Even decacorns have their challenges • ZebethMedia
Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, I’ll take a look at the hottest fintech news of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay on top of it — and make sense of it — so you can stay in the know. — Mary Ann Hello, hello. By the time you’re reading this, we’ll be two days away from ZebethMedia Disrupt! Soooo exciting! But first, let’s talk about fintech. Last week’s big news was corporate spend management startup Brex’s announcement that it was laying off 11% of its staff, or 136 people. It was also revealed that the startup’s CFO, Adam Swiecicki, is departing to join Rippling as its CFO. Notably, workforce platform unicorn Rippling recently entered the corporate management space, making it a direct competitor with Brex. First off, it’s rare — and refreshing — for a company to actually proactively share news of a layoff, so it’s interesting that Brex got ahead of any gossip and let me know firsthand of its plans. And as Alex Wilhelm pointed out on Friday’s Equity podcast, the layoffs appear to mostly be related to Brex’s move earlier this year to no longer work with SMBs and nonprofessionally funded startups. In other words, the company said it primarily let go of people who were focused on serving that group. Still, it must suck for those employees — especially considering those groups that it no longer works with were initially Brex’s bread and butter. Bigger-picture-wise, the news of Brex’s layoffs show that even decacorns have not been immune to this downturn. The company earlier this year confirmed a $300 million Series D extension at a staggering $12.3 billion valuation. And while the company claims to be “in a strong financial position with many years of runway,” it adds that its shift away from SMBs to focus more on enterprise customers — and, by default, any related layoffs — will put the company “on a path to sustainable profitability over the next few years.” Side note: Brex aside, it still blows my journalist mind that companies in general can raise hundreds of millions of dollars in funding and yet not be profitable. I am doubtful that I could ever be a venture-backed startup founder. The pressure of having to provide returns to investors who poured that kind of money into my company and the pressure of not wanting to ever have to lay off staff would likely make me lose sleep at night! Guess that’s why I’m a journalist and not a startup founder! Anyway…speaking of Disrupt and Brex, I will be interviewing co-founder and co-CEO Henrique Dubugras and Anu Hariharan, managing director of YC’s growth fund, YC Continuity, live in a Fireside Chat on October 19! I’ll also be talking to Ramp CEO and co-founder Eric Glyman, Airbase CEO and founder Thejo Kote and Anthemis partner Ruth Foxe Blader in a session called “How to Compete without Losing Your Mind and Runway When Cash Is Expensive” that same day. And lastly, I’ll be chatting with Rippling CEO and co-founder Parker Conrad about his company’s plans to “go global.” Come see us! (Get 15% off here). Oh, and if you want to hear me talk about everything from “The Good and Ugly Sides of Fintech, What Great Journalism Really Means, & Why Startups Represent Hope,” check out this episode of the Fintech Leaders podcast I recently recorded with VC Miguel Armaza. VCs clamor to fund real estate investing startups Image Credits: Edwin Remsberg (opens in a new window) / Getty Images Hello! It’s Anita Ramaswamy reporting from the fintech desk here at ZebethMedia alongside Mary Ann. We’ve been seeing a lot of interest — and funding news — in the real estate and proptech spaces lately. Specifically, there have been a number of startups raising rounds for real estate investing apps that aim to help broaden access to the asset class to retail investors by giving them tools to bypass hurdles like large up-front capital requirements that are typically necessary to invest in property. Fintor is one such example. The startup recently closed on a $6.2 million funding round at an $80 million valuation for its platform that offers fractionalized shares in residential properties to investors for as little as $5. We’ve also covered similar platforms such as Landa, Nada and Arrived Homes, all of which have raised new funding in 2022. The surge in interest among retail investors for access to real estate might seem counterintuitive given that rising interest rates make real estate seem less attractive than it has been for the past few years. But these startups are likely more focused on long-term, secular demand growth for real estate as a part of a diversified portfolio rather than getting caught up in concerns around short-term volatility. Here’s what Fintor founder and CEO Farshad Yousefi had to say about the current market environment in an email to ZebethMedia: While recent media headlines have mainly focused on the volatility of the market, there are still present opportunities for investors to take part in investing in real estate with the right type of strategic approach. For example, Atlanta has seen an incredible near 12% year-over-year growth in rental rates, directly boosting investors’ cash flows. Additionally, when looking across the board at the top MSAs, major institutional investors have seen a near 50% jump in renewal rent growth. This drastic upward trend in tenant retention clearly demonstrates where rental demand is going. For a deeper dive into real estate tech and how it’s changing the investing landscape, check out my article in TC+ this week: Weekly