FinTech companies continue to make waves as the last week witnessed a slew of heavyweights scoring millions of dollars with headlines being filled with decacorns and unicorns alike.
The biggest headline of the week was Plaid, which raked in a colossal $425m Series D led by Altimeter Capital to put its valuation at $13.4bn. Despite having a tumultuous year, the FinTech’s growth has been rapid proving that there is a huge opportunity for the open banking sector in the US. This funding round comes a few months after Visa pulled out of a $5.3bn deal with the firm due to data privacy and antitrust risks. While it seemed like a shock at the time, the Plaid-Visa breakup paid off handsomely for Plaid’s investors.
Founded in 2012 by Zach Perret and William Hockey, Plaid’s API platform allows applications to connect with users’ bank accounts, enabling consumers to share their financial information, including monitoring investments with apps such as Venmo, Robinhood and Coinbase. Among its expansion plans is Europe, where a host of other open banking companies are at play such as Railsbank, TrueLayer and Tink. Between its UK, European and North American markets, Plaid claims to connect over 3,000 apps to over 11,000 financial institutions with plans to grow its footprint further.
Undoubtedly the firm is building its product suite as only recently it launched a payroll verification service dubbed simply Income aimed to ease income verification for people to enable them for things like securing loans and qualifying for mortgages, rent apartments and lease cars, among other things.
Given how consumers are becoming increasingly aware and receptive of open banking with younger generations, in particular, being more interested in the potential for more flexible and transparent financial offerings – according to a new report by Financial Technology Partners – it’s easy to see why investors are increasingly injecting money in firms like Plaid.
Plaid was hardly the only startup in the open banking sector to score funding. Taking advantage of the surge in online banking and e-commerce, UK-based TrueLayer raised $70m in a Series D funding round led by new investor Addition to fuel its expansion plans across the pond. With customers in the likes of Revolut, Trading 212 and Payoneer, the firm claimed to have serviced 50% of open banking traffic in the UK, Ireland and Spain.
Furthermore, the coronavirus pandemic has expedited digital transformation in banking. Consumers are increasingly embracing digital channels. This will seemingly become a lasting trend as OBIE claims open banking users have more than doubled since January 2020 with over two million customers currently.
In specific, funding in the US FinTech space has escalated in the past few years. Data from KMPG states it hit record heights in 2019, with a massive $59.8bn pumped into the space. Indeed, the country is churning out more decacorns in the likes of Plaid such as Chime and Robinhood.
It is not just Plaid suggesting the market will be fine despite the consequences of Covid-19 as a host of unicorns have been grabbing headlines. Just this week, four FinTechs earned the horn. Wisconsin-based loyalty app Fetch Rewards snagged a $210m round catapulting it to the unicorn club. The reward scheme – which awards consumers points for scanning their shopping receipts that can then be exchanged for gift cards – has 500 brands and has grown to 7 million monthly active users from 2.5 million at the start of the pandemic.
As the pandemic-induced lockdown caused shoppers to stay home and e-commerce and delivery services to disrupt retail, brands are looking for newer ways to attract customers which is a key reason for driving Fetch’s growth.
Another US FinTech unicorn to raise capital this week was New York-based corporate card provider Ramp bagging $115m co-led by Stripe and D1 Capital Partners. The startup, which aims to help companies track and manage their expenses through a spend management platform, reportedly quintupled its transaction volume in the past six months nearing a run rate of $1bn annually, it claimed.
While investment in the US and UK is high, countries in South Asia are slowly gaining traction, therefore, becoming the new hotbed for FinTechs. This week, two Indian startups entered the unicorn club demonstrating that the country’s overcrowded FinTech space indeed has much room for innovation.
Credit card management and bill payments platform CRED and investment platform Groww reeled in $215m and $83m and became the newest entries in the unicorn club. Tellingly, India has seen record-breaking deal activity across stages since January. Year to date, Series A rounds have netted $6.29m, the highest in the last five years, according to data by Tracxn.
Another sector that has been going from strength to strength is the cryptocurrency market with startups such as NYDIG and Atani scoring $100m and $6.25m respectively. The investment in the sector comes at a time when the volatile digital asset Bitcoin surged above $60,000 yet again. Furthermore, crypto exchange platform Coinbase – which is slated for a direct listing soon – revealed a record-breaking start to 2021. It surpassed its revenues from 2020 in just the first three months of this year alone with revenue of $1.8bn in the first quarter of the year compared to $1.3bn in all of last year.
With last week being quite the news cycle for FinTech giants, let’s go through this short and sweet summary of all the rounds you should know about.
Plaid leads with a massive $425m round
The Silicon Valley-based startup Plaid got a steroid shot from the latest increase in fortunes for FinTechs after it secured $425m making it the newest member of the decacorn club.
