What a16z’s $9B in new capital tells us about 2022💸; PayPal is working on its own stablecoin 🤯; Can Solana be the ‘Visa of Crypto’? 🤔
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Good day Everyone,
And happy Saturday! This week was just insane, hence, I invite you to take a look at the three stories that were moving the headlines this week in the financial technology world. You can uncover other stories, keep the FinTech pulse daily and get at least X5 more by becoming a subscriber. Join the community here:
And here’s a mix of 3 awesome FinTech stories from this week:
What a16z’s $9B in new capital tells us about 2022💸
The money pile💰 Private-market heavyweight and one of the leading venture capital firms in the world Andreessen Horowitz has just announced that it has closed $9 billion in new capital for its venture capital, growth-stage, and biotech-focused vehicles.
One can remember that the firm, better known as just a16z, also raised a $2.2 billion crypto-focused fund last year.
Tech focus 🔎 As the firm said in the announcement, they believe in the future and think it will be tech-driven. Ben Horowitz elaborated further:
At Andreessen Horowitz, we specifically believe in the technology-enabled future. There are no more worthwhile endeavors than our most brilliant minds taking great risks to improve the world by doing something larger than themselves. As my partner Marc describes in Technology Saves the World, without great advances in technology, life on Earth certainly will not get better and may well get worse.
More money than ever 🤯 For the perspective, it must be noted that the VC firm’s last generation of funds — including its 7th venture fund worth $1.3 billion, its second growth fund worth $3.2 billion, and its third bio-focused fund worth $750 million — were worth just a touch over half of its latest aggregate fundraise.
Hence, it’s clear that a16z is not only refilling its tanks - it’s also raising more capital than ever. And this tells us something about the future.
✈️ THE TAKEAWAY
2022 should continue being crazy. 2021 was a mind-blowing year for startups, their funding, venture capital, and entrepreneurship in general. Almost anyone was able to raise virtually any amounts of money they needed for their ideas to materialize. 2022 doesn’t seem to be any different. At least, for now. At the core, the newest fund from a16z signifies that there’s still an infinite capital appetite in today’s startup market. With enthusiasm for technology companies in general (both traditional such as software and frontier-like crypto, quantum computing, metaverse, etc.) being red-hot, the capital arms race is not going to stop anytime soon. Actually, quite the opposite can be seen - the funds are getting larger because of larger startup funding rounds, and due to growing pressure regarding harder deal access and higher startup valuations. So fasten your seatbelts folks, 2022 should be quite a ride 🚀
PayPal is working on its own stablecoin 🤯
The news 🗞 Payments giant PayPal has confirmed that it is investigating to start off its own personal stablecoin.
The payments giant ended up making a statement after hints about such a development were spotted within its iPhone app. Code revealed by designer Steve Moser demonstrates that the computerized resource would be known as "PayPal Coin" — and like other stablecoins, it excessively would be supported by the U.S. dollar.
Addressing Bloomberg, PayPal's senior vice president of crypto and digital currencies Jose Fernandez da Ponte said:
"We are exploring a stablecoin; if and when we seek to move forward, we will of course, work closely with relevant regulators."
Regulatory blockers 😬 Regulation could be indeed a huge pain point for PayPal as it aims to bring a stablecoin to market, not least because these digital assets have drawn the interest of U.S. lawmakers in recent months.
Scrutiny has also been growing of other stablecoin issuers such as Tether amid concerns that the USDT in circulation isn't backed on a one-to-one basis with dollars in a bank account.
Facebook (now known as Meta), for instance, has faced persistent resistance as it aims to bring its Diem digital currency to the market. It is yet to succeed.
✈️ THE TAKEAWAY
What do we know thus far? One must note that PayPal has been very active with its cryptocurrency efforts recently, increasing the amount of crypto its customers can purchase, as well as investing in educating its users on crypto and working to allow them to withdraw their crypto safely to third-party wallets. Furthermore, a PayPal spokesperson told Bloomberg that images and code inside of the PayPal app stemmed from a recent internal hackathon – an event in which engineers team up to quickly explore and build new products that may never see a public release – within the company’s blockchain, crypto, and digital currencies division. That casts some serious doubts, to be honest… At the core, having more than 400M users, PayPal is one of the world’s leading wallet providers, and by rolling out a stablecoin, PayPal can potentially become a payments player beyond its own wallet. It also gives it a front-row seat for CBDC, and CEO Dan Schulman has stated he wants PayPal to be a CBDC wallet.
