A FinTech that doubles your VC raises 💸; The Uber move, but reversed - from FinTech to ride-hailing 📲; Massive Amazon + Venmo deal 🤯
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Good day Everyone,
And happy Saturday! Before you go to the Netflix & Chill mode, 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 great stories from this week:
A FinTech that doubles your VC raises 💸
The new kind of bank account 🏦 London and New York-headquartered startup Capchase has launched a new bank account for startups that’s promising to double your VC money for a relatively small cost.
Founded just last year, the company says it has already made $800M of funding available to founders in Europe and the US, using a non-dilutive model for startups with recurring revenue.
The USP 🥊 The new product, Capchase Earn, is designed for startups with cash in the bank, and allows founders to deposit their funds into a Capchase account. It will then essentially offer a loan with a 2% annual cost to more than double that money.
If the startup has annual recurring revenue, the maximum loan amount equals the sum of the cash in the bank and the startup’s annual revenue added together.
So if you’re a startup that’s just raised €250,000, with annual recurring revenue of €25,000, you can take out a loan of €275,000, which will cost €5,500 a year.
✈️ THE TAKEAWAY
Preserving precious equity. At the core, Capchase’s financing solutions aren’t designed to replace equity VC, but offer alternatives to endlessly diluting ownership whenever a startup needs more cash to grow. The key thing in mind here is that startup equity is super expensive. For instance, equity in the best companies costs at least 100% year by year, on the other hand, Capchase costs 2%, and that’s its key USP. Therefore, startups with recurring revenues should start realizing the real value of their earnings, and hence try to adopt the range of financial products available to them. And that’s Capchase’s mission.
The Uber move, but reversed - from FinTech to ride-hailing 📲
The news 📰 After pioneering FinTech in South Korea, Viva Republica—one of the country's most valuable startups—is making its first foray away from the world of finance and into the cut-throat arena of ride-hailing, according to Forbes.
Started from FinTech 👉 Viva Republica operates Toss, a finance super app with over 20M users in Korea, which is equivalent to more than 1/3 of the country’s population.
Launched in 2015, Toss started out as a money transfer service and has since expanded to offer a suite of financial services, including banking, insurance, and investing. Now, nearly 7 years after launching Toss, Viva Republica is making its first major move beyond digital finance.
Now we here 👉 Later this month, Viva Republica expects to complete its acquisition of a 60% stake for an undisclosed amount in Seoul-based VCNC, which operates a ride-hailing service in Korea called Tada.
VCNC launched Tada in 2018 and the company says it has about 2M users. Around 90% of Tada users use the app regularly, according to VCNC.
✈️ THE TAKEAWAY
Data, data everywhere 🙌🏼 The move by Toss seems to be inspired by the success of Southeast Asian internet giants Grab and Gojek (renamed to GoTo Group after merging with Indonesian e-commerce platform Tokopedia in May). The important thing to note here is that the mobility data have been some of the key pillars for Grab and Gojek. Both Grab and Gojek started off as ride-hailing companies, and after achieving a critical mass of users, the two companies built an ecosystem of services around ride-hailing, including financial services, among others. Grab and GoTo have managed to build robust credit score models and insurance policies because they have all of the data of drivers' behaviors. Toss wants to replicate the same. If it will succeed, it will be one of the most interesting pivots in FinTech to date.
Massive Amazon + Venmo deal 🤯
The news🔥 Venmo’s mother company, PayPal, has announced that retail giant Amazon is adding a Venmo payment option for customers in the US, starting 2022.
Amazon shoppers will hence be able to link their accounts to Venmo’s mobile payment service for purchases made both on Amazon’s website and the company’s mobile shopping app.
New way 👉 With over 80 million in the US alone, PayPal represents an easy way to purchase goods and transfer money from one account to another.
However, the mother company is not supported as a payment method on Amazon currently, which means the addition of Venmo could open the way for more than 65 million users to start shopping on Amazon.
Still closed ecosystem 🤷♂️ Amazon remains restrictive in its payment methods and will not allow clients to purchase goods using cryptocurrencies or alternative payment apps like Venmo, outside of the US.
✈️ THE TAKEAWAY
Huge news. Primarily for PayPal. The partnership is a huge opportunity for Venmo to expand the use of its checkout functionality and grow its payments volume. Pay with Venmo will definitely be one of the key revenue drivers for the app moving forward and getting closer to profitability, and given the scale that Amazon has, their goal becomes much more achievable. On the other hand, if Venmo integrates PayPal’s Checkout with Crypto functionality, Amazon could use it to meet the rising consumer demand for the payment method without launching a crypto service themselves. With that, Amazon could test out a much-demanded crypto capability with very little effort.
🔎 What else I’m watching
FinTech IPO🔔 San Francisco-based NerdWallet, provider of an online platform of personal finance tips and financial product offerings, raised $131M in its IPO after pricing shares at $18 each, the midpoint of the proposed range.
An update on Open Banking🇬🇧 UK’s CMA has published an update on Open Banking to set out progress in strengthening corporate governance at OBIE following an independent investigation and CMA’s consideration on the future governance of Open Banking. Open Banking is a key step towards unlocking competition in retail banking and the evolution of the UK’s fast-growing innovative financial technology (fintech) sector – changing the face of retail banking for the benefit of millions of customers and small businesses. Open Banking was initiated in 2017 by the Competition and Markets Authority (CMA) following its market investigation into retail banking, and the CMA is committed to ensuring its continued success.
New kid in town 📲 A new digital challenger bank for the UK’s 4.8M “mass affluent” customers is gearing up to launch following the lifting of regulatory restrictions. In October 2020 Monument was granted ‘authorisation with restriction’ by the Financial Conduct Authority and Prudential Regulation Authority to begin acting as a fully-fledged bank, with restrictions usually being removed following the completion of a larger capital raise. At the same time, it raised its Series A fundraise, which went on to total £28M when it closed in February. To date, it has raised £60M of capital.
💸 Following the Money
Neuro-ID has raised $35M in a Series B funding round, which will go toward its mission of improving fraud screening for digital organizations. Neuro-ID was established in 2014 and works in real-time behavioral analytics solutions to fight online fraud and boost conversion rates and customer experiences, according to the release.
Argentinian FinTech Ualá is stepping up its presence in Mexico through the acquisition of local bank ABC Capital. The deal, subject to government authorizations, will enable Ualá to move into new business verticals.
Asset management giant Abrdn, formerly known as 'Aberdeen' is continuing its hunt for fintech acquisitions with a new bid for Interactive Investor. The company confirmed it's looking to buy Interactive Investor, the UK's second-largest D2C brokerage (and portfolio holding of Augmentum Fintech). yesterday. That follows on from news last week that it had swooped on Finimize and its deal to buy Exo Investing from Nucoro earlier this year.
👋 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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