and compare their overall carbon footprint and the carbon footprint of spending categories with that of other users.
Last month, Íslandsbanki became the first Nordic bank to implement Meniga’s Carbon Insight solution into its own digital banking offering.
Wise, the London-headquartered company that made its name offering international money transfers and is reportedly planning an IPO, has accused its former banking partner in Brazil of a “smear campaign” after it was accused of fraud — claims that Wise says are “false and unfounded.”
The war of words between Brazil’s MS Bank and Wise appears to have followed Wise securing its own FX broker license from Brazil’s Central Bank in January, meaning that its partnership with MS Bank would soon come to an end. The following month, without prior notice, MS Bank terminated its contract with Wise and informed customers that it was launching its own transfer service called CloudBreak.
Without a banking partner and before it had time to begin testing transfers under its own FX broker licence, Wise was forced to temporarily suspend its Brazil corridor. On March 12, Wise was able to open its Brazilian real (BRL) to U.S. dollar (USD) corridor again, under its own license, and then things got hostile.
In an email sent to customers the same day — and shared with TechCrunch earlier this week — MS Bank alleges that Wise had been committing fraud via customer accounts. Those allegations were also repeated in a YouTube video and text published on MS Bank’s own website and focussed on a discrepancy in the way transactions are registered on a customer’s account and with the Brazilian Central Bank.
In a subsequent blog post, Wise gives a detailed and robust explanation of the discrepancy in the way transactions are recorded, categorically denying any wrongdoing, and calls out MS Bank for launching an alleged “defamation campaign.”
In a statement provided to TechCrunch, Wise says the accusations “have been timed to raise awareness of the launch of that ex-partner’s competing product. We are not aware of any investigation or accusations against Wise by any regulator or other authority, either in Brazil or anywhere else,” adds the fintech company. “We are certain that we are not responsible for any fraudulent or improper activity using customer data and/or funds. Wise is taking legal measures to address this matter.”
Wise’s statement in full:
In recent weeks Wise has been the subject of a smear campaign by a former business partner in Brazil. The accusations have been timed to raise awareness of the launch of that ex-partner’s competing product. We are not aware of any investigation or accusations against Wise by any regulator or other authority, either in Brazil or anywhere else.
Wise maintains its commitment to the transparency and security of our operations for our more than 10 million customers around the world. We are certain that we are not responsible for any fraudulent or improper activity using customer data and/or funds. Wise is taking legal measures to address this matter.
Ikigai, a London fintech founded by former McKinsey partners, thinks there’s room in the crowded challenger market for a new premium offering that combines digital banking with wealth management.
Targeting future and present high-net-worth individuals, Ikigai is iOS-only for now and consists of a current account and savings account, with adjacent wealth management features, all combined in a single app and card. The thesis, says the founding team, is that currently there is very little on the market that provides a modern digital-first banking experience and the kind of premium banking services typically offered by legacy banks to their more affluent customers.
“Our typical client is young — usually in their late twenties or thirties,” explains Ikigai co-founder Edgar de Picciotto. “They’re entering their prime spending and earning years, and are looking to secure their financial future. Although they’re not high-net-worths yet, they have aspirations and goals — and they want to do more with their money”.
Rather than a freemium model, Ikigai charges a flat subscription fee from the get-go, and new users gain access to a relationship manager, which differentiates it from most digital-first banking. Features include an “everyday” spending account, and a saving section of the app, dubbed “nest”. The latter is separate from the spending account, including having its own account number, but can be easily topped up from the everyday account.
So far, quite me-too, you might conclude. However, where some more differentiation arguably comes into play is that Ikigai also offers “fully managed, globally diversified investment portfolios” under the wealth section of the app. Portfolios are built and managed by Ikigai in collaboration with asset manager BlackRock, and take into account both risk appetite and the nature of what users want to achieve.
“We say it a lot but Ikigai was very much born from personal frustration,” says de Picciotto. “Everything on the market seemed to be slow, impersonal, full of attempts to sell lending and debt products. It felt like either the tech was there or the humanity, never both. That was the first thing we knew we wanted to solve”.
“Banking can also be way too time-consuming, investing even more so,” adds Maurizio Kaiser, Ikigai’s other co-founder. “There is so much for people to do when they have to do it themselves. It can basically become a second job if you’re constantly looking at different stocks and shares working out if the value is under this or over that. No one really has time for that — I certainly didn’t”.
Once the pair dug deeper, as management consultants are wont to do, they say they also discovered “interesting behavioural trends,” particularly when it comes to young and affluent people.
“This group are entering their prime earning and spending years, and they expect so much more from their banks than previous generations,” says de Picciotto. “Not only do they expect faster, fairer and better experiences, they have specific expectations and demands that current financial providers just don’t meet. This includes things like approaching personal finance as an act of self-care, like lifestyle banking over lifestage banking, and aligning their money with their goals and sense of purpose”.
Notably, unlike many of the first wave of challenger banks that made a virtue out of claims to be building their own core banking technology, Ikigai is primarily partnering with technology providers, including Railsbank and WealthKernel.
“Going with banking-as-a-service providers actually makes it easier to execute on our vision,” claims de Picciotto. “It allows us to focus on what we are good at and really matters to our customers: the user experience”.
On banking competitors, Ikigai’s founders argue that existing incumbents and challengers both have “significant” failings.
Incumbents are too dependent on branches or telephone services, and are premised on cross-selling and up-selling services, particularly lending products, in order to make money on loss-making current accounts.
Challengers, on the other hand, are “faster and more accessible”. However, in a bid to keep their cost-base low, they are increasingly automating their chat support and, in some cases, hiding live chat features.
“Delivering a high-quality service is obviously at odds with their aim of offering banking for free,” concludes Kaiser.