Fintech startup Brex was among the many bidders for SVB’s early-stage and growth portfolios


Welcome to The Interchange! When you received this in your inbox, thanks for signing up and your vote of confidence. When you’re reading this as a post on our site, join here so you’ll be able to receive it directly in the long run. Every week, we’ll take a have a look at the most popular fintech news of the previous week. This can include all the pieces from funding rounds to trends to an evaluation of a specific space to hot takes on a specific company or phenomenon. There’s lots of fintech news on the market and it’s our job to remain on top of it — and make sense of it — so you’ll be able to stay within the know. — Mary Ann and Christine

Brex bid for SVB portfolios

The FDIC finally released the various financial institutions that bid for parts of Silicon Valley Bank’s portfolio. As our fellow fintech enthusiast Alex Johnson pointed out, there was one name that stood out on that list for being “not just like the others”: fintech startup Brex.

TechCrunch spoke with Brex co-CEO and co-founder Henrique Dubugras, who confirmed that the corporate did in truth put its name within the hat for SVB but just for the early-stage and growth portfolios inside its business.

The thought actually got here from a customer, he said, who thought Brex “could handle those customers higher than big banks.” The primary week after the SVB meltdown, the FDIC was not going to simply accept any bids from entities apart from banks. During that point, Brex worked to step up for SVB customers in other ways. Then the next week, the FDIC said it was open to selling it by parts — and likewise open to non-banks submitting bids.

“That’s after we submitted our bids,” Dubugras said.

While the offer didn’t pan out, he doesn’t regret Brex taking a shot at it. “Ultimately, we predict it was just easier for them to sell the entire thing in a single piece,” he added.

Still, the startup continues to “keep seeing [its] deposits materially increase,” as not every startup or early-stage that when banked at SVB desires to move their money over to a giant bank.

At one point (in early 2021), Brex was in truth pondering of becoming a bank itself, going so far as to use for a bank charter, before later withdrawing that application.

Today, Dubugras said that’s not something he thinks is in Brex’s future. — Mary Ann 

Digital banking for seniors

Different demographics can have different banking needs. So it’s no surprise that we now have seen a flurry of economic technology startups offering banking services catered to certain populations based on aspects similar to age and ethnicity.

For instance, quite a few fintech startups cater to younger users — from Greenlight to Step to Current and now, Acorns. There are banks that focus on specific ethnicities and/or races. Greenwood desires to serve Black and Latinx consumers; Cheese started off targeting Asian American consumers; quite a few (TomoCredit, Welcome) are desirous to serve immigrants.

But far less common are fintechs dedicated to serving older members of our society. Enter Charlie, a latest startup offering banking services for the 62+ community, which launched last week with $7.5 million in funding led by Higher Tomorrow Ventures. The corporate’s goal, in keeping with co-founder and CEO Kevin Nazemi (who also co-founded now publicly traded Oscar Health), is to assist retirees and soon-to-be-retirees “benefit from their limited resources.”

My ears perked up after I got this pitch, because it’s an idea that hasn’t come across my inbox in all my years of covering fintech. I spotted that (1) older Americans have fewer options in the case of digital banking and (2) the COVID-19 pandemic really did result in lots of individuals who were once proof against online banking being won over by the benefit and convenience. And while trust probably stays a problem for some, I believe a good segment of this population would welcome more options.

Perhaps Jake Gibson, founding partner of Higher Tomorrow Ventures, said it best. He told TechCrunch that he believes that the “overwhelming majority of founders, including in fintech, are likely to construct products for folks that appear to be themselves.”

“That’s why we now have so many repetitive neobanks, social investing apps, etc. Meanwhile you’ll be able to probably count on one hand the variety of fintech corporations serving the needs of seniors, despite that being such an enormous population,” he added. — Mary Ann 

Financial crime prevention

Certainly one of the fun stories I wrote this week was on Cable, an organization that gives automated assurance and risk assessment. I don’t normally dabble within the financial crime sector of fintech, but what co-founders Natasha Vernier and Katie Savitz are doing is pretty interesting.

Why? Well, people within the U.S. reported $8.8 billion of economic fraud in 2022 to the Federal Trade Commission. And as Vernier explained to me, much of the controls monitoring by banks and fintechs to be certain that they will prevent fraud continues to be done manually.

