Fintech Update, 6/13 - 6/19
Hi! It’s Monday, June 20, 2022.
The Rundown
Brex, the corporate spend management giant that was founded to serve startups, has given small and medium-sized businesses until August 15th to leave its platform. The company explained its change in strategy by saying it has “become less suited to meet the needs of smaller customers.” The move, which does not allow for SMBs to appeal, follows April’s launch of Brex Empower: a push to move upmarket and serve larger enterprise clients like DoorDash (an anchor client for the announcement). CEO Henrique Dubugras clarified in a later interview that Brex will still serve professionally-funded startups, but not tens of thousands of bootstrapped startups or brick-and-mortar companies currently using the platform. We find the development quite surprising, not least because current business will not be given recourse, but we also see it as a big opportunity for other corporate spend players like Ramp and Airbase (who recently raised a strategic investment from Amex) to hoover up shunned SMBs.
Layoffs continued to impact large fintech firms:
Crypto firms Coinbase (18% of staff, about 1,100 employees), Crypto.com (5%, about 260 employees), and BlockFi (roughly 20%, about 170 employees) all announced layoffs.
Investing unicorn Wealthsimple, valued at $4B last year, laid off 159 employees, some 13% of staff.
ID verification unicorn Socure, recently valued at $4.5B, laid off 69 employees, some 13% of staff.
Remote notarization startup Notarize laid off 110 employees, some 25% of staff.
As we mentioned two weeks ago, if we can be helpful, feel free to reach out to us at fintechupdate@gmail.com).
Crypto more-than-just-investing platform Celsius said it was pausing all withdrawals on Monday, citing “extreme market conditions.'“ A large player in the nascent crypto lending space, Celsius offers customers interest on deposits by lending them out for higher yield, much like a bank does (just without the regulatory oversight). The news calls into question Celsius’s solvency: its assets under management have halved since October to some $12B, and the value of its ‘cel’ token has dropped 97%.
Celsius’s announcement had wider effects on the crypto market: Tether slipped from its dollar peg again on Tuesday, in part due to exposure to the lending platform. The stablecoin’s parent company was an initial investor in Celsius and has lent it Tether in exchange for other cryptocurrencies as part of a previously-reported lending agreement. The stablecoin’s market cap continues to slide: investors pulled out $1.6B over just two days this week.
Klarna is looking to raise funds at an even lower valuation than the down round it was seeking just last month. The BNPL giant, which was valued this time last year at $45.6B after a SoftBank-led round, is now in talks to raise ~$500M at a $15B valuation (down from $1B at $30B in May). The firm’s net loss quadrupled in the first quarter, and it announced major layoffs last month.
Selected fundings
Indonesian payments fintech Flip raised a $55M Series B extension round.
Financial management startup Airbank raised a $20M Series A.
Able.ai, a startup that speeds up commercial loan processing, exited stealth with $20M in funding.
Cube, a startup that helps companies with financial planning and analysis, raised a $30M Series B.
Narmi, a fintech layering services on existing banking infrastructure, raised a $35M Series B.
Investment-as-a-Service startup Upvest raised a $42 million Series B.
PayCargo, a fintech for the freight industry, raised a $130M Series C.