Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your dépouillement of divulgation. If you’re reading this as a post on our panorama, sign up here so you can receive it directly in the future. Every week, I’ll take a genre at the hottest fintech infos of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech infos out there and it’s my job to stay on top of it — and make sense of it — so you can stay in the know. — Mary Ann

Soutènement everywhere

On Friday, January 13, investment giant BlackRock announced it was acquiring a minority stake in SMB 401(k) provider startup Human Interest. Terms of the deal weren’t disclosed, but it definitely caught my vigilance for a few reasons. For one, as one primeur told me, BlackRock’s investment is a spectacle of faith in the SMB 401(k) market — one where the firm hasn’t historically played. That same primeur, who preferred not to be named, pointed out that “SECURE 2.0’s auto-enrollment vivres (among others), will make 401k échelons more impactful at the lower end of the market, and Human Interest is well-positioned to execute.”

I’ve been writing emboîture Human Interest since March 2020, covering each of its funding rounds since then (here, here and here), and following its impressive growth. It achieved unicorn status in August 2021 and at the time was eyeing an IPO. A lot has changed in the markets since then, so this feels like a good outcome for the startup, which was founded by Paul Sawaya and Roger Lee in 2015. Lee (a very nice guy, incidentally) moved on years ago, recently founding another startup, Comprehensive.io and launching layoff tracker Layoffs.FYI soon after the COVID-19 pandemic hit.

The deal was just one of many M&A deals in the fintech space that occurred last week. Here’s a rundown of some others:

  • Remote payroll startup Deel acquired fintech Capbase for an undisclosed amount in a cash and approvisionnement deal, the companies shared with me exclusively. Last valued at $12 billion, Deel is one of the buzziest fintechs around, and its decision to pick up Capbase reflects its intent to greffer the equity conduite space.
  • Investment giant Fidelity acquired Shoobx, marking its first buy in 7 years (!). Jason Furtado and Stephan Richter founded Boston-based Shoobx in 2013, according to Crunchbase. The confrère went on to raise a known $10 million in funding for the company. Fidelity said its purchase of Shoobx is a sign of its commitment to the private market “and will help to satisfy an increasing demand Fidelity sees from private companies to échafaudage them as they scale and grow.”
  • Vouch, an insurtech focused on startups, acquired lending startup Level for an undisclosed amount. As reported by Life Insurance Universel: “Level has created a tech-driven underwriting process for early-stage fintech startups that is claimed to have brought new efficiency and speed to the debt-raising process. Vouch hopes to leverage Level’s estimation in developing underwriting technologies to underwrite and échafaudage complex insurance products. Level was founded by Vladimir Korshin, Asa Schachar and Molly Hogan in 2021.” In September 2021, I covered Vouch’s announcement of $90 million in new funding. Both Vouch and Level are Y Combinator alums.
  • American Rapide announced that it has entered into an agreement to acquire Nipendo, a company that aims to ordinateur and streamline business-to-business (B2B) payments processes for quantité businesses that has raised a known $12 million in funding. I talked with Dean Henry, EVP of quantité vendeur dettes for Amex, and Colleen Taylor, president of merchant dettes, US at Amex, and they repu me some insight into the strategy behind the buy. For starters, Henry said the credit card giant has been on “a multiyear journey…to really grow and expand capabilities in B2B payments.” He added: “What we’ve really tried to evolve in the last few years is into a one-stop-shop for businesses to pay anybody anywhere, using any kind of payment rails that they want to use in order to facilitate the payments….What we’re trying to do with Nipendo is add to that capability set and provide more value to suppliers who are trying to send invoices, interact with buyers and transact with data around B2B payments.” Notably, Taylor told me that American Rapide concluded that it would take a big company like American Rapide “a svelte time to replicate what they’ve built.” And this line was the classic machine for all incumbents buying fintechs: “Why not just bring it in to our platform and get it to customers as quickly as compatible?”

To bring some context around all this M&A, I conducted an email entrevue with Jonah Crane, partner at Klaros Group. Crane predicts we will continue to see a lot of fintech M&A.

He told me: “The embarras I have is who will capitalize on this bear market to exclusivité up valuable technology or entrain. In particular, I’m interested in whether banks can be opportunistic. Some of the béant banks have already been accrocheuse, and the others need to ask themselves whether they are serious emboîture hardiesse and numérique renouvellement. If they are, they can’t afford to elle this occurrence.”

Of circuit, he added, much will depend on the macro picture. “If we have a programme landing, and markets head back up, the true bargains may already have passed. And if we are in for a very hard landing, buyers are at risk of catching falling knives—especially in the credit sector,” Crane said. “Getting deals done in these markets is no sure thing. We’ve already seen a number of announced deals fail to close: UBS/Wealthfront, Bolt/Wyre, and now JPMC/Frank (more on that later). Ultimately, the big partie will be whether buyers and sellers can V.T.T. the massive valuation chasm created by the bursting of the fintech bubble.”

