Welcome to The Exchange! If you got this in your inbox, thanks for signing up and your vote of confidence. If you are reading this as a post on our site, sign up here so that you can receive it directly in the future. Every week, I’ll take a look at the latest fintech news from the previous week. This will include everything from funding rounds to trends, an analysis of a particular space, and opinions on a particular company or phenomenon. There’s a lot of fintech news out there and it’s our job to stay on top of it, and make sense of it, so you can stay on top of it.
Hello! I am excited to report the introduction of two new additions to this newsletter. First, the amazing Christine Hall will be co-writing with me in the future. Christine and I have known each other for 19 years, we used to work together at the Houston Business Journal. She has been covering fintech for the past few years and I am delighted that she will work on The Interchange with me in the future. Second, if you read to the end, you’ll see a logo created exclusively for Interchange by TC’s amazing graphic designer, Bryce Durbin. I’m ridiculously excited about it. — maria anna
Many thanks to Mary Ann for that greeting! I am excited to be working with her covering the wider world of fintech and look forward to contributing to what I consider, in part, the go-to newsletter for this industry. — christina
Now we go with the news.
Celebrating women-led ventures
I, like many of you, I’m sure, continue to be disappointed in the lack of LP (limited partner) dollars flowing into female-led VC firms. So you can imagine my excitement when I received an email about a new venture company, called Vesey Ventures, which was founded by three former Amex Ventures managing directors who had recently closed a $78 million startup fund.
Vesey’s self-described mission is to support companies “transforming financial services” from the early stages to Series B. He plans to invest $1.5 million to $3 million as initial checks and larger amounts for follow-ups. Based in the United States and Israel, the fund has so far backed five startups, including Coast, Cyrus, Grain, Equi and Proper.
The trio wouldn’t say if Amex is an LP in their new fund, but hinted there were no hard feelings when they all decided to leave (at the exact same time in late 2021, mind you). Personally, aside from the fact that this means more money for fintech startups, I love that Dana Eli-Lorch, Lindsay Fitzgerald, and Julia Huang worked together for about a decade and got along so well as colleagues and friends that they decided: “ Hey, let’s do this on our own.”
Clearly, his track record impressed enough LPs, including seven unnamed “highlight” financial institutions, that they were able to close the fund in a very challenging macro environment. During their time at Amex, they worked on investments in companies like Plaid, Stripe, Melio, and Trulioo. They have also worked extensively to help fintechs build partnerships with established financial institutions, experience they plan to use to offer portfolio companies customized “Strategy Sheets” alongside term sheets.
Vesey defines fintech in its broadest sense, meaning it invests outside of traditional financial services categories, such as consumer and B2B. He also discusses the software vertical, embedded financial technology, the future of commerce, and the infrastructure layer such as cybersecurity, risk, and compliance.
It made my week to have the opportunity to cover this news, I’m not going to lie. Here’s to more money flowing to female investors and founders too!!
Speaking of which, I also covered the $15 million raise for Kindred, a home exchange network. While that company is more proptech than fintech, I mention it because it was also founded by women who previously worked together, in this case at Opendoor, and saw an opportunity to branch out on their own. – Maria Ann
Fintech financing in Q1
This week, we take a look at global fintech funding for Q1 2023 and find some notable data.
First things first, funding for the quarter was $15 billion, up 55% from Q4, but clearly shows a market correction given the staggering amounts fintech companies raised in both 2021 and 2022 .
And it’s important to note that of that $15 billion, $6.5 billion were Stripe raises. Without that deal, CB Insights said the funding would have totaled $8.5 billion, or a 12% drop in funding from the fourth quarter of 2022.
Meanwhile, 2022 was packed with fintech companies achieving unicorn status, with 72 unicorns being minted that year and 38 in the first quarter alone. However, that was probably helped by the plethora of available capital flowing into the sector; in the first quarter of 2023, only one fintech firm became a unicorn: Egypt-based MNT-Halan, which in early February raised $260 million in equity financing at a $1 billion valuation. According to the latest CB Insights State of Fintech report, this is the first time this has happened since late 2016.
