Fintech

The latest in Plaid’s payments push • ZebethMedia

By zebethcontrolPosted on November 20, 2022Posted in Fintech, Startups, The InterchangeNo Comments

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 Hey, hey, Mary Ann here, feeling all sorry for myself because I have COVID for the first time when I should be grateful that it took so long for me to get it, right? Thankfully you can’t catch my germs through a computer or phone screen. I’ll be okay but as a result…you’re stuck with another slightly abbreviated version of this newsletter! Huge credit to, and gratitude for, ZebethMedia’s Kyle Wiggers, who once again saved the day by writing up all the blurbs (and there were many to cover) here. Kyle, you’re the best. Since Thanksgiving is less than a week away, I’ll take this opportunity to say how truly thankful I am to be given the trust and confidence to draft this newsletter and for you all to take the time to read and share it. I do not take this lightly because without your support, I would not be doing this. I know there are a ton of fintech-focused newsletters out there, so it really does mean the world. Okay, now that I’m done with the cringe part of this newsletter (to quote my children), let’s go straight to the news. Weekly News Image Credits: John Anderson, head of payments / Plaid Plaid announced it has hired John Anderson, a former Meta exec, to serve as its first head of payments. The move comes as the fintech startup leans into payments, both in terms of facilitating them itself and aiming to help others do so better and faster. Our first thought is that it was taking another swing at Stripe, but interestingly the two remain partners — for now. Plaid also announced that its Signal offering is out of beta with early users such as Robinhood, Webull and Uphold. It claims that by using Signal, companies can “unlock instant ACH.” In contrast to crypto, some segments of the lending market appear to be robust — at least presently. Nu Holdings, the Warren