What plans Spotify has for Web3?š¤; Spend management is the hottest FinTech vertical now as Ramp grows revs 10X & doubles valuationš; Apple + Credit Kudos proves tech giant is serious about FinServš
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Good morning Everyone,
And happyĀ Saturday! This week was just crazy!š„ In fact, itās probably the hottest week in FinTech this year š¤Æ Therefore, without further ado, letās dive into the three stories that were making a difference this week. You can uncover other stories, keep the FinTech pulseĀ dailyĀ and get at leastĀ x5 moreĀ by becoming aĀ subscriber. Join the community here:
And hereās a mix of 3 crazy hot FinTech stories from this week:
What plans Spotify has for Web3? š¤
The news š Streaming giant Spotify has two newĀ job postingsĀ that will focus on Web3-related projects, meaning NFTs could be coming to a Discover Weekly playlist near you, the FT reported.
The objective is to grow artistsā income through appending NFTs technology in streaming activities.
More on this š Spotify job listings were stating the requirement of a team for the futurist and having oversight in the long-term strategy, industry, competitive advantage, business bits of intelligence design of Spotify Moonshots.Ā
Spotify is looking for a senior manager to look into market intelligence and search exponential growth in opportunities for Spotify.Ā
Spotify is a media and music streaming service founded in Sweden. As of December 2021, it had over 406M monthly active users, including 180M premium clients, making it one of the largest music streaming platforms.
Does Spotify feel vulnerable? It should. Hereās why:
āļø THE TAKEAWAY
Bringing $$$ back to the artists. The thing is that right now, whenever you stream - from Tailor Swift to 50 Cent, your favorite artist only gets a fraction of a cent, which is close to nothing when you think about it. That said, music NFT startups like Royal, Catalog, or Sound XYZ believe that Spotifyās business model is ripe for disruption as musicians could earn way more by selling works directly to fans as NFTs. This isnāt a theory anymore, and some artists like Snoop Dogg has already bought Death Row Records and quickly pulled some of its catalogs off streaming platforms, saying he wanted to turn his new company into āan NFT label.ā Zooming out, we can remember that back in December, Danish investment bank SaxoĀ predictedĀ 2022 would be the year NFT music platforms began clawing market share away from traditional streamers.Ā It seems that itās already happening. Big Tech companies that were once disrupters are trying to not get disrupted by crypto companies.
Ramp growing revenues 10X & doubling valuation shows that spend management is one of the hottest FinTech verticals right now š
The money šø New York-based Ramp, a corporate card and expense automation platform, just raised a whopping $750M in debt and equity in new financing that sets a valuation of $8.1 billion. Thatās more than double from its previous funding last August when Ramp was priced at a $3.9 billion valuation. Wow! š®
Founders Fund led the latest equity financing with all major existing backers ā such as Stripe, D1 Capital Partners, Iconiq Capital, Thrive Capital, Redpoint Ventures, among others ā also participating which brings Rampās total raised to $1.37B. Not too shabby! š
The USP š„ Founded in 2019, Ramp came out of stealth in February 2020 with a corporate card offering. At first, it focused on small-to-medium-sized businesses (SMBs), while it now works with virtually anyone ā from startups to multibillion-dollar enterprises. The key goal of Ramp now is to help companies generally automate their finances, and thatās probably their biggest competitive advantage.
The numbers š Doubling valuation is less than a year is nice, but fundamentals are much more crucial. Ramp seems to have pretty solid numbers. Hereās what we know:
The company didnāt reveal any hard revenue figures, he noted that Ramp saw āclose to a 10xā bump in revenue year-over-year in 2021.
More than 5,000 businesses use Ramp, powering over $5B in annualized payments volume.
Its customer base is up 7x and cardholder growth is up 15x year-over-year.
It took them over 3 years to reach 10,000 cumulative cardholders, and now they are adding that many in a month.
Itās clear that Ramp is growing like on steroids, but what does this tell us about their vertical as well as the broader FinTech ecosystem? Hereās the takeaway:
āļø THE TAKEAWAY
Disrupting the trillion-dollar market. First and foremost, we must say that Rampās new massive funding round and more importantly - impressive revenue growth clearly shows that spend management is undoubtedly one of the hottest FinTech verticals right now. The fact that Rampās big round is only one out of several large transactions involving companies pitching cards and tech that help companies track expenses only further supports this hypothesis. Examples here could be Divvy being acquired last June by Bill.com for ~$2.5B, TripActions & TravelPerk, two companies that offer travel and expense management for business travelers, raising $275M and $160M, respectively last year, London-based Soldo, not to mention $12.3B Brex being busy in the space,Ā as well Airbase that has received backing from AmEx. Regardless of how crazy it might seem at first sight, it all starts to add up when you realize that the corporate payments market is worth around $1.4 trillion in 2021. And thatās for the United States alone. Let that sink in. The industry has barely been disrupted by FinTech upstarts and only in the last few years, businesses have started adopting corporate payment solutions as it helps them more easily manage their expenses. If Rampās claims - saying it has delivered more than $133M in savings for its customers and that its software automated over 3.5M hours of work for businesses - are true (or close to the truth), then weāre only at the tip of the iceberg. I expect much more traction in this space this year and next, especially in the M&As domain.
