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Unit’s banking-as-a-service platform is getting into the charge card game • ZebethMedia

If the banking-as-a-service fintech Unit does its job right, it will be ubiquitous among businesses and simultaneously have a name unknown to the end user. The company gives companies a way to embed financial services into their product — and after already launching debit cards, Unit is officially breaking into the charge card game. Unit customers can now use the startup’s API to build custom-designed charge cards for their own end users. Customers can offer their customers a charge card, credit card, revolving loan or any other credit products that Unit’s bank partners offer. On the back end, Unit will handle card printing, compliance and, once the card is in use, transaction tracking as well. According to co-founder and CEO Itai Damti, cards are Unit’s fourth and final pillar as a venture-backed company, adding onto its products in the debit, bank accounts and payments space. Just six months ago, Unit announced that it raised a $100 million Series C at a $1.2 billion valuation, making its total equity raised since inception to nearly $170 million. Charge cards, which are more popular than credit cards for small businesses, give Unit a way to enable customers to build and offer lending products, even though the startup is not a lender itself. “Once you can store money for people, you can move money for people and you can give people money, this is the full spectrum of banking that all these software products can use to launch within their environments,” Damti said. Image Credits: Unit If Unit’s new card line sounds competitive with the likes of Brex and Ramp, valued at billions of dollars — I had the same thought, and it’s a little more complicated. Instead of selling a card to startups like its well-capitalized competitors, Unit is selling customers on a way to create personalized cards for their own end users. It’s going for a classic B2BC model instead of a B2B model. “If you’re a company that sells to construction companies, instead of your customers finding other solutions in the market, you can just embed [lending] into your software,” Damti said. “We don’t compete with [Brex and Ramp] per se, but we do allow companies to basically offer an equivalent product and do it in a way that is embedded.” Unit’s expansion sits differently during a particularly tough economic run for fintech companies such as Chime and Stripe, which conducted layoffs over the past few weeks. Unit VP of lending David Sinsky, who recently joined the company after a seven-year stint at Opendoor, explained that the new product could help its customers introduce an entire new line of revenue through interchange fees. “There’s maybe less VC money to spend on Google and Facebook ads, but we’re working with companies that have built differentiated software,” Sinsky said. “And I see Unit [as an] opportunity to better serve those users and improve their unit economics.” Unit claims that a card swipe transaction will yield 0.5% more interchange revenue when done with a credit card compared to a debit card. Damti added that there’s “less of a red ocean in vertical finance … there’s a tremendous opportunity, because they have data, they have a distribution and they can be very effective underwriters who are very effective lenders in their vertical.”

Most of the unicorns aren’t • ZebethMedia

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. Oh what a week. What a week. Things are busier than ever at ZebethMedia, where we’re coming out of our post-conference stupor and charing straight back into a packed news cycle. Sure, Musk is still making waves, but there are startup rounds to cover, layoffs to chew on, earnings coverage, unicorn reports, new data, and more. After cutting back sharply on material and still going long, here’s what Mary Ann, Natasha, and Alex got into this week: Rewind wants to help people with their memory. We talk about how the startup, which launched this week, uses recording technology to help you get what you see, hear and say at your finger tips. We talked about Onward, a startup that wants to help divorced or separated parents fight less about money and how it just raised nearly $10 million despite being pre-revenue. The somewhat odd, possible Byju’s IPO-spinoff of Aakash, a tutoring company that it bought the other year. Our views can be summarized in meme format: An edtech IPO? In this economy? Unicorns face an incredibly uphill journey to get public, which may explain in part why Byju’s is not itself going public (recall that it had had plans, but like with so many other companies those are on hold). And then there was Brex, which announced a new partnership with Techstars despite a big push into the enterprise space. Stripe revealed that it has cut 14% of its staff, or over 1,100 people, and its CEO and co-founder Patrick Collison admitting that the payments giant had “overhired for the world we’re in.” And finally, there’s a new VC ratings company in the neighborhood. How do we feel? Better than some VCs, at least. Got all that? Good. More Monday morning. Equity drops at 7 a.m. PT every Monday and Wednesday, and at 6 a.m. PT on Fridays, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. ZebethMedia also has a great show on crypto, a show that interviews founders, one that details how our stories come together, and more!

Yes, but CEOs? That’s complicated) • ZebethMedia

There’s no one who knows a company’s inner workings like a chief financial officer. So, when three high-profile CFOs leave their jobs at richly valued, late-stage startups in quick succession, we notice it. This week, OpenSea CFO Brian Roberts left the web3 company less than a year after taking the job. Days later, Brex CFO Adam Swiecicki left the expense management company to join Rippling, another company that recently expanded into the expense management space. The shuffle came on the heels of Brex announcing it had to slash 11% of staff. (Its former CFO, who stepped down so Swiecicki could take the helm, is back in his original position). “The first person who is going to know if it’s possible to grow into these valuations is the CFO.” Continuum CEO Nolan Church But that’s not all. Noom, a diet and health coaching platform, confirmed that its CFO, Mike Noonan, is leaving the job two years after joining, hours before ZebethMedia learned that the company was executing a round of layoffs. While the CFO departures are reportedly unrelated to the layoffs, is anything ever that simple? After all, layoffs were a result of needing to strengthen financials ahead of an uncertain market, quite literally the job of a chief financial officer.