Led by Altimeter Capital, the round was joined by fellow new investors Silver Lake and Ribbit Capital alongside a roster of existing investors including Andreessen Horowitz, Index Ventures, among others. The firm previously raised a $250m Series C round with Mastercard and Visa as participants back in 2018.
Having grown its customer base by 60% last year, the firm added Microsoft and Google as clients and is set for further expansion across the globe.
CRED scoops $215m with valuation surpassing $2bn
Credit card repayment platform Cred concluded its Series D funding, raising $215m in a round co-led by new investor Falcon Edge and existing investor Coatue Management.
The new round which gives the FinTech firm a post-money valuation of $2.2bn comes three months after its Series C round when was valued at $800m.
Cred provides a one-stop-shop to its 5.9 million customers for their credit card bills and offers its customers discount points called Cred Rewards for paying their credit card on the platform.
Fetch Rewards bags $210m
The loyalty and rewards app secured over $210m in a Series D from SoftBank Vision Fund 2 with participation from existing shareholders ICONIQ, DST, Greycroft and e.ventures. This latest round of funding brings the total amount raised by Fetch Rewards to $328m.
Founded on the belief that people should be rewarded for the things they already do, the Madison-based Fetch Rewards is one of the few startups with headquarters outside of Silicon Valley or New York to reach the unicorn valuation milestone. Fetch plans to use the capital to inform its product strategy and adapt to changing consumer shopping habits on the heels of the Covid-19 pandemic.
OneStream adds $200m to its coffers
Corporate performance management solutions provider OneStream secured $200m in series B funding and a valuation of $6bn.
The round which was led by D1 Capital Partners with participation from Tiger Global and Investment Group of Santa Barbara will help the firm accelerate global expansion and innovation across its intelligent finance platform and solutions marketplace.
DLocal collects $150m
Latin American cross-border payments platform dLocal bagged $150m in funding. Alkeon Capital led the round alongside BOND, D1 Capital Partners, and Tiger Global. The round follows a $200m investment in September and puts a valuation on the Uruguayan-based company of $5bn.
The firm specialises in connecting global merchants to emerging markets, enabling clients to accept payments, send payouts and settle funds globally. Its customers include Amazon, Dropbox, Mailchimp, Microsoft, Spotify and Uber.
Japanese BNPL Paidy receives $120m in a Series D round
Buy-now-pay-later firm Paidy bagged $120m from JS Capital Management LLC, Soros Capital Management LLC, Tybourne Capital Management Ltd and Wellington Management.
Founded in 2008, the Klarna-rival firm offers instant, monthly consolidated credit to consumers by removing hassles from payment and purchase experiences. Its software leverages machine learning to underwrite transactions in seconds and guarantee payments to merchants.
NYC-based Ramp banks $115m, earns its horn
Continuing its FinTech investments, payments giant Stripe backed corporate card startup Ramp as part of a $115m funding round that values the company at $1.6bn.
Founded in 2019 by Eric Glyman, Karim Atiyeh and Gene Lee, Ramp builds expense management software for businesses which helps in identifying wasteful spending and creating a more transparent system for corporate card payments.
Crypto-based firm NYDIG lands $100m
NYC-based provider of technology and investment solutions for Bitcoin Nydig raised $100m in funding. Backers included Starr Insurance, Liberty Mutual Insurance and other P&C insurers which joined existing life insurance and annuity-focused strategic partners New York Life and MassMutual.
Led by Robert Gutmann and Ross Stevens Nydig provides Bitcoin investment and technology solutions to insurers, banks, corporations, institutions and HNW individuals.
Airtel Africa picks up $100m from Mastercard
African mobile money business, Airtel Africa secured a $100m investment from credit card giant Mastercard.
Founded in 2010, Airtel Africa claims it is a leading provider of telecommunications and mobile money services, with a presence in 14 countries in Africa, primarily in East, Central and West Africa. The firm, which offers a suite of telecommunication solutions to its subscribers including mobile money services, will use the funds to reduce the company’s debt and invest in network and sales infrastructure in the respective operating countries.
Groww nets $83m to boost its stock trading platform
Investment platform Groww raised $83m in a Series D funding round led by Tiger Global, making the startup the latest entrant into India’s startup unicorn club.
Founded in 2017, the firm Groww allows investors to invest in mutual funds and stocks. It plans to use the fresh funding to expand its product suite, hire top-quality talent, and invest heavily in financial education and awareness.
WhiteSource scores $75m
Open-source security startup WhiteSource raised $75m in Series D funding.
Pitango Growth led the funding round with participation by existing investors M12, Susquehanna Growth Equity, and 83North. This latest investment brings WhiteSource’s total funding to $121.2m. With customers including Microsoft, IBM, Nokia, Comcast, Pitney Bowes, Capital One and Deloitte, the funds will allow the startup to acquire other companies and expand its application security platform.