Can Solana be the ‘Visa of Crypto’? 🤔
The news 🗞 Solana (SOL) has the potential to become "the Visa of crypto," according to Bank of America.
The note 📝 In a research note, analyst Alkesh Shah argued that Solana's value lies in how it can handle thousands of transactions per second — with real-time data from the project stating that each transaction commands fees of $0.00025. He added:
"Its ability to provide high throughput, low cost and ease of use creates a blockchain optimized for consumer use cases like micropayments, DeFi, NFTs, decentralized networks (Web3) and gaming."
Looking ahead, it is believed that Solana has the potential to meaningfully eat into Ether's market share, which currently stands at 19.2%.
This, in turn, has the potential to translate into a big boost for SOL's price, considering that its market cap of $47B is far below ETH's $398B valuation.
So what’s the future for SOL like? Is it worth the hype?
✈️ THE TAKEAWAY
Not so fast. Obviously, we first have to acknowledge where SOL is. The Solana network launched only in 2020, and its native token, SOL, has since grown into the 5th-largest cryptocurrency with a market capitalization of $47B. That’s really solid. It becomes even more solid when you realize that all has been achieved in an order of magnitude faster than Ethereum, and it has hence been used to settle over 50B transactions and mint over 5.7M nonfungible tokens (NFT). When it comes to SOL & Visa, there’s a clear argument here. Visa processes an average of 1,700 transactions per second (TPS), but the network can theoretically handle at least 24,000 TPS. Ethereum currently handles around 12 TPS on its mainnet (more on layer twos), while Solana boasts a theoretical limit of 65,000 TPS. This makes a massive difference and this is where the key argument for BoA probably came from. But it’s not only rainbows and unicorns, and we have to account for the risks involved. Most importantly, Solana prioritizes scalability over decentralization, which has underlying risks. Furthermore, Solana network has experienced several network performance issues since its inception, which got developers really depressed. Finally, there’s also an unresolved issue with the SEC as to whether or not SOL is security. If it is, then it’s another story… Add it all up, and it’s probably clear why the market hasn’t moved much since BoA’s research note. In fact, SOL is down 15% over the last 14 days.
🔎 What else I’m watching
Bitcoin in 2021: a story in 5 graphs, and what might come in 2022. 2021 was another crazy year for the crypto markets, and especially for the biggest and most popular crypto out there - Bitcoin. Institutional buying buzz, Tesla investing into Bitcoin, Coinbase going public and marking the first-ever crypto exchange to IPO, NFTs exploding, El Salvador🇸🇻 buying the dip while China🇨🇳 cracking down on Bitcoin miners were only a few among many developments that shaped and pushed 2021 forward. It was a real rollercoaster! 🎢 I invite you to take a look at the 5 graphs that help put things into perspective and paint a rather consistent story as to what 2021 was all about. Read it here.
Another one bites the dust 👀 John Pinette, head of communications at Facebook’s parent company Meta, will be quitting the company, Reuters reported. There was no confirmation on why he quit, with Meta citing a company policy of not discussing personnel matters. Pinette had been in the role since April 2019. Meta has seen several exits of well-known employees, including that of Novi head David Marcus and Tomer Barel, co-creator of the company’s crypto initiative. Who’s next? 😬
El Salvador’s Bitcoin bet is not paying off yet🇸🇻 El Salvador has made a substantial loss on its Bitcoin investment over the past 4 months. President Nayib Bukele has been aggressively buying crypto ever since adopting BTC as legal tender in September 2021. Sudden falls in Bitcoin's value have regularly been accompanied by Bukele declaring that the Central American country was "buying the dip" — and at the time of writing, it holds 1,391 BTC in reserve.
In cash terms, El Salvador's Bitcoin buys have cost $73.2M — but at the time of writing, this BTC is worth a mere $60.7M, resulting in a $12M loss.
💸 Following the Money
Buy now, pay later (BNPL) platform Rupifi has raised $25M in a financing round to help the company expand its business-to-business (B2B) payments offerings in its existing markets and into new ones.
India-based digital payments provider Pine Labs has announced it prepares for a US listing and seeks to raise $500M to reach a $7B valuation.
Learn-to-earn platform Proof of Learn raised $15M to create a Web 3 learning hub where users can earn crypto and NFT rewards. The platform will also feature a careers marketplace.
Global Processing Services extends the fundraising round with another $100M.
👋 That’s it for today! Thank you for reading and have a productive weekend! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
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