Revolut employees to cash in with massive $500M share sale 😳; MercadoLibre seeks banking license in Mexico 😳🇲🇽; Europe's fastest-growing FinTechs that defy funding slowdown 🚀
You're missing out big time... Weekly Recap 🔁
👋 Hey, Linas here! Welcome back to a 🔓 weekly free edition 🔓 of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.
If you’re not a subscriber, here’s what you missed this week:
Top resources for building and scaling billion-dollar startups 🦄 [600+ pages of knowledge and advice to launch & scale your next unicorn in 2024]
JPMorgan Investor Day 2024: positioning for strength, & roadmap for dominance in the digital age 🚀 [breaking down the key takeaways from the massive event & how the firm's strategic vision positions it for unparalleled success in the future + some bonus deep dives into JPM]
LendingClub: poised for reacceleration in 2024? 🤔 [breaking down their latest numbers, and what they mean & why it’s probably significantly undervalued right now]
Cash App aims to become a full-service digital bank 👀🏦 [what’s the plan + a bonus dive into Block & their latest financials]
N26 fined €9.2M by German regulator over AML lapses, signaling increased scrutiny of FinTechs 😳 [what it’s all about & why it matters + some bonus dives into N26 & their strategy]
Google Pay expands digital wallet with some brilliant features 📲 [what they are & why they matter + some bonus reads inside]
Migrant-focused neobank Majority secures $20M, & signals strong growth 🚀
Cash holds strong as credit cards surge and mobile P2P growth plateaus 💸📊
As for today, here are the 3 brilliant FinTech stories that were changing the world of financial technology as we know it. This is one of the most interesting and intense weeks this year thus far, so make sure to check all the above stories.
Revolut employees to cash in with massive $500M share sale 😳
The news 🗞️ Revolut, the UK's most valuable FinTech, is planning a significant secondary share sale worth around $500 million (£394M) later this year, Sky News reported.
Let’s take a look at this.
More on this 👉 The company is reportedly engaging Morgan Stanley MS 0.00%↑ to coordinate the offering, which will allow employees to cash in on their stock options.
Revolut's co-founder and CEO, Nik Storonsky, is determined to maintain the company's $33 billion (£26 billion) valuation from its 2021 primary funding round. Solid if true.
ICYMI: Is Revolut now worth 45% more?! 🤔 [latest revaluation & why it means so little + some bonus reads]
Zoom out 🔎 The FinTech giant has experienced rapid growth, with its customer base surging from 16.4 million to over 40 million in just three years. Despite the downturn in tech valuations, Revolut's impressive expansion is expected to justify its status as Britain's most valuable fintech.
The company's revenue nearly doubled last year, reaching approximately £1.7 billion.
While Revolut has faced regulatory and compliance challenges, it has continued to attract interest from prospective investors. The upcoming share sale is expected to be restricted to company employees, many of whom have been granted stock options as part of their compensation packages.
Board members are also anticipated to participate in the offering.
✈️ THE TAKEAWAY
Why it matters? 🤔 The secondary share sale is definitely a significant move for Revolut, as it allows employees to benefit from the company's success while maintaining its high valuation. More importantly, this transaction could serve as a precursor to a potential initial public offering (IPO) in the coming years, although Revolut has not yet announced any concrete plans for a public listing. Looking at the big picture, Revolut's future growth and success will likely hinge on its ability to secure a UK banking license, for which it applied more than three years ago. CEO Nik Storonsky has been critical of the delay in the approval process, suggesting that he would not consider listing on the London Stock Exchange due to the approach of British regulators and politicians. Other than that, this share sale could be a strong catalyst for an already solid UK/Europe and FinTech ecosystem. Cheers to the Revolut Mafia then 🥂
ICYMI: Revolut takes on telecoms with eSIM launch 😮📱[why this makes sense + some bonus deep dives into a FinTech giant]
MercadoLibre seeks banking license in Mexico 😳🇲🇽
The news 🗞️ Latin American e-commerce giant MercadoLibre MELI 0.00%↑ has initiated discussions with Mexican authorities to obtain a banking license, signaling its ambition to become a major player in the country's burgeoning FinTech sector.
The move comes as Mexico emerges as an attractive market for financial services startups, with less than half of the population currently holding bank accounts.
Let’s take a look at this and see why it matters.
More on this 👉 MercadoLibre, which currently operates under a FinTech license in Mexico, sees immense potential for growth in the country, drawing parallels to the significant advancements in banking accessibility, electronic payments, and credit usage observed in Brazil over the past decade.
By securing a banking license, the company thus aims to offer a comprehensive suite of products and services, including the ability to accept payroll deposits, remove caps on held amounts, and streamline the approval and issuance of credit cards.
The licensing process is expected to take between 12 to 24 months, with MercadoLibre opting to pursue a new license rather than acquiring an existing one. But more importantly, the company's decision aligns with its ambitious goal of becoming the largest digital bank in Latin America.
NU 0.00%↑ , are you watching? 🤔
✈️ THE TAKEAWAY
What’s next? 🤔 First and foremost, we must note that MercadoLibre's move comes amidst a wave of FinTech companies seeking banking licenses in Mexico, including Argentina's Ualá, UK-based Revolut, and the biggest of them all - Brazil's Nubank. By simplifying various operations, from credit provision to investment product offerings, MercadoLibre is therefore positioning itself to capitalize on the growing demand for digital banking services in the region. Looking at the big picture, the company's move highlights the increasing convergence of e-commerce and FinTech, as players in both sectors seek to offer integrated, user-centric solutions. As MercadoLibre and other FinTech companies secure banking licenses and expand their offerings, traditional financial institutions may face heightened competition. On the other hand, that should lead to increased innovation and improved access to financial services for underserved populations. And for MELI 0.00%↑, that means more products & growing TAM, which will translate into some solid revenue growth. Bullish.
