Revolut’s jaw-dropping fundraise 🤯; ECB gives digital euro a green light 🟢; Stripe for insurance? 🤔
Good Morning FinTech. 2/30
Revolut right now…
Good morning Everyone,
We’re in the middle of the summer and the week is about to end. Which can’t be said about FinTech and massive investor interest…
Revolut’s jaw-dropping fundraise 🤯
Revolut confirmed it raised a jaw-dropping $800M in Series E led by SoftBank and Tiger Global Management putting the digital bank at a $33B valuation 🤯
This makes the British neobank the most valuable startup in the UK🇬🇧 and the second-biggest FinTech unicorn in Europe (being only behind Klarna worth close to $46B) 🦄
What's stunning here is that Revolut was valued at *only* $5.5B last year. Since then valuation grew X6 🤯
At $33B, Revolut is now valued more than Barclays, Societe Generale, Deutsche Bank, UniCredit, and Credit Suisse 💸
What about the numbers that matter? 🤔 Revolut has reported it lost $277M while many of the banks are operating profitably for centuries. For instance, Barclays made $2.11B in profit last year while Credit Suisse almost $3B (still lots to grow! 👀).
Fundamentals 📊 Revolut’s new market value is more than 100 times its 2020 sales.
✈️ THE TAKEAWAY
FinTech is eating the world 🍽 Having over 16M customers globally and seeing over 150M transactions/month, investors expect that Revolut continues to grow at current rates. Scale is what matters here (that’s why it has ambitious plans for India & USA), and as long as investors believe the vision, profitability isn’t a concern.
ECB gives digital euro a green light 🟢
Euro goes digital 💶! The European Central Bank has given the approval to a multi-year project to create a digital version of the euro aka digital euro, as reported by Reuters.
What is it? It’s an electronic version of banknotes and coins. More importantly, the digital euro will likely be a digital wallet that eurozone citizens can keep at the ECB.
Why? At the core, the purpose of digital euro is to be a means of payment that gives holders a claim against the ECB. Ultimately, you should have an online bank account or digital wallet held directly at the ECB rather than at a commercial institution (=bank).
✈️ THE TAKEAWAY
ECB wants your money 💶 The reason for this is very simple - ECB doesn’t want to lose the payments war to the private sector and wants to stay relevant. But don’t be excited (or scared) too much. ECB has given itself 2 years to finalise the digital euro's design, then Governing Council should approve it, and if approved, the implementation should take around for 3 more years before going live…
Stripe for insurance? 🤔
Wait, what? It’s Lula, a Miamia-based insurance infrastructure startup, that aims to democratize access to insurance and disrupt the 400 year old insurance industry.
The FinTech startup has just raised $18M in a Series A round of funding, co-led by Founders Fund and Khosla Ventures, among other notable investors.
Founded by 25-year-old twin brothers and Miami natives Michael and Matthew Vega-Sanz, Lula emerged from another business the pair had started while in college.
Mission 🎯 Lula’s mission is is to provide companies of all sizes — both startups & multinationals — with insurance infrastructure. Hence, it invites to think about it as ‘Stripe for insurance’.
At the core, Lula offers technology-enabled tools such as customer vetting, fraud detection, driver history checks, policy management, and claims handling through its insurance partners.
It already has a waiting list of nearly 2,000 companies, which indicates that the demand is there.
✈️ THE TAKEAWAY
Pyments APIs 👉 Insurance APIs. The key thing that Stripe did (and the rest followed) was that it has built a payment API that eliminates the need for companies to build their own payment infrastructure. Accepting payments became hassle-free. We can’t say the same about insurance, especially in the digital first world, where underwriting episodic usage of assets becomes relevant (think of Ubers, Wolts, DoorDashes and the likes here). And globally, insruance is close to $6T industry, so there’s definitely a lot room for disruption.
🔎 What else I’m watching
BlackRock doubts crypto 🤔: in an interview with CNBC, Larry Fink, the CEO of >$6T asset manager, said the biz has seen very little demand for digital assets. Maybe crypto is not yet mainstream? 👀
India🇮🇳 shows Mastercard a stop sign ✋: The Reserve Bank of India aka RBI aka India’s Central Bank, has announced that Mastercard won’t be allowed to bring new domestic debit/credit/prepaid card customers onto its network starting July 22, 2021, due to non-compliance with data storage rules. The same was told earlier to AmEx & Diners Club. Yet another illustration that compliance is crucial when it comes to financial services.
It’s a match 💏: Discover is backing BNPL provider Sezzle with a $30M investment. Another BNPL play coming soon…
Valuations 💸: German digital bank N26 is in fundraising talks that could value the FinTech between $8B & $11B, according to Bloomberg. I’d be more positive here, especially following Revolut, and aim for at least $15-20B…
Small growth is still growth 📈: Bank of America posted positive second-quarter results. The total number of digital users in the second quarter was 40.5M, up from 39M a year ago.
Covid fraud hit Americans hard 😢: fraud and scams involving COVID-19 have taken from Americans’ wallets as much as $487.92M, according to data from the Federal Trade Commission (FTC). The median fraud loss was $366.
💸 Following the Money
Railsbank, which builds APIs for banking, payment cards, and credit products, has raised $70M in new equity funding.
Nethone, a Poland-based online fraud fighter has banked $6.7M in Series A to fight account takeover.
Brazil-based API-first embedded finance upstart Dinie has announced a $3.8M seed round.
Blockchain interoperability protocol Axelar raises $25M in Series A funding.
👋 That’s it for today! Thank you for reading and have a productive Friday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
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