By automating this process — which is something Vernier believes Cable is the one company doing right away — banks and fintechs can monitor all of their accounts to know, in real time, in the event that they are compliant with regulations and if their failure controls are working as expected to combat breaches.

The concept is catching on: Up to now yr, the corporate increased its revenue five times, and raised $11 million in Series A capital, led by Stage 2 Capital and Jump Capital, with participation from existing investor CRV.

“Regulators are particularly involved in effectiveness testing, but additionally, just the volatility within the banking industry right away, with COVID and if we’re in a recession or not, there may be increased financial crime,” Vernier said. “We’ve definitely seen, globally, a rise in fraud and other kinds of financial crime over the previous couple of years. And, as real-time payments get rolled out within the U.S., we’ll see more financial crime.” — Christine

Weekly News

Alex Wilhem was on fire last week when it got here to analyzing the fintech space. On this piece, he checked out how each Coinbase and Robinhood reported better-than-anticipated revenue in the primary quarter. He wrote: “The changing revenue mix at each Coinbase and Robinhood makes it clear that their ability to generate material amounts of revenue off money balances (and the crypto equivalent) is changing the sport of their favor. Studying public company performance is an incredible option to higher understand what’s happening in that segment of the market, in order that’s what we’re doing today with Coinbase and Robinhood. As all the time, we’ll relate what we’ve learned back to startups.”

Alex also leapt off how PayPal saw its stock drop despite the corporate reporting better-than-expected revenue and profit in the primary quarter. He wrote: “Indeed, fintechs haven’t fared well in any respect even while you account for the broader dip in valuations at tech corporations. It almost feels unfair. Comparing data from F Prime’s fintech index with valuation marks for SaaS and cloud companies when it comes to historical revenue multiples, it seems that fintech corporations are being clobbered just a little an excessive amount of. So why are fintechs today value lower than they were before the recent enterprise boom? Why are cloud corporations faring higher?” More here.

Christine, too, was busy covering Capchase’s move into the buy now, pay later space. In a nutshell, Capchase Pay is aimed toward helping software-as-a-service corporations close deals faster by giving them a option to collect the total contract value for his or her software while also providing their customers with flexible payment terms. Though SaaS growth didn’t take as big of successful as previously thought, Miguel Fernandez, co-founder and CEO of Capchase, told TechCrunch “that SaaS corporations did see a shift of their return on investment when sales cycles delayed as buyer’s asked for more flexible financing terms.” He called buy now, pay later offerings “one in every of the last B2B payment frontiers to be done in software.” More here.

Christine also wrote in regards to the District of Columbia Attorney General announcing an agreement with SoLo Funds, a fintech company that allows peer-to-peer lending, to settle a lawsuit that alleged SoLo Funds engaged in predatory lending practices. As Christine wrote, SoLo denied the allegations within the Grievance and denied that it had violated any law or engaged in any deceptive or unfair practices. More here.

Reports Manish Singh: “After India and Brazil, WhatsApp is launching the power to pay businesses inside a chat in Singapore. Meta has partnered with Stripe to roll out the feature within the region. WhatsApp has built this payment feature using Stripe Connect and Stripe Checkout solutions, making in-app payments available online and offline. Customers will pay businesses using bank cards, debit cards or Singapore’s PayNow fund transfer system.” More here.

“In recent weeks, a lot of brand-name mainstream financial institutions have been rolling out latest crypto services in an try to make the space more accessible. At the tip of April, Mastercard, PayPal and Robinhood all independently talked in regards to the measures they’re taking to achieve this at Consensus 2023 and the way they’re furthering their moves into the crypto ecosystem.” More here.

Dan Primack interviewed Stripe president John Collison at Axios’ BFD event this week and discussed Stripe’s annual letter, amongst other things. Listed here are some takeaways from that interview:

  • It continues to be hard to start out a business, and there continues to be too little cross-border finance, and Stripe helps with that.
  • Stripe processed transactions totaling $817 billion in 2022, and Collison said that “it may very well be in the overall vicinity of” $1 trillion this yr.
  • When asked about why Stripe hasn’t gone public, Collison said, “The world in Q1 of 2023 didn’t seem to be an exceptional time to go public.” He noted that the corporate raised $6.5 billion in March as a substitute to assist employees with their equity awards “to do right by them.” Collison went on to say that “Silicon Valley seems to get caught up in transactions and IPOs, but look, we’re just focused on constructing something useful for people and having a great business that’s self-funding.”