ICYMI: Mercado Libre’s latest financials show that Latin America's e-commerce & FinTech powerhouse is poised for continued growth 📈 [why you can’t ignore the Amazon of LatAm + some bonus reads inside]
Europe's fastest-growing FinTechs that defy funding slowdown 🚀
Following the trends 📈 Despite a significant decrease in FinTech funding compared to the 2021 tech boom, several European FinTech startups have managed to still secure capital and focus on expanding their teams.
According to data from Dealroom, the ten fastest-growing FinTechs have raised at least $30 million and have teams larger than 50 employees.
Let’s take a quick look at them.
More on this 👉 Leading the pack is Istanbul-based WealthTech platform Midas, which has seen a 197% increase in headcount over the past 12 months.
Other notable FinTchs include Danish payment terminal provider Flatpay (+194%), London-based spend management platform Vertice (+168%), and German digital insurance broker Clark (+109%).
The list also features companies from various FinTech subsectors, such as UK-based asset management software provider Zilo (+107), Swedish digital pet insurance company Lassie (+100%), and Dutch business account provider Finom (+88%).
These startups have all managed to raise significant funding rounds in the past year, ranging from €13 million to €69 million.
✈️ THE TAKEAWAY
What’s next? 🤔 First and foremost, the success of these FinTechs amid a funding slowdown perfectly demonstrates the resilience and potential of the European FinTech space. It also highlights the growing & resilient demand for innovative digital solutions across different financial services, from wealth management and insurance to spend management and business banking. As these startups continue to grow and expand their offerings, hopefully, they will drive further innovation and competition in the FinTech industry. More importantly, their success may also attract more investment into the sector, as investors recognize the long-term potential of these companies. That’s something Europe is really lacking these days. Other than that, despite challenges, the future of European FinTech still looks promising, with a diverse range of startups addressing various pain points and opportunities in the financial services landscape.
P.S. if you want to grow fast too, use this:
🔎 What else I’m watching
PSR Holds Back on Capping Visa & Mastercard Fees 💳🔍 The UK's Payment System Regulator (PSR) has decided not to impose financial penalties on Visa V 0.00%↑ and Mastercard MA 0.00%↑ scheme and processing fees, despite evidence of a duopoly and lack of competition. The PSR's market review found that Mastercard and Visa increased their fees by over 30% in real terms over five years, with little evidence of improved service quality. UK businesses have few alternatives to paying these increased fees. The PSR also discovered complicated, unclear pricing statements and difficulty in negotiating fees. Instead of capping fees, the PSR suggested remedies to improve transparency and provide clearer information about services. Both Mastercard and Visa defended their fees, citing investments in network resilience and fraud prevention. The PSR is seeking feedback on its interim report until July 30, 2024, and will publish a final report in Q4 2024. ICYMI: Visa's strong Q2 2024 results demonstrate resilience and growth potential 🚀 [analyzing the most important numbers, seeing what they mean, & what’s next for Visa + some bonus deep dives to learn more]
Mastercard's global reach and digital dominance drive sustained growth in Q1 2024 📈 [a deeper dive into the most important numbers, what they mean, and what’s next for Mastercard + a bonus deep dive into its biggest rival]
BVNK Integrates PayPal USD Stablecoin into Payments Platform 💸 UK-based payments infrastructure provider BVNK has added the PayPal USD (PYUSD) PYPL 0.00%↑ stablecoin to its platform. Issued by Paxos Trust Company and regulated by the NYDFS, PYUSD is pegged to the US dollar. BVNK customers can now access PYUSD alongside 14 other digital currencies, leading stablecoins, and 25 fiat currencies. As a PYUSD ecosystem member, BVNK can mint and burn tokens for customers. The platform allows users to create PYUSD wallets, settle payments, pay contractors/employees globally, and accept consumer payments in PYUSD, all through the API, hosted payments page, or merchant portal. PYUSD can also be converted to EUR and GBP. Stablecoins have seen significant growth, with PYUSD reaching a $320M market cap within 8 months of its launch. ICYMI: PayPal's solid Q1 2024 results show promising signs of transformation amidst the transition year 📈 [analyzing the latest numbers, unpacking what they mean & see why we should continue being really, really bullish on PayPal + a bonus dive into another solid FinTech stock]
Stripe Expands in the UK, Launches Open-Banking & Financing Tools 🇬🇧💳Stripe is solidifying its presence in the UK by opening a flagship London office and introducing new payment and financing solutions. The UK, Stripe's second-largest market, will be the first to access Stripe's Open-Banking-powered payment method, Pay by Bank, offering a low-cost, real-time option for consumers to pay directly from their bank accounts. Stripe Capital, a flexible financing service for businesses on the Stripe network, will also be available, using transaction history to qualify applicants and providing funds within one business day. Later this year, Stripe Connect users in the UK can offer Stripe Capital financing to their own users. ICYMI: No IPO soon? Stripe raises $694 million in a share sale 🤑💸 [what it’s all about & why IPO won’t happen soon + bonus deen dives into Stripe and their latest numbers]
💸 Following the Money
UK digital bank Chetwood Financial has acquired buy to let mortgage lender CHL Mortgages complement its soon-to-launch ModaMortgage's proposition.
Middle Eastern investment bank EFG Hermes has acquired a minority stake in Danish fintech Kenzi Wealth. Kenzi Wealth uses AI-powered asset management technologies and investment risk analytics to help investors construct and rebalance their portfolios.
Open finance firm Fabrick has entered the DACH market through the acquisition of a majority 75% stake in German operator finAPI.
👋 That’s it for today! Thank you for reading and have a relaxing Sunday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
Great read as always - thank you!