TrueLayer notches $70m Series D
Founded in 2016 by Francesco Simoneschi and Luca Martinetti, TrueLayer raised $70m led by new investor Addition, as well as existing backers Anthemis Group, Connect Ventures, Mouro Capital, Northzone and Temasek.
In 2020 the open banking firm onboarded a wealth of new customers including Nutmeg, Revolut, Trading 212, sync. and Freetrade among others. The new infusion of capital will help the London startup advance the international expansion of its network and introduce new products.
Neobank StashFin scores $40m
Singapore-based StashFin raised $40m in Series B extension equity financing from global investors Altara Ventures and Uncorrelated Ventures with previous investments from Integrated Capital, Kravis Investment Partners, Saison Capital and Tencent Cloud Europe BV.
Founded in 2016, it has worked with banking and finance firms such as Merrill Lynch, Citi, Goldman Sachs and Kabbage. It will use the funding to pursue neobanking across South Asia as well as strengthen its customer platform for local languages.
Tax compliance Blue Dot inks $32m
Formerly known as VATBox, Israel-based Blue Dot closed a $32m funding round to develop its AI-driven, cloud-based tax compliance platform.
The round was led by Ibex Investors in partnership with Lutetia Technology Partners. Previous investors Lamaison Partners, Viola and Target Global also participated in the round. The company intends to use the funds to expand adoption of its solutions to North American and European customers.
Brazil-based Cora bags $26.7m
SMB lender Cora raised $26.7m in a Series A funding round led by Ribbit Capital along with Kaszek Ventures, QED Investors and Greenoaks Capital. The investment brought the total funding to $36.7m since the company was founded in 2019.
Cora, which describes itself as “everything that an SMB will need in a bank,” offers solutions ranging from digital checking accounts — to send and receive money and pay bills digitally — along with a Visa debit card and management tools like a cash flow dashboard and invoice manager.
Security software startup ThreatQuotient banks $22.5m
ThreatQuotient raised $22.5m in equity and debt funding from New Enterprise Associates, Adams Street Partners, Escalate Capital, Blu Ventures, Cisco Investments and Gaingels.
The company, which arms users with threat data and cybersecurity tools, plans to use the fresh financing to accelerate innovation to bring new capabilities to the ThreatQ platform and support its global growth strategy.
Challenger bank Alpian scores $18m
Swiss digital financial services company Alpian raised $18m in Series B funding.
Launched in October 2019 by Schuyler Weiss, Alpian combines private banking and wealth management services with everyday banking to serve mass affluent investors. The company aims to serve the market segment of mass affluent clients; individuals with anywhere from CHF100,000 to 1,000,000.
Alpian has applied for a full banking license to Switzerland’s Financial Market Supervisory Authority and intends to launch its core product and services range in the course of 2021.
Medxoom adds $8m to its accounts to scale its platform
Atlanta-based healthcare marketplace platform, Medxoom raised an additional $8m in Series A funding.
The round was led by Castellan Group with participation from existing investors Las Olas VC and TTV Capital. The company intends to use the funds to expedite business growth, increase staff and expand payments, financial services and marketplace capabilities to scale.
Online credit marketplace FinanZero closes $7m round
FinanZero raised $7m in a new round led by Swedish investors VEF, Dunross & Co, and Atlant Fonder to further expand in Brazil. The use of proceeds will primarily go towards marketing, product development, and hiring new talent.
Founded in 2016 by Swedish-Brazilian investment firm Webrock Ventures and Swedish entrepreneurs Olle Widén and Kristian Jakobsson, FinanZero has raised $22.85m since its launch.
Crypto trading app Atani collects $6.25m
Cryptocurrency startup Atani completed a $6.25m seed funding round led by early Flywire investor JME Ventures and included participation from Conexo Ventures, Encomenda Smart Capital and Lanai Partners.
The Madrid-based startup is a non-custodial platform offering trading and portfolio monitoring on a slew of exchanges including Coinbase Pro, Binance and Bitstamp. The funding will be used to build out additional features for advanced users such as API trading.
Cybersecurity firm Cyble inks $4m
India-based Cyble raised a $4m seed financing round led by Blackbird Ventures and Spider Capital with participation from Xoogler Ventures, Picus Capital, and Cathexis Ventures.
The funding comes as Cyble graduated from Y Combinator, which accepted it into its Winter 2021 cohort and provided pre-seed funding in January of this year. The cash injection will enable the cybersecurity firm to scale its SaaS platform Cyble Vision, in lockstep with its growing client base, it said.
Cybersecurity firm Calamu banks $2.4m
Data protection and resiliency company Calamu emerged from stealth after closing $2.4m in seed funding.
The company intends to use the funds to expand operations and business reach. Founded by CEO Paul Lewis, Calamu provides a platform that enables businesses to maintain complete ownership of their data, preventing unauthorised access and simplifying regulatory requirements around data privacy and protection.
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