Brex, valued at $12.3B earlier this year, lays off 11% of staff as part of restructuring • ZebethMedia

The startup’s CFO is departing to join Rippling, which recently entered the spend management space Mary Ann Azevedo 12 hours Corporate spend management startup Brex has laid off 136 people, or 11% of its staff, across all departments as part of a restructuring, the company has told ZebethMedia exclusively. After the layoffs, Brex has just over 1,150 employees. It’s been a tumultuous year for Brex, which announced in April that it was leaning into the enterprise segment. That new focus led to the company announcing in June that it would no longer work with small businesses or non professionally funded startups. The latter news caused a bit of an uproar — and some feelings of abandonment — in the startup community, which Brex initially set out to serve. Internally, the move apparently left less of a need for certain internal staff who were focused on serving those SMBs. Brex said it initially tried to “repurpose” as many roles as it could before ultimately deciding it had to let some people go. The layoffs also are evidence that even decacorns are not immune to the challenging macro and fundraising environment that 2022 has brought us. It was exactly nine months ago that Brex confirmed that it had raised $300 million in a Series D-2 round at a $12.3 billion valuation. Greenoaks Capital and TCV co-led that financing, which brought the three-year-old San Francisco-based startup’s total raised to $1.2 billion. Unsurprisingly, Brex cited the challenging macro environment in its decision.  In a blog post, co-founder and co-CEO Pedro Franceschi wrote: Late last year we decided to sharpen our focus and serve fewer customers really well. Today’s change is a continuation of this. We’ve been laser-focused on serving early-stage startups and scaled companies this year, and we’re very grateful for the momentum we’ve seen on Empower since we launched in April. While we’re fortunate to be in a strong financial position with many years of runway, the new macro environment is materially different from the first five years of Brex, and warrants a new level of focus and financial discipline. We know the importance that our customers place on Brex’s financial strength, and this change will put us on a path to sustainable profitability over the next few years. Over the summer, Sam Blond left his role as chief revenue officer at Brex to become an investor at Founders Fund. His replacement, Doug Adamic, had over 16 years experience at SAP/Concur — most recently as that company’s chief revenue officer — and is helping drive enterprise sales, according to the company. More recently, sources told ZebethMedia that Adam Swiecicki is stepping down from his role as chief financial officer at Brex, a position he assumed late last year when Michael Tannenbaum took on the position of chief operating officer. He will be joining workforce platform Rippling, which recently entered the spend management space, as CFO. Brex confirmed Swiecicki’s impending move, with co-founder and co-CEO Henrique Dubugras telling ZebethMedia: “We’re happy for Adam in his next role and it’s always great to see our team land with great companies. Rippling is a Brex partner and is focused on the small business market, while Brex has moved upmarket. From our side, Michael Tannenbaum will resume the role of CFO.” Moving forward, Tannenbaum — who began serving as CFO initially in 2017 — will serve in both positions. Swiecicki’s decision to leave is reportedly unrelated to the layoff. In an attempt to soften the blow for the laid-off workers, Brex said the affected employees will receive eight weeks of pay, with an additional two weeks for each complete year of service. For those with less than one year at the company, the startup said it is waiving the equity cliff. And for those with options, it is offering to extend the exercise period to seven years. Impacted workers will have access to current healthcare benefits through the end of the month, and then Brex says it will pay for six months of health insurance. The company says it is also dedicating part of its recruiting team to help those impacted “find new opportunities,” and will prioritize hiring them back “as roles open up over time.” Additionally, Brex is letting all impacted employees keep their computers.  Brex started its life focused on providing credit cards aimed mainly at startups and SMBs. It gradually evolved its model with the aim of serving as a one-stop finance shop for these companies before its aforementioned pivot to a focus on enterprise earlier this year. A company spokesperson told ZebethMedia that the company is “getting some really strong signals on Empower,” its new enterprise-focused software offering. Since Empower’s April launch, its monthly active user count has grown 5x month-over-month “on an increasingly large base,” the spokesperson added. It also, the company said, passed $3 billion in annualized processing volume in less than three months of the platform going live. Meanwhile, the spokesperson told ZebethMedia that Brex cash deposits are up 100% year over year, noting that rising interest rates have actually increased the revenue in its deposits business. Brex declined to share hard revenue figures, saying only that “growth — even in this environment — is remaining quite strong.”   The company obviously took a big chance by betting on the enterprise space. It will be interesting to see how that bet plays out. Reporter’s note: The story was updated post-publication to clarify that Swiecicki will be joining Rippling as CFO. My weekly fintech newsletter, The Interchange, launched on May 1! Sign up here to get it in your inbox.

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