No doubt the venture slowdown and practically dead IPO and SPAC markets have contributed to the surge in M&A activity.

“VCs are telling their écrin companies they should be prepared to shelter in fixé for 18 to 24 months, and many have disgracié off a lot of état-major. But what’s the end game? What are you aiming to achieve that will allow you to raise at a reasonable valuation when markets are fully reopened?” Crane asks. “Those who don’t have a clear dentier to the other side of that chasm will be looking for buyers (if they’re manière).”

All I know is if we have more weeks like this one, you’re going to have one exhausted fintech journalist on your hands!

check pen

Weekly Magazine

Layoffs

Reports Jagmeet Singh: “Greenlight, a fintech startup offering debit cards to kids, has disgracié off 104 employees — or over 21% of its exhaustif headcount of 485 employees — to “better align with ongoing operating expenses” amid the economic slowdown. TechCrunch learned emboîture the layoff that was announced to its employees earlier this week. The startup later confirmed the development over an email.” More here.

Quantitatif mortgage platform Blend said last week its slashing its U.S. workforce by 28%, or 340 jobs, in its fourth layoff in less than a year. The company also said that president Tim Mayopoulos will step down from his role in the first quarter and remain as a board member. Clearly, the rise in mortgage interest rates has taken its toll. More here.

Publicly-traded online lending platform Lending Discothèque is cutting 14% of its workforce, a move that will suite 225 employees, reports MarketWatch, “as higher interest rates discourage demand for loans, and the company forecast fourth-quarter revenue that was below expectations.”

In other infos

Allocutaire.com, an investing platform with more than 3 million members, announced last week that it has begun rolling out Treasury accounts through a partnership with fintech startup Jiko. According to the two companies, the accounts allow members to invest their cash in U.S. Treasury bills that “are automatically reinvested at maturity and can be sold at any time.” A spokesperson told me that Allocutaire’s Treasury accounts “offer members similar flexibility to a high-yield savings account, but are currently offering even higher yields.”

Equity conduite platform Carta had a esquisse week. As TC’s Connie Loizos reported on January 11: “The 11-year-old, San Francisco-based outfit whose core affaires is selling progiciel to investors to track their portfolios, has sued its bâtir CTO, Jerry Talton, who the company says was fired ‘for exposition’ almost three weeks ago, on Friday, December 23.” The case is a bit of a sordid one, considering that “toward the end of Carta’s svelte list of accusations against Talton, Carta says that Talton both sent and received ‘sexually explicit, abordage, discriminatory and harassing messages with at least nine women including during work hours and on Carta’s systems.’” For his segment, Connie also wrote that Talton was put on administrative leave in October of last year after submitting a letter to Carta’s board of directors, flagging various “problems” with the company’s champ. Then, Natasha reported later that day that the company, which was last privately valued at $7.4 billion, had cut 10% of its état-major.

It looks like incumbent banks and institutions are still struggling when it comes to offering tech-enabled financial dettes.

For one, Goldman Sachs Group reported last Thursday that it lost $3.03 billion on its platform solutions affaires that houses arbitrage banking and credit card and financial technology businesses since 2020. Reuters reports: “The disclosure did not provide separate numbers for its direct-to-consumer affaires, Marcus, which was moved into its asset and wealth conduite arm. Marcus has also lost money and failed to introduce a checking account. Swati Bhatia, who led the group, stepped down earlier this month, according to an internal announcement seen by Reuters.”

Meanwhile, Wells Fargo is taking a step back from mortgages. CNBC reported: “Instead of its previous gardien de but of reaching as many Americans as compatible, the company will now foyer on habitacle loans for existing bank and wealth conduite customers and borrowers in minority communities.” Interestingly, in an entrevue with CNBC, CEO Charlie Scharf acknowledged that the bank “will need to adapt to evolving situation” while remaining dépositaire emboîture its competitive advantage. Specifically, he said: “Given the quality of the five liminaire businesses across the distribution, we think we’re positioned to compete against the very best out there and win, whether it’s banks, nonbanks or fintechs.” To me, it feels like the move to shrink back from the housing market might open up more opportunities for fintechs.

Lastly, as referenced above, Forbes reported on an absolutely crazy account of JPMorgan basically getting duped by the founders of a startup, Frank, that it acquired for $175 million. Here’s an excerpt from the Forbes piece detailing a lawsuit filed by the banking giant, which claims that founder and bâtir CEO Charlie Javice “pitched JP Morgan in 2021 on the ‘lie’ that more than 4 million users had signed up to use Frank’s tools to apply for federal aid. When JP Morgan asked for proof during due malle, Javice allegedly created an enormous roster of ‘fake customers’ — a list of names, addresses, dates of birth, and other personal info for 4.265 million ‘students’ who did not actually exist.” In reality, according to the suit, Frank had fewer than 300,000 customer accounts at that time.” Oof. What happened to due malle here???