Although MNT-Halan was the only company to win a horn, the first quarter was filled with “mega-spins,” the term for deals valued at $100 million or more. There were 16 deals like this, totaling $9.2 billion, an increase of 179% over Q4 2022 and representing 61% of total funding in Q1, CB Insights reported. After Stripe’s $6.5 billion deal came Rippling, which raised $500 million in mid-March as Silicon Valley Bank was falling apart. Notably, the deal count declined, falling 24% quarter-over-quarter. —Christina
Apple delves deeper into fintech
Do all tech companies want to become fintech? As reported by Romain Dillet: “Apple Card customers in the US can now open a savings account and earn interest through an Apple Savings account. For details on Apple’s new offer, click here. When the company originally announced the new financial product in October, Apple said it couldn’t share the interest rate that would be paid on these accounts because rates fluctuate so much these days. Starting today, Apple will offer a 4.15% APY.” You can read more details about the move here.
Meanwhile, Moody’s Investors Service issued a new report outlining its view that the ability for consumers to earn higher returns on their cash through the tech giant’s new savings account (offered in partnership with Goldman Sachs), if it’s well integrated into Apple’s ecosystem, “it’s a negative credit to established banks and cash alternatives such as money market funds.”
As we know, the new savings account deepens Apple’s financial services product offering, which already includes a digital wallet, credit card, and its buy now, pay later credit offer, Apple Pay Later. As Moody’s notes, “the expansion aligns with a common technology company strategy to increase the reach, utility and attractiveness of its digital platforms.”
“If Apple aggressively promotes the savings product, it could draw a significant amount of savings into the Apple ecosystem and away from traditional banks. Through the partnership, Goldman Sachs could benefit from increased deposit funding through the broad reach of Apple’s digital ecosystem,” Stephen Tu, vice president of Moody’s Investors Service, said in a written statement.
Moody’s further added: “While there are already many higher-yielding cash alternatives available to most consumers, Apple’s above-average interest rate on the account, combined with its simple and easy-to-use ecosystem, could incentivize consumers to transfer funds to Apple. platform of established financial institutions. – Maria Ann
(Disclosure: My husband works for Apple, but not in any capacity related to this project.)
Other weekly news
Lili Claims Super App Status With New Accounting Platform
Greenwood, a digital banking platform for Black and Latino individuals and businesses, goes live for everyone and cancels the waiting list (TechCrunch covered the company’s $40 million raise in 2021 here.)
UK-based Finastra partners with Plaid to give users access to fintech apps
Airbase Adds Guided Procurement to Spend Management Platform
The online real estate firm Opendoor cuts 22% of the workforce (TechCrunch covered the company previous round of layoffsthat affected 18% of its workforce at that time, last November.)
Matt Harris of Bain Capital Ventures published an article on how banks should work with startups: Lessons from ancient Rome: how banks can learn to love startups
Financing and M&A
Spotted on TechCrunch
Autotech Ventures’ new $230 million mobility fund adds fintech and circular economy to its investment strategy
Accounting automation startup Trullion lands $15 million investment
and in other places
Wealthtech-proptech-fintech crossover Plotify raises $12.5 million in equity financing
Actor Ryan Reynolds buys a position at Canadian payment technology company Nuvei
Insurtech Capitola raises $15.6M Series A from Munich Re
Clerkie Raises $33M Series A Funding From Major Investors To Address Broken Debt System
French spend management company Mooncard secures €37 million Series C financing
YELO Funding, a college funding startup, announces $1.2 million in pre-seed funding
TiiCKER, a shareholder engagement and loyalty platform, raises $5 million in seed round
Residential tech company Habi receives a $100 million credit line from Victory Park Capital
Waste management payments startup CurbWaste raises $4 million
Now here is the logo I promised! It’s not pretty?
That’s all for this week. It felt a bit slow, but hey, sometimes it’s okay 🙂 I hope everyone is having a great and fun-filled weekend! See you next time. xoxoxo, Mary Ann and Christine