Fast co-founder Domm Holland is back with a new venture, Trady. After seeing his last two corporations go bust, we now have to say he’s definitely, uh…daring.

This tweet’ll make you’re thinking that. (Courtesy of Theodora [Theo] Lau, founding father of Unconventional Ventures.)

More headlines

Onboarding and automation: What fintechs can learn from big banks

Plaid signs agreements to migrate traffic to financial institutions’ APIs

Revolut’s CFO leaves the digital bank after two years, citing personal reasons

Visa partners with Tarabut Gateway. This news follows Tarabut Gateway’s $32 million raise last week to expand Saudi open banking.

Twitter to add encrypted direct messages and voice and video chat

Shopify launches eCommerce payments tool with help from Israeli fintech Melio

Tema launches active luxury and reshoring ETFs

Paysend launches cross-border payments solution for small businesses in US

Earnings of note

Affirm reported a quarterly lack of 69 cents per share for the quarter ended March 2023, in comparison with a lack of 19 cents per share a yr ago. Nevertheless, it said revenue was $381 million, a rise of seven.4% over the identical period in 2022. Its gross merchandise volume was up 18% to $4.6 billion, and the corporate said it represents a 43% compounded annual growth rate on a two-year basis. By way of transactions, Affirm reported that 88% of them were from repeat customers, while transactions per energetic consumer increased by 34%.

Robinhood also posted mixed earnings for the primary quarter, including a net lack of 57 cents in earnings per share on net interest revenue of $208 million. That compares to a net lack of 19 cents per share on net interest revenue of $167 million for the fourth quarter of 2022. As well as, the corporate launched 24 Hour Market, which it said makes “Robinhood the primary brokerage to enable customers to trade individual stocks at their convenience, 24 hours a day, five days per week.”

Dave, a neobank, reported that it narrowed its loss, posting a net lack of $14 million on revenue of $58.9 million, for the primary quarter led to March. That in comparison with a net lack of $32.8 million, on revenue of $42.6 million, for a similar period in 2022.

Courtesy of Jason Mikula of Fintech Business Weekly: “Varo did reduce its overall loss by about 11% vs. Q4 2022 but, at nearly $29 million, the fledgling neobank continues to be a good distance off from profitability — which helps to clarify why the corporate raised an extra $50 million in equity at a substantially reduced valuation, as first reported by Fintech Business Weekly. Still, the extra capital extends Varo’s runway by lower than six months, based on its current burn rate. The extra $50 million in funding was finalized in April, per management comments in the decision report, and thus will not be reflected in Varo’s Q1 data.” More here.

Funding and M&A

Seen on TechCrunch

Salsa dips into $10M to fireplace up payroll features for software corporations

The Mint, began by Higher Tomorrow Ventures, desires to be the accelerator fintech needs

Petal raises $35M, spins off data unit ‘to bring credit scores into the twenty first century’

Triumph raises $14M for an SDK so as to add real-money tournaments into games

8fig gives smaller e-commerce businesses the ‘C-suite’ they’ve all the time wanted

Zamp wants to provide online sellers ‘freedom from sales tax’

And elsewhere

EasyKnock acquires power buyer Ribbon

Cross-border processor Rev acquires online payments company Netspend to reach underbanked customers

Join us at TechCrunch Disrupt 2023 in San Francisco this September as we explore the impact of fintech on our world today. Latest this yr, we may have a complete day dedicated to all things fintech, featuring a few of today’s leading fintech figures. Save as much as $800 while you buy your pass now through May 15, and save 15% on top of that with promo code INTERCHANGE. Learn more.

As all the time, we’re so grateful to your readership and support! Have a beautiful week ahead!! xoxoxo, Mary Ann and Christine


Please enter your comment!
Please enter your name here

Share post:




We don’t spam! Read our privacy policy for more info.


More like this

2020 Q2 report: domains increase by 3.3 million (up 0.9%)

VeriSign, Inc. (NASDAQ: VRSN) today announced that the second...

Universities CEOs Attended the Most

Having a good education is one of the first...

Live domain auction grosses $2.2 million

Seven figure sale of highlights auction. Last week’s Right...

Mike Mann with Alex Pires and Krista Gable (video)

Mike Mann with Alex Pires and Krista Gable (video)