Fintech Update, 10/18 - 10/24
Hi! It’s Monday, October 25, 2021.
Leading Off
Hi all,
We’ll be trying something new over the next several weeks: We’ll be replacing our normal sections with a single, streamlined view of the week’s top-10 (or so) stories, organized in order of how important we think they will be. We’ll also start sending monthly recaps, sharing what we think we got right, what we think we got wrong, and what we’ll keep watching for in the coming months. Let us know what you think of these changes by commenting on our site or emailing us back! We’d love to hear from you.
- Joe, JC, and Kieran (Team TFU)
The Rundown
Actually important
Plaid finally made its move into payments, announcing a partnership with dozens of payment processors and tech companies (Square, Stripe, SoFi, etc.) to make it easier and cheaper for users to make digital payments funded by their bank accounts. Plaid views the program as a complement rather than a competitor to credit and debit-card networks like would-be acquirer Visa.
PayPal is in advanced discussions to acquire Pinterest. PayPal has discussed acquiring the company for a potential price of around $70 a share, which would value Pinterest at about $39 billion. Acquiring Pinterest would allow PayPal to capture more of the e-commerce growth specific to social media internet shopping (social commerce) and diversify its income though advertising revenue. If PayPal were able to integrate Pinterest's social commerce platform with Honey's capabilities, it could help their super-app become a true destination for online shoppers.
Legit but not groundbreaking
The SEC released its report on January’s Gamestop trading frenzy sparked by Reddit-fueled meme-stock traders, affirming that retail trading firms (notably Robinhood) halted trading after margin calls totaling about $7 billion from the industry’s clearinghouse required them to throttle activity or potentially fail meet their own obligations. The SEC found that “the clearinghouse’s demands . . . reflected a market functioning normally — although . . . policymakers could consider ways to speed up the settlement of trades.”
Proshares launched the first Bitcoin-focused ETF, allowing everyday investors to buy exposure to the world’s largest cryptocurrency through traditional brokerage accounts.
Klarna unveiled a “pay now” option amid growing concerns that BNPL encourages consumer debt – with the U.K. Financial Conduct Authority in particular increasing its scrutiny of the space…
… and acquired online trip planner Inspirock, Klarna’s FIFTH acquisition of the year.
Chime is rumored to be in talks to go public at a valuation of $35 to $45 billion in March of 2022.
Spanish bank BBVA is launching a new digital bank in Italy.
Identity operating platform Alloy announced the expansion of its platform to include credit underwriting decisioning capabilities.
Stripe acquired Recko, the Indian financial operations platform for internet companies that automates reconciliation, commission calculations, and payouts. The acquisition helps Stripe continue to expand the services it offers alongside its core payments product (e.g., Identity, Capital, Treasury).
Hyped up but potentially interesting
Starbucks reportedly is discussing how to use Amazon’s “Just Walk Out” technology to allow customers to buy their over-roasted java and leave “without going through a regular checkout.” Which, okay, but maybe nail getting names right first? Just saying.
X1, the company behind a new stainless steel credit card that includes “smart credit limits” based on “future income instead of credit scores,” rolled out to 350k people on its waiting list.
15-minutes of fame
Worldcoin wants to scan your eyes with something called “The Orb” in exchange for some of its new cryptocurrency. So far over 100k people have participated. Because nothing bad has ever happened when people give away their sensitive data for free to tech entrepreneurs.
Selected fundings:
Brex raised AGAIN - this time, the spend management platform raised $300 million in new funding at a $12.3 billion valuation.
Indian investment platform Groww raised $251 million in Series E funding at a valuation of $3 billion.
Indian tax and investing platform Clear raised $75 million in a Series C funding round led by Stripe.
Mobile wallet payment provider Citcon raised $30 million in Series C funding.
LatAm fintech infrastructure provider Pomelo raised $35 million in a Series A funding round led by Tiger Global.
Payment infrastructure fintech Hash raised $40 million in a Series C funding round co-led by QED Investors.
Brazilian cloud-based banking and payments platform Pismo raised $108 million in a Series B funding round co-led by SoftBank, Amazon, and Accel.
German challenger bank N26 raised $900 million in Series E funding at a $9 billion valuation.
UK neobank Zopa raised $300 million at a $1 billion valuation.