Fintech Update, 4/8 - 4/14
Hi! It’s Monday, April 15, 2024
Before we get to this week’s update, we have a quick plug for Wednesday, when we’ll be publishing our latest (and long overdue!) original piece on regulatory oversight in fintech, written by our colleague Abby Hogan! Abby is a consumer protection, lending, and bank regulatory expert and we’re so excited to share her Big Idea with you in T-minus 2 days. Keep an eye on your inbox! - Team TFU
The Rundown
British challenger bank Revolut was granted a banking license in Mexico, allowing the company to ramp up operations in the second-largest Latin American economy (the first is Brazil, which is already served by Revolut). Entry into Mexico allows Revolut to compete with other digital offerings for a share of the country’s large cross-border remittance market, which grew 8% last year to hit a “record $63.3 billion in 2023, mostly sent from the United States.”
Empower, which advances cash to individuals with poor credit, entered into an agreement to acquire Petal, the credit card issuer for underserved consumers with little to no credit history. Terms of the deals were not disclosed, but reports from the past 6+ months suggest that Petal faced difficult financial conditions and may have “put itself up for sale amid . . . concerns about its ability to survive.” Separately, Empower also completed its acquisition of Filipino consumer credit company Cashalo.
And in other M&A news… Data security provider Entrust completed its acquisition of facial recognition and identity verification provider Onfido, after announcing the plans in February. Terms of the deal were not disclosed but rumors peg the price at over $400 million. Meanwhile, over in France, spend management platform Spendesk acquired procurement company Okko for an undisclosed amount.
Santander announced its plans to launch its digital banking subsidiary Openbank in the U.S. and Mexico later this year. Openbank, which has been around since 1995 and has some ~€18B in deposits, expanded beyond Spain to other countries in Europe in 2019, and Argentina in 2021.
According to a new FBI report, American consumers and business owners in 2023 suffered cyber fraud losses totaling $12.5 billion, a 22% increase over 2022 (and a new record! U-S-A! U-S-A!). The report also noted that “46% of merchants generating annual revenues of $1 billion or more are currently improving their anti-fraud efforts” in response to mounting losses.
Global payments giant PayPal said it has completed integration of its PYUSD stablecoin into its Xoom cross border payment app, allowing U.S. customers to fund payments using the stablecoin with no transaction fees.
The Reading Nook
Axios looked at the value relative to IPOs that smaller fintech acquisitions present to VCs: Restive Ventures says the sector has 10 times as many M&A deals over $50 million as IPOs, while Sheel Mohnot of Better Tomorrow Ventures predicts an increasing number of fintech IPOs as long as the regulatory environment discourages certain acquisitions.
From runway to, er, runway… The New York Post profiles Frich, a Gen Z-focused fintech startup founded by former runway models Katrin Kaurov and Aleksandra Medina.
Selected fundings
Sales tax platform for software companies Anrok raised $30 million in a Series B funding round led by Khosla Ventures, with participation from Sequoia Capital and Index Ventures at a $250 million valuation.
London-based remittance platform TransferGo raised $10 million in new funding.
AI-powered accounts receivable platform for B2B businesses Tabs raised $7 million in a seed funding round led by Lightspeed.