Fintech Update, 3/1 - 3/7
Hi! It’s Monday, March 8, 2021.
Leading Off
Square had a big week, announcing that its ILC, Square Financial Services, had begun operations and that it is acquiring Jay Z’s music streaming service Tidal. However, that was only one M&A headline of many this past week as it was reported that PayPal is in talks to acquire crypto startup Curv, Betterment acquired Wealthsimple’s U.S. book of operations, Money Lion acquired financial planning software provide Wealth Technologies, and advertising platform Cardlytics announced its planned acquisition of free cash back app Dosh. // In other news, Goldman Sachs *re* launched their crypto trading desk, Plaid launched a new employment verification and payroll data product and announced a new partnership with BaaS provider Unit (continuing its post Visa break up ~glow up~), and Klarna confirmed $1 billion in new funding at a $31 billion valuation. // All this + more below!
Heavy Hitters
Square completes decidedly old-school move, then makes galaxy-brain acquisition. The payment fintech began operation of its FDIC-approved industrial bank on Monday, the same week it acquired Tidal, Jay-Z’s struggling music streaming service. In launching its bank, Square is realizing the logical ambition of deepening its product suite by offering loans and deposits to its millions of sellers. In-house banking capability will allow it to ‘operate more nimbly’, which appeals to other fintech like Brex who have recently sought charters. Many have raised their eyebrows regarding Square's decision to pony up $297 million for the "majority of" a failed streaming service. Some even joked that the acquisition was the price CEO Jack Dorsey was willing to pay to become friends with Jay-Z and Beyonce. However, in a series of tweets regarding the acquisition, Dorsey gave us all an interesting insight into why he favors this deal. "Given what Square has been able to do for sellers of all sizes and individuals through Cash App, we believe we can now work for artists to see the same success for them, and us." The deal could give Square a foothold in the creator economy and it is certainly not lost on us that this move closely follows another move within the Dorsey ecosystem to reimagine creator monetization (Twitter’s launch of paid Super Follows). We’ll be watching closely to see how this one plays out.
Speaking of acquisitions, it was quite the week! Square’s purchase of Tidal wasn’t the only significant M&A headline this past week:
PayPal is in talks to acquire Curv. PayPal is in talks to acquire Curv, the crypto startup that helps companies transfer and store digital currencies, for anywhere between $200 million and $500 million. This acquisition is another step for PayPal deeper into crypto, after announcing a new service that enables all eligible PayPal account holders in the U.S. to buy, hold and sell cryptocurrency directly with PayPal last October.
Betterment acquires Wealthsimple U.S. Leading robo advisor Betterment announced that it acquired Wealthsimple’s U.S. book of business (NOT its technology, employees, or operations). Betterment was “chosen in a competitive process as the partner for this acquisition” as Wealthsimple “sought out an established company with a strong reputation, as well as a company that emphasizes their customers' best interests.” The deal is reported to add $190 million in assets to Betterment’s AUM and 17,000 customers to their customer base.
MoneyLion acquires Wealth Technologies. Just a few weeks after its SPAC deal, MoneyLion, the mobile banking platform, announced that it acquired the financial planning software company Wealth Technologies. MoneyLion’s CEO Dee Choubey said the “acquisition of WTI adds significant new capabilities to MoneyLion by enhancing our suite of financial tools with precision-guided financial advice to help our members see the interconnectivity of short- and long-term financial decisions across their entire financial portfolio."
Cardlytics announces its planned acquisition of Dosh. Digital advertising platform Cardlytics announced its planned acquisition of cash-back offers platform Dosh for $275 million in cash and stock. Cardlytics’s advertising platform already boasts over 163 million monthly active users. Combined with Dosh’s technology, the companies should be able to offer a unique value proposition to “engage with consumers through some of the largest financial institutions and most notable neo-banks and fintech companies in the world.”
Quick Takes
Goldman to (re)launch crypto trading desk. Following bitcoin’s recent surge, the investment bank is setting up a cryptocurrency trading operation that will deal bitcoin futures and ‘non-deliverable forwards’, a contract that allows speculation on future asset prices. Goldman started a similar desk in 2018 after bitcoin prices crashed, making a few big hires, but abandoned the project by year-end.
Antivirus pioneer John McAfee is charged with crypto fraud. McAfee was indicted by the DoJ on fraud and money-laundering conspiracy charges stemming from two cryptocurrency schemes. McAfee, who is facing civil changes from the CFTC as well as the DoJ charges, is accused of using his large Twitter following to artificially inflate altcoins while concealing payments he received from companies behind them.
Plaid launches Plaid Income. Plaid launched its latest product, Plaid Income, which it says is aimed at “improving the lending lifecycle” by giving fintechs and financial institutions access to employment verification and payroll and income data.
Unit and Plaid partner. In a blog post, Unit, the Banking as a Service provider, announced that it has partnered with Plaid to help its clients move funds seamlessly between external bank accounts and customers accounts on the Unit platform.
Pop Flies
Klarna confirmed it has raised $1 billion in new investments at a $31 billion valuation, tripling its $10 billion valuation from last September.
Robinhood is considering getting rid of its confetti animations, a lighting rod for critics who view them as evidence of Robinhood’s gamification of stock trading.
Insurtech Hippo entered a definitive agreement to hit the public markets by way of SPAC.
Fundings!
Banking
Codat, the technology company that lets banks, fintechs, and insurers plug into their SME customers' key financial data platforms, raised new funding from Amex Ventures and PayPal Ventures and announced that it is expanding into the U.S.
Cross-border online banking solutions provider Rewire raised $20 million in Series B funding.
Mexican pay-on-demand startup Minu raised $14 million in Series A funding.
Flourish, the digital engagement platform provider for financial institutions, raised $1.5 million in new funding.
Payments
Indonesian payments infrastructure provider Xendit raised $64 million in Series B funding.
Corporate
Pension funds transparency platform ClearGlass Analytics raised $3.6 million in new funding.
Countingup, the U.K. fintech that offers business accounts with embedded accounting features, raised £9.1 million in Series A funding.
Cloud-based HR and payroll platform Papaya Global raised $100 million in new funding at a valuation north of $1 billion.