Fintech Update, 1/11 - 1/18
Hi! It’s Tuesday January 19, 2021.
Welcome back! We hope you enjoyed the long weekend and had a chance to meaningfully celebrate the life and mission of Dr. Martin Luther King.
Leading Off
Last week was so full of massive fintech stories, we struggled to keep up. Among the big news in the past week, Visa and Plaid terminated their merger agreement, bowing to continued pressure from the DOJ; Walmart announced that it’s starting its own fintech firm in collaboration with fintech VC firm Ribbit Capital; and Ant Group is completely restructuring itself in order to comply with regulatory orders from the Central Bank of China.
Meanwhile, the OCC granted a national trust charter to digital asset platform Anchorage; “buy now pay later” leader Affirm debuted on Nasdaq and finished its first week up over 100%; Revolut applied for a UK banking license; and Marqeta and Marcus announced a partnership in which the former’s card issuing platform will power the latter’s digital checking accounts. // All this + more below!
Heavy Hitters
Walmart to launch fintech startup. Walmart announced that it is launching its own fintech startup in a strategic partnership with Ribbit Capital, a leading fintech investment firm with stakes in Affirm, Credit Karma, Robinhood, and other fintech success stories. Walmart’s press release did not provide many details on the new company – not even a name or product list – but the retailer promised to “develop unique and affordable financial products for Walmart employees and customers.” Nevertheless, it’s clear that this move has great potential given Walmart’s scale, distribution, and retail knowledge, along with Ribbit’s financial expertise. As we wrote in our most recent Big Idea, we expect more companies to begin offering financial products specialized for their customers, and Walmart would be a test-case of this argument on a giant scale.
Visa and Plaid call it quits. The payments giant abandoned its plan to buy the payments API platform amid regulatory pressure: The Department of Justice recently had sued Visa to stop the deal, claiming that Visa was trying to suppress competition by swallowing up a future rival in the payments space. Visa denied the allegations, but said it pulled out of the deal to avoid protracted litigation. Other reports have claimed that Plaid itself got cold feet after achieving a higher valuation than the $5.3 billion it had agreed to with Visa as the sale price. Regardless of the underlying reason, the canceled deal reflects the DOJ’s increasingly proactive approach toward potential monopolists in the US tech industry. Many analysts now believe Plaid is likely to go public rather than search for another acquisition partner.
Ant Group moves to comply with CBC regulations. After launching an antitrust investigation in December after abruptly pulling the plug on Ant’s planned IPO, China’s financial regulators have imposed a variety of new compliance requirements with which the Central Bank says the fintech giant is working to comply. The new regulatory requirements are explicitly aimed at reforming Ant’s business practices and represent an unprecedented squeeze on a business that is regularly used by over 700 million people for a variety of financial services, from P2P payments to mortgage loans and credit scoring. The requirements have even called into question the future of private enterprise in China, with some expecting that the CCP’s next move will be to nationalize Ant. Meanwhile, founder Jack Ma has not appeared in public since October 24th, when he criticized China’s state-owned banks and regulatory apparatus.
Quick Takes
The OCC grants its first national trust charter to a digital asset firm. The regulator granted conditional approval to Anchorage Digital Bank, enabling it to more easily partner with banks looking to offer custody services for crypto. The approval represents a ‘solution input’ to accompany recent OCC interpretive letters related to crypto, and puts Anchorage on a similar regulatory footing to national banks.
Affirm IPOs. After pricing itself at $49/share, the Buy Now Pay Later company made its Nasdaq debut at $91.50/share and closed its first day of trading at $97.24/share, about 98% higher than its initial pricing. Affirm closed its first week of trading at $115.40, up ~135% from its IPO price, almost doubling the company’s original $12 billion valuation.
Revolut applies for a UK banking license. Though it has an EU banking license through Lithuania, the digital bank is pursuing a one in its home country for the first time. Regulatory approval would reduce partnership costs for Revolut and enable it to offer full-service current accounts, loans, and credit cards in the UK.
Hold on to your crypto wallet password, folks. The New York Times looked at the plight of Stefan Thomas, a programmer who has two more guesses left to access $220M in bitcoin. Crypto’s decentralized nature means that his predicament is not uncommon, with some $140B worth of bitcoin (20% of the currency in circulation) appearing to be lost or stranded in wallets. Thomas has “made peace” with the almost certain loss.
Gemini launches latest crypto rewards credit card. Gemini, the Winklevoss twins’s cryptocurrency exchange announced that later this year, it will launch a credit card that provides crypto asset rewards; users “will earn up to 3% in bitcoin rewards.”
Marqeta and Marcus partner. Marqeta and Marcus by Goldman Sachs announced a partnership in which Marcus will leverage Marqeta’s card issuing platform to power digital checking accounts for Marcus customers.
Pop Flies
Payments service provider Billtrust announced that it will go public through a merger with a SPAC.
Fundings!
Payments company Checkout.com raised $450 million in a Series C funding round led by Tiger Global.
Curve, the banking platform that consolidates cards and accounts into one smart card and app, raised $95 million in Series C funding.
Fintech infrastructure provider Modern Treasury raised $38 million in new funding.
Digital lending platform provider Blend raised $300 million in Series G funding at a $3.3 billion valuation.
Banking data analytics provider MX raised $300 million at a $1.9 billion valuation.
Digital banking platform for startups and high-growth companies Rho raised $15 million in Series A funding.
Fintech-as-a-service provider Rapyd raised $300 million in new funding at a $2.5 billion valuation.
Payment network Relay Payments raised $43 million in new funding.
Fintech infrastructure startup Stytch raised $6 million in new seed funding.
Grab raised $300 million for its financial services arm at a $3 billion valuation.
Strategic finance platform provider Mosaic raised $18.5 million in Series A funding.
X1, the credit card provider that sets limits based on current and future income as opposed to credit score, raised $12 million in new funding.
Capchase, the online platform for rapidly getting cash from accounts receivable, raised $60 million in credit.