Fintech Update, 1/8 - 1/15
Hi! It’s Tuesday, January 16th, 2024
Before we get into this week’s fintech update…
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The Rundown
The SEC approved eleven of the first US-listed Bitcoin exchange-traded funds (ETF)s last week. The news is an auspice for the institutionalization of Bitcoin in the US, especially given an otherwise harsh regulatory environment (we’ve previously written about the SEC’s recent slew of lawsuits against major crypto exchanges). An ETF will enable investors to gain exposure to Bitcoin and trade it intraday without owning Bitcoin outright. Bitcoin surged to over $48,700 (its highest level since March 2022) in response to the announcement.
Carta reads the room, exits the secondary market business. Following last week’s controversy over its use of customer data to facilitate sales for shares of the private companies for which it manages cap tables, Carta is bowing out of the stock sale business. In a blog post, CEO Henry Ward commented that, “just the appearance of impropriety is damning” as context for his decision to “exit the secondary trading business to eliminate any concern that we are not acting in our founders’ best interests.” It’s an extraordinarily quick ending for one of the company’s four business areas, though it represents only a small percentage of its total revenue.
X (fka Twitter) committed to launching peer-to-peer payments in 2024, offering “more user utility and new opportunities for commerce” (read: tie-ins with other products like creator revenue sharing). The social media company has been accumulating the required state licenses to permit payment processing, and is up to 14 in total. Musk has also previously mused about offering money market accounts to encourage users to hold more funds on the platform.
USDC issuer Circle announced that it confidentially filed for an IPO with the SEC. In 2022, Circle had planned to go public via a SPAC at a $9 billion valuation, but ended up backing out after the SPAC market collapse + FTX’s bankruptcy spiral. After the prolonged slump in fintech companies going public due to the volatility of the market and the high interest rate environment, we wouldn’t be surprised if other companies followed suit as the market seems to continue to warm up. Apex Fintech also confidentially filed for an IPO in December after their SPAC fell through in 2021 and Klarna appeared to begin preparing for an IPO last November. [Disclaimer: one of us is an investor in Circle]
The Reading Nook
The Wall Street Journal profiled Coinbase CEO Brian Strong, “The Last Man Standing in Crypto.”
Matt Brown, who is an early stage fintech investor at Matrix, wrote a great piece - Fintech from first principles. In the piece, Matt wrote about how large fintechs today are multi-product, but it took them years to get there. He went on to predict that tomorrow’s winners in fintech will be multi-product within months or quarters, if not at launch.
Selected fundings
Hyperexponential, the London-based P&C insurtech that “ helps insurers and reinsurers make better-informed pricing decisions using predictive data and insights,” raised $73 million in a Series B funding round led by Battery Ventures with participation from a16z.
Brazilian expense management and corporate card company Conta Simples raised $41.5 million in Series B funding.
Prometeo, the Uruguayan startup building open banking for Latin America, raised $13 million in Series A funding.
Pier, the fintech developing an API for companies to automate their own credit products, raised $2.4 million in seed funding.