Fintech Update, 2/15 - 2/21
Hi! It’s Monday, February 22, 2021.
Leading Off
Congress held its first hearing on last month’s GameStop trading frenzy. // Coinbase was valued at over $100B ahead of its plans to go public via direct offering. Goldman Sachs launched Marcus Invest, an automated investment service for its digital only consumer bank. And Marqeta had a big week, filing for an IPO and launching a credit card offering platform in partnership with Deserve. // In other news, Brex filed for an ILC charter with the FDIC and the Utah Department of Financial Institutions; Apple Pay is now accepting Bitcoin; Google is giving users the option to pay for parking and public transit directly in the Google Maps app; British digital bank Atom is partnering with Plaid to offer SME banking services; and Russell Westbrook invested in Varo, and we’re only happy to fete him in this week’s update :) // All this + more below!
Heavy Hitters
House holds first hearing on GameStop trading. The House Committee on Financial Services heard several key participants of last month’s Reddit-coordinated GameStop trading frenzy during “the first of a series” of hearings on the subject. The hearing featured investor Keith Gill (a.k.a. “Roaring Kitty” a.k.a. DeepF**kingValue), one of the main backers of GameStop trading on the r/WallStreetBets forum, who “rejected suggestions that he played a key role . . . arguing his social media conversations . . . were no different than what people do at bars, golf courses or with family members at home.” Meanwhile, the Committee took a particularly tough tack against Robinhood CEO Vlad Tenev, whose company came under fire from lawmakers and customers alike for its inconsistent and abrupt management of the situation. Tenev apologized for restricting trading during the height of the frenzy, but defended Robinhood’s actions as being done in the interest of consumers. The hearing focused on the app’s ‘gamification’ of investing in addition the crisis’s implications for the financial system more broadly.
Maybe they should rebrand to Coinba$e? Coinbase, the world’s leading cryptocurrency exchange, was valued at “over $100 billion in a recent private market share sale ahead of its upcoming public listing,” according to Axios sources. If accurate, Coinbase would make its public debut at “a higher initial valuation than any other U.S. tech company since Facebook.” The massive valuation is based on Coinbase’s most recent direct share sale – in which it sold 127,000 shares at $373, giving it an overall valuation of $100.23 billion – the goal of which was “to help Coinbase determine a reference price for its public offering.” In addition to validating Coinbase’s business, the massive valuation is another data point in the recent surge of activity and value in the broader cryptocurrency market (which also includes Bitcoin pushing past $50,000 and a $1 trillion market cap(!) and the increasing embrace of crypto business by state and federal regulators alike), suggesting the growing legitimacy of cryptocurrency across sectors.
Goldman Sachs launches Marcus Invest. The global bank added an automated investment service to Marcus, its digital-only consumer offering. Marcus Invest will require a $1,000 minimum investment will charge a 0.35% fee for the service. Similar to many other robo advisory tools and platforms (e.g., Betterment, Wealthfront), Marcus Invest will “offer portfolios with low-cost stock and bond ETFs, including Goldman Sachs' ETFs, based on users' risk tolerance and goals.” The news is impressive given the speed of Marcus’ growth, which debuted only five years ago. Since taking its first steps into retail banking, Goldman has:
Acquired personal finance startup Clarity Money in April 2018 to bolster Marcus;
Launched Marcus in the UK in September 2018;
Rolled out a high yield savings account in September 2018;
Closed Marcus UK to new deposits in June 2020,
Launched Marcus Insights, a personal finance management tool, in September 2020;
Announced a partnership with Marqeta in January to launch checking accounts later this year;
Shuttered Clarity Money earlier this month to concentrate on building out Marcus Insights; and
Re-opened Marcus in the UK earlier this month.
In the process, Goldman has built Marcus up to over 5 million users and over $92 billion in deposits. Now, Marcus Invest will help broaden Goldman’s reach deeper into consumer finance, create additional cross-selling opportunities, and drive customer acquisition as Marcus inches closer to becoming a financial super app.
Marqeta files for IPO and launches credit card issuing platform. Marqeta filed with the SEC for an IPO, with support from Goldman Sachs and JP Morgan, eyeing a $10 billion valuation. Days later, Marqeta announced that it is partnering with credit card player Deserve to expand into the consumer credit card space to help other companies launch credit card programs. Already a major player in the prepaid and debit card issuing market and serving big name customers like Cash App, DoorDash, and Instacart, the move to expand in credit cards helps Marqeta further position itself as the modern card issuing platform. CEO Jason Hardner said "expanding the Marqeta platform to service modern innovators building disruptive new credit products establishes us as a truly comprehensive modern card issuing platform."
Quick Takes
Brex files for ILC charter. The corporate card company became the latest fintech to apply for an Industrial Loan Company (ILC) charter in Utah, submitting paperwork to the state’s financial regulator and the FDIC, in a bid to gain bank-like abilities. An ILC charter would allow Brex to expand its suite of financial products, including offering FDIC insurance on deposits and various financing and credit solutions to business customers.
Stripe targets more cash and Carney. As the payments giant takes aim at a new round of funding that reportedly would value the firm at $115 billion (3x its valuation from its most recent round last April), it also brought in former Bank of England and Bank of Canada governor Mark Carney as its newest board member.
Apple Pay to accept Bitcoin. By way of Apple Pay’s partnership with the cryptocurrency payment provider BitPay, U.S. users can now add their BitPay Prepaid Mastercard to the Apple Wallet and use cryptocurrency to make in-store, in-app, and online everyday transactions.
In-app payment for parking is coming to Google Maps. As part of an “expanded partnership with transportation software companies Passport and ParkMobile,” Google is rolling out the ability to pay for street parking within Google Maps. Android users will see the feature first, with expansion to Google Maps’ iOS version “soon.”
Atom and Plaid team up on SME banking. The British digital bank is partnering with the finance platform to offer open banking services to small and medium enterprises. The move comes as Plaid eyes significant expansion in Europe.
A TransferWise by any other name… Would just be Wise. The cross-border payments firm has rebranded by lopping off “Transfer” as it reportedly gears up for an IPO.
Pop Flies
Revolut launched business QR codes to facilitate socially distanced payments by customers to businesses.
HMBradley launched joint accounts, which it claimed in a blog post to be its “most requested feature”!
Fundings!
Wealth management
Event outcome trading platform Kalshi raised $30 million in a Series A funding round led by Sequoia.
Investment manager Titan raised $12.5 million in Series A Funding.
Banking
Financial health startup SeedFi raised $65 million, led by a16z.
Varo raised $63 million led by NBA MVP Russell Westbrook, who will join as an advisor to Varo’s programs aimed at helping underserved communities.
Crypto
Crypto wallet Blockchain.com raised $120 million in new funding from a group of investors, including Google Ventures.
Corporate
Third party risk management platform provider Mirato raised $9 million in new funding.