Apple acquiring Credit Kudos just proves tech giant has some serious ambitions in financial servicesšš³
The deal š¤ Apple, the most valuable company on the planet, has acquitted UK Open Banking startup Credit Kudos that helps lenders make better decisions.
The deal was reportedly closed earlier this week bringing the value of the startup to about $150M, an uplift in valuation.
The USP š„ The startup offers insights and scores on loan applicants drawn from bank data ā specifically transaction and loan outcome data ā sourced via the UKās Open Banking framework. Its API can offer lenders faster decision-making, less risk, and increased acceptance rates, according to its website.
Itās huge. Hereās why š Credit Kudos' APIs make it easy for any institution to perform real-time credit checks, so having this in-house could make Apple's banking & card systems significantly more agile.
Think here about bringing Apple Card to the UK (and later - Europe) as well as launching a BNPL proposition aka Buy Now, Apple Pay Later.
Also, Apple's recent move into POS payments - where AppleāsĀ software point-of-sale (softPOS) solution allows merchants to accept contactless payments without the additional hardware - means that it can now enter the POS financing too.
In order to understand the broader impact of this acquisition, we have to think holistically here. Hereās the takeaway:
āļø THE TAKEAWAY
The giant woke up. Two of the biggest (in monetary terms) open banking acquisitions unsurprisingly came from the card networks - Visa bought Tink for a whopping $2.1B after Plaid deal went bust while MasterCard got their hands on Aiia for an undisclosed sum. But despite Apple paid only $150M for Credit Kudos, it could have a much bigger impact on the FinTech industry as such. Adding financial management tools (i.e. credit score checks & budget alerts to the Apple Wallet and Apple Card), improving credit underwriting for Apple Card (to increase scale & reach more subprime borrowers), and having the possibility to move into both BNPL & POS financing, Apple is effectively building Apple Finance (just like Apple Health or Apple Fitness). Your ultimate home for all your financial needs. But from Apple, not a bank. And this is huge.
š What else Iām watching
Ghanaāsš¬š cocoa farmers & blockchain: Koa, a Cocoa product-focused startup, launched a program to "improve transparency and accountability" within the cocoa supply chain for Ghanaian farmers. The program is designed to record payments for cocoa on a blockchain to ensure that large corporations, which are the biggest consumers of cocoa, are paying fair rates to farmers. Seedtrace, a German supply chain company, provides the infrastructure for Koa, allowing farmers to identify where their products are distributed, whereas consumers can track the origin of the ingredients in their food.
Crypto bug š· Investment app Acorns has added the option for its user to invest up to 5% in BTC via their investment accounts. According to the announcement, the Galaxy Digital-backed company says that it implemented the feature as their 4.6M subscribers expressed interest in cryptocurrencies. Acorns is an investment FinTech that popularized the feature to invest spare change into prebuilt portfolios along with banking services such as a checking account.Ā
Stablecoins can be unstable š Ā Solana-based stablecoin protocolĀ Cashio has suffered an āinfinite mint glitchāĀ attack, according to developers. The value of Cashioās CASH token, a stablecoin pegged to the U.S. dollar, approached zero.Ā According to aĀ tweet, Cashio said users should not mint any CASH amid the ongoing investigation. While Cashio said it believes it has found the root of the cause, it is urging users to withdraw their funds from pools as soon as possible.
šø Following the Money
UK-based FinTechĀ SimplyPayMeĀ has secured $4M in funding to finance its product development and expansion in European and North American markets.
Wireless technology firm Qualcomm has created a $100M fund to invest in virtual reality (VR) and augmented reality (AR) tech to help jumpstart the metaverse.
Yuga Labs, the creator of BAYC,Ā raised $450MĀ in new funding round, led by a16z, at a $4B valuation. The company said they will use the funds to build an NFT-based gaming metaverse called "Otherside."
š Thatās it for today! Thank you for reading and have a productive weekend! And if you enjoyed this newsletter,Ā invite your friends and colleagues to sign up:
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