Fintech Update, 4/26 - 5/2
Hi! It’s Monday, May 3, 2021.
Leading Off
Investors continue to pile into youth-focused neobanks with Current, Greenlight, and Step announcing huge funding rounds; and bitcoin marched further into the mainstream with yet more major companies announcing crypto-related products this week. // In other news, Chinese regulators convened the country’s major fintech players to warn them against engaging in monopolistic behavior; Robinhood is now using JPMorgan to process transactions, switching from Ohio-based Sutton Bank; and Barclays announced a partnership with Amount to offer BNPL services for merchants. // All this + more below!
Heavy Hitters
Investors continue to *dump* money into neobanks targeted at younger users. With the number of neobanks reaching 300 worldwide, not all will succeed. But challenger banks targeting specific audiences remain compelling to investors and customers alike. The first wave of general purpose challenger banks (Revolut, N26, etc.) are being followed by those targeting younger users, and they’re bringing in big funding:
Greenlight raised $260M. Kid-friendly banking services provider Greenlight raised $260 million in a Series D funding round, led by a16z, at a $2.3 billion valuation. In September Greenlight raised at a $1.2 billion valuation and had 2 million accounts for parents and kids. The challenger bank is now up to over 3 million accounts and says it has “more than tripled” YoY revenue.
Step raised $100M. Teen banking app Step raised $100 million in Series C funding. If you’re on Tik Tok, you’ve probably seen Charlie D’Amelio dancing to "WAP" by Cardi B and Megan Thee Stallion while waving around her Step card. Well, guess what. Finfluencers work! Step has grown to over 1.5 million users within 6 months of launch. CEO CJ MacDonald said of the new funding: “honestly we don’t need the capital, it’s just we think speed to market is really key and we think we can accelerate our growth and invest in infrastructure.”
Current raised $220M. Digital bank Current raised $220 million in a Series D funding round also led by a16z at a $2.2 billion valuation. Current raised funding only 5 months ago at a $750 million valuation and boasted 2 million members. The challenger bank now has almost 3 million users. In the same week, Current also announced an exclusive partnership with, and investment from, YouTube creator MrBeast.
Welcome to the ~crazy crypto corner~!!! This week saw a slew of crypto news as bitcoin continues to become more mainstream as an option for investment, payment, reward, and compensation with each and every passing week, including:
Gemini partners with Mastercard on crypto credit card. The Winklevoss twins’ crypto currency exchange announced a partnership with Mastercard to launch a crypto rewards credit card this summer. Gemini credit cardholders “will be given the option to transfer their crypto rewards into interest-earning program Gemini Earn.”
Sofi launches crypto redemption. SoFi announced that its credit card users may now redeem SoFi Credit Card points directly into Bitcoin or Ethereum via SoFi Invest. This means that SoFi users have the option to redeem “reward points into SoFi Money®, SoFi Active Invest, or paying down SoFi Student Loan Refinances or Personal Loans.”
Coinbase allows crypto purchases via PayPal. Coinbase added new functionality that will allow its users to buy cryptocurrency using their PayPal accounts (although purchases made via PayPal will be capped at $25,000 a day).
Wealthfront to allow crypto investments. Wealthfront, the digital wealth manager, announced that it will start allowing its clients to invest in cryptocurrencies later this year, although it did not specify which cryptocurrencies will be available at launch. The move represents something of a departure from the robo advisory’s strategy, which has focused on being “conservative and long term, automatically allocating client assets into a set of ETF-based portfolios.”
JD.com has paid some employees with the digital yuan. The People’s Bank of China is working with major firms like e-commerce company JD.com to trial its forthcoming digital currency. The news follows a recent announcement by the central bank’s deputy governor that it will look to expand trials of the currency, which has been in development since 2014.
Quick Takes
China warns fintechs against monopolistic behavior. Chinese financial regulators convened 13 large tech companies engaged in financial services (like Tencent and Bytedance) to tell them to strengthen anti-monopoly measures. Regulators criticized “disorderly expansion of capital” and told the companies to carry out self-inspections and correct regulatory issues.
Robinhood now uses JPM to process transactions. The trading app notified customers this week that it is using JPMorgan to process transactions for cash management accounts. Robinhood previously used Ohio-based Sutton Bank for processing. The switch to partnering with the largest U.S. Bank by assets shows how traditional banks will coexist with fintechs that they admit pose a threat.
Barclays partners with Amount. The bank will offer point-of-sale financing options in America through a new partnership with digital banking platform Amount. The partnership is the first time the bank will offer BNPL, which it hopes will strengthen merchants’ connections with their customers.
Pop Flies
CB Insights released their “State Of Fintech Q1’21 Report.”
Bank-to-bank payments fintech GoCardless launched open banking payments.
Cameo introduced a wallet feature to help its creators manage relationships and payments.
Travel-focused BNPL company Uplift announced a partnership with Southwest Airlines.
More Fundings!
Wealth management
Investment app StashAway raised $25 million in a Series D funding round led by Sequoia Capital India.
Banking
Within a week of receiving OCC national trust approval, Paxos announced it has raised $300 million in Series D funding at a valuation of $2.4 billion.
German financial platform and mobile banking app Vivid Money raised $73 million Series B funding.
Greek neobank Viva Wallet raised $80 million in new funding.
Payments
Expense-splitting startup Splitwise raised $20M in Series A funding.
Corporate
Corporate spend software provider Brex raised a $425 million Series D funding round led by Tiger Global, notably only a few weeks after Ramp disclosed its two new massive funding rounds (within a week).
Infrastructure
Weav, the fintech infrastructure provider that aims to provide “real-time, user-permissioned” commerce data, raised $4.3 million in seed funding and emerged from stealth.