Welcome to The Interchange! If you received this in your inbox, thank you for your registration and vote of confidence. If you are reading this as a post on our site, please register here so you can get it directly in future. Each week, I’ll take a look at the hottest fintech news from the previous week. This will include everything from funding rounds to trends to analysis of a specific space to hot opinions about a specific company or phenomenon. There’s a lot of fintech news, and it’s my job to keep up with it — and understand it — so you can stay informed. — Mary Ann
Last month, Andreessen Horowitz — one of the biggest and most prominent players in venture capital — announced that its “headquarters will be in the cloud” move forward.
Founded in 2009 in Menlo Park, California, the firm — also known as a16z — has been a symbol of Silicon Valley investing for years.
His new philosophy in this post-COVID era of remote work is that there is no longer a need for a centralized headquarters. This philosophy extends to its fintech team. And let’s face it, fintech opens up so many doors in general – it makes so much more possible in terms of running a company or just operating in general, globally. A lot of people may be underestimating how much the pandemic has really pushed this acceleration in the financial services world and people are now kind of commenting, “Oh, there’s this slowdown and it’s like look how much fintech investment has gone down.” You have to put it in perspective – we’re still very, very far ahead of 2020 in terms of how much money is going into this space. And fintech still takes nearly a fifth of all venture capital dollars. I believe this is because it affects every day. If financial services are easier to access, or if it’s easier for businesses to operate or make payments or accept payments, then it’s all because of fintech.
I sat down (virtually, that is) with a16z general partners Angela Strange and Anish Acharya to learn more about why the pair believe we’re experiencing a ‘Silicon Valley spin-off’, which fintech sectors have the most potential, and how the new era of telecommuting has led to so.many.opportunities for fintech startups.
Read more here.
Reporter’s note: The interview with Angela and the interview with Anish took place weeks before publication and after publication I learned that recent analysis it is reported that of the firm’s fintech portfolio of 42 companies, only four had female co-founders. I contacted the partners about the issue this weekend, but did not hear back at the time of publication of this newsletter. Of course, it’s the weekend, so I wasn’t expecting an answer so soon. If I hear back, I’ll let you know next weekend!
My fintech partner in crime, the oh so talented one Natasha Mascareñasend the week with a spoon for A stripe laying off some of the employees who support TaxJar, a tax compliance startup acquired last year. According to Natasha, “The layoff – which took place over the past month – is related to Stripe’s decision to end its TaxJar-focused go-to-market efforts at the end of July. Sources estimate the number of employees affected by the workforce reduction to be between 45 and 55, at least some of whom have been invited to take 30 days to apply for internal jobs at Stripe… According to LinkedIn, the co-founder of TaxJar Matt Anderson left Stripe in July, followed by people in the sales, marketing and partnerships teams.” Read more here.
The world of expense management just got (even more) competitive. A corporate expense and cash management company Ro announced that it is adding expense management to its offerings with “customized controls designed to make spending less painful.”
Over email, the company told me it believes “offering the full package” is critical in today’s fintech world. Specifically, a spokesperson said: “When we look at the landscape, there are ten different vendors for every single process: spend management (eg Brex), expenses (eg Expensify) and banking (eg Mercury). Consolidating different platforms for these separate functions creates friction for finance users. Ro believes in the power of integrating cost management and business banking services. Every corporate finance process – AP, merchant banking, expense/card management, treasury management – works better when they work together in a single, connected view.”
Launching in December raised a $75 million Series B funding round led by Dragoneer Investment Group.
Speaking of cost management, Air base announced the appointment of Philippe Lacour as Chief Revenue Officer. Lacor most recently served as CRO for code-free platform company Unqork, where he handled all go-to-market efforts, including sales, pre-sales consulting, customer success, revenue operations and channel partners. He also led the company’s expansion into the Asia-Pacific region. He was previously CRO at Envoy.
Mexican fintech Kovalto, which serves Mexican SMEs and was formerly known as Credijusto, has agreed to go public on a US stock exchange through a SPAC at an estimated pro forma valuation of $547 million. The transaction is believed to be the first time a Mexican fintech has agreed to go public on a US stock exchange. In a press release, the company said it is merging with LIV Capital Acquisition Corp. II, a special purpose acquisition company launched by Mexico City-based fund LIV Capital. Upon completion of the transaction, LIVB will be renamed Covalto and remain listed on the Nasdaq under the new symbol “CVTO.” The company said originations grew at a 152% CAGR from 2015 to 2021. More here.
While we’re on the subject of public markets, something interesting is happening with the fintech stocksAccording to F-Prime’s fintech index. The index rose 41%, compared with EMCloud’s 19.5%, the Nasdaq’s 15.6% and the S&P’s 12.2%. Notably, Affirm is the leader of the group and has grown by 67%. Insurance stocks rose 46% overall, led by Lemonade and Oscar Health. Payments shares rose 44%, led by Wise and Mercado Libre. Wealth and asset management stocks also rose 32%, led by Coinbase and Bakkt Holdings. Meanwhile, shares of the banking and credit sector rose 24%.
Speaking of Confirm. Buy now, pay later, the advertising giant announced extended, multi-year partnership with BigCommerce this “makes Affirm the preferred and recommended payout partner over time for the tens of thousands of BigCommerce merchants,” according to the two companies. As a result of this partnership, BigCommerce merchants can enable Affirm as a checkout option directly in their BigCommerce merchant dashboard.
On August 12 PayPal announced that “all eligible PayPal account holders in the US can now transfer, send and receive cryptocurrency with PayPal.” TechCrunch reported that the move would be will take place in early June.
Robin Hood released several new features last week. On the one hand, it launched advanced leaderboards, with the goal of “providing all customers with customization, fast, easy, and in-depth analytics right in the app.” The company said advanced charts are the “number one most requested feature” by its active customers. The company also launched Cash offersa new benefit that allows all Cash Card customers to earn cash back “automatically” when they spend at retailers like Chevron, Nike, Five Guys, Macy’s and more.
from PitchBook on payments: “The accelerated digitization of financial services, as well as the shift to online services, has benefited fintech startups over the past few years. The COVID-19 pandemic helped accelerate these trends as consumers turned to digital financial services instead of face-to-face interactions… Digital payments, one of the earliest financial segments to go digital, continued to see rapid disruptions during this period . Payment platforms have benefited from demand for online and contactless transactions, telecommuting has led to a need for payroll software providers, and corporate credit card providers such as Ramp and Brex have reportedly seen a surge in revenue.”
Hi Alice, which says it “helps over 1,000,000 small businesses grow,” announced a new Mastercard for small businesses. The card was launched on August 16 in partnership with Mastercard and First National Bank of Omaha and offers small business owners features such as a rewards program that includes the ability to earn points by performing “business advancement activities” on the Hello Alice platform. The company says it recently completed a Small Business Access to Capital Survey and found that 78 percent of owners say access to capital limits their ability to manage their day-to-day operations, with black (84 percent) and mixed-race owners (82 percent) overstating this claim. In its words, Hello Alice designed the card “to meet the needs of small business owners where they are, breaking down long-standing barriers for those who have traditionally been denied access.”
Financing and M&A
Seen on TechCrunch
Ecuadorian “unicorn” Kushki buys financial services start-up in Mexican expansion. TechCrunch covered the company A $100 million increase at a $1.5 billion valuation in June.
Another busy fintech week ahead. Thanks as always for your support in reading and sharing this newsletter of mine! Have a great week ahead. xoxo, Mary Ann