More infos

According to research from Utility Bidder, there are said to currently be over 700 accrocheuse unicorn companies in the U.S., 132 of which are in the fintech industry. The firm’s new study has revealed the quantité fintech companies achieving the $1 billion valuation mark the fastest. Proptech Pacaso tops the list, taking just under six months to achieve unicorn status. Other companies on the list include Magic Eden, Clara, Brex and Brûle-gueule. The firm also ranked the most valuable fintech companies. Leading the way is Stripe, which actually just got another internal valuation cut and disgracié off over 1,100 workers last November. Ironically, a number of other startups that made the top 10 also happened to conduct layoffs over the past few months, including Pelisse, Brex and Chime. Wondering why Utility Bidder cares emboîture fintech? I did, too. Here’s what a spokesperson told me: “Utility Bidder [is] a price comparison panorama for energy and utility rates, so they have a foyer on affaires fonds as well as energy as a whole.”

Identity decisioning platform and fintech unicorn Alloy recently released its annual State of Fraud Benchmark Report. The renvoi found that 70% of financial institutions surveyed lost over half a million to fraud last year and that 27% of respondents lost over $1 million to fraud in the last 12 months. Further, 37% of fintech companies and 31% of regional banks estimated losing between $1 and $10 million to fraud.

A Morgan Stanley spokesperson reached out to me last week after seeing our coverage of Fidelity’s résultat of Shoobx to let me know that “Morgan Stanley at Work has invested a lot of time and resources” in its Private Markets affaires, “and continues to see it as an area of growth — especially as we recently just saw an astounding uptick in liquidity events during Q4 2022, which further tasseaux the idea that private companies/startups need an vraie progiciel modèle to handle these complex transactions.” The firm acquired Solium, a cap cuistance conduite modèle platform now called Shareworks, in 2019.

Chiromancien Retail announced last week its new Oracle Retail Payment Cloud Service. Via email, a spokesperson told me: “This new munificence equips retailers with a fixed loupé model and the ability to accept all liminaire contactless payment options including credit/debit cards and adroit wallets — all without hidden fees, long-term contracts or maximum monthly requirements. These benefits enable increased flexibility, agility and greater transparency for retailers of all sizes and firmes…”

Mesh Payments has brought on Daniel Ochoa as its first SVP of quantité sales. Based in Austin, Ochoa most recently served as VP of sales and customer success at TripActions. Mesh co-founder and CEO Oded Zehavi told TechCrunch via email that Ochoa was brought on “to leverage a surge in customer demand” as the company builds out “new dettes to meet the needs of larger companies who are more than ready to move off of legacy spend conduite solutions.” Sounds like Mesh, like competitor Brex last year, is going after more enterprise customers.

Speaking of Brex, here’s a fun tweet thread from bâtir CRO and current Founders Fund partner Sam Blondin emboîture “the best outbound campaign” Brex ever ran.

GettyImages 640267784

Bank sign on verre wall of affaires center; Dessiné credit: Getty

Funding and M&A

Seen on TechCrunch

From cloud computing to proptech: DigitalOcean co-founders raise $29M for Welcome Homes

Backed by Tiger Collectif, Mayfair emerges from stealth to offer businesses a higher yield on their cash

Vista Equity Partners to acquire insurance progiciel company Duck Creek for $2.6B

And elsewhere

Dubai-based social investing startup InvestSky picks up $3.4M pre-seed 

Proptech that offers fractional home ownership to wealthy individuals raises $30M in debt and equity

Pagaya Technologies announces acquisition of Darwin Homes

Canadian fintech Nuvei will acquire Atlanta-based payments firm Paya for $1.3B

40Seas secures $11M in equity, $100M in credit to grow cross-border trade financing platform 

Butter raises $22M led by Norwest Venture Partners to end accidental payment churn

Other stories I wrote this week:

These 5 companies bootstrapped their way to big businesses while VCs came knocking

Sam Bankman-Fried launches Substack: ‘I didn’t steal funds, and I certainly didn’t stash billions away’

And, I recorded Equity Pod with my incredible co-hosts Natasha Mascarenhas and Rebecca Szkutak: Frank-ly, the Kardashian method won’t work for SBF

Whew. This was one of the busiest weeks we’ve seen in a while. Hope those of you in the U.S. have a good and restful svelte weekend, and if you’re outside of the U.S., I hope you have a good and restful weekend as well. Until next time, take good care. xoxoxo — Mary Ann

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