Fintech Update, 8/10 - 8/16
Hi! It's Monday, August 17, 2020.
Leading Off
American Express is reportedly in advanced talks to acquire small business lender Kabbage for ~$850M (last valued at over $1B during a $250M fundraise in 2017). // Facebook unveiled a new group led by Libra co-creator David Marcus to pursue the company’s payments plans. // Revolut reported 2019 losses that triple the previous year’s, despite surges in revenues and customer numbers; Robinhood reported a record year for retail trading with volumes that exceed its publicly-traded rivals; Binance’s BUSD stablecoin was greenlit by the NYDFS; Stripe tabbed GM’s CFO to manage its financials, the SEC and FBI are examining Yieldstreet; and N26 is facing staff unrest. // All this + more below!
Heavy Hitters
AmEx considering Kabbage acquisition. American Express is reportedly in advanced talks to purchase the small business lender for around $850 million. Kabbage, backed by investors such as SoftBank and Vision Fund, was last valued at over $1 billion in 2017. If an agreement is reached between the two firms, it would give American Express a huge increase in exposure to small businesses and turn it into a massive small business lender overnight. Small business lending firms have struggled amid the economic uncertainty created by COVID-19, forcing business model changes and valuation decreases, including Enova’s recent acquisition of OnDeck Capital, which valued the firm at 7% of its 2014 market cap.
Facebook consolidates all payments initiatives into one. The social networking giant announced the creation of Facebook Financial (or “F2” internally), which will oversee and manage the company’s myriad payments projects, including Novi (the rebranded Libra), WhatsApp Pay, and Facebook Pay. F2 will be headed by David Marcus, who co-created the erstwhile Libra project and will continue overseeing Novi. The consolidation effort echoes a broader strategy by Facebook to re-brand, streamline, and integrate the company’s various assets, including Instagram and WhatsApp, under a single Facebook banner, possibly as a way to make it more difficult to disentangle the firm amid growing scrutiny by Congress and antitrust regulators. “We have a lot of commerce stuff going on across Facebook . . . [and this] was the right thing to do to rationalize the strategy at a company level,” said Marcus.
Quick Takes
Revolut reports that losses tripled in 2019. Despite surges in revenues and customer numbers, Revolut posted a total loss of £106.5 million for 2019, three times its 2018 loss of £32.9 million. Revolut attributes the losses to investment in “international expansion and new product offerings.”
Robinhood announces record year for retail investing. The trading app revealed data showing that its daily average revenue trades (a metric it tracks despite not charging for trades itself) are, at 4.3M in June, higher than all of its publicly traded rivals. Elsewhere, the app is blocking access to Robintrack.net, a chronicler of day trading demand.
Binance’s stablecoin greenlit by NYDFS. The New York Department of Financial Services (NYDFS) added the global crypto exchange’s BUSD stablecoin to its “Greenlist”, allowing permissioned financial institutions in New York to list and custody the coin without prior NYDFS approval. BUSD joins other tokens like bitcoin and ether, as well stablecoins like Paxos and Gemini dollar, on the regulator’s list.
Stripe hires GM CFO to head finance. The payments giant tabbed General Motors’s chief financial officer, Dhivya Suryadevara, amid the business’s pandemic-related e-commerce boom. Suryadevara is the latest high-profile hire for Stripe, which also recently hired new Chief Revenue Officer Mike Carville from AWS and new General Counsel Trish Walsh from Voya .
N26 faces staff unrest. The Berlin-based digital bank’s employees penned a letter to management and met to form a works council, describing their confidence in management as “at an all time low.” Employee grievances reportedly include discontent around “uneven workers’ salaries,” recent executive team resignations, and cultural tensions as the firm scales up.
US regulators examine YieldStreet. The crowdfunding investment platform is reportedly under examination by the Securities and Exchange Commission and FBI for its sale of alternative assets. The SEC is probing Yieldstreet’s business dealings while the FBI is looking into customer interactions.
Finix quadruples transaction volume. The fintech infrastructure firm, which helps software companies embed payments into their product, reported that transaction volumes on its platform grew 4.5x between Q2 2019 and Q2 2020 amid surging demand for digital payments services.
Betterment leads fintech industry coalition to address lack of diversity. The wealth management firm is spearheading the Fintech Equality Coalition to address racial inequality across multiple dimensions of the fintech ecosystem, including customers, employees, and executives.
Etsy expands international presence. The e-commerce site is expanding its payments platform to Israel, Malaysia, Mexico, Morocco, South Africa, Turkey and the Philippines; and it announced plans to launch in three additional markets by the end of the year.
Pop Flies
TechCrunch looks at the significant capital investments required to build a fintech firm.
Blend raised $75M in Series F funding, led by Canapi Ventures, valuing the firm at $1.7 billion. 🦄
Bond trading platform Trumidraised $200M, doubling the firm’s valuation to over $1 billion. 🦄🦄
Freight broker firm Axelraised $28 million in debt and equity financing.
Clear Books, which provides accounting software to 13,000 SMEs, announced an integration with Stripe.
Italian digital bank Fineco is experiencing a soaring share price despite a general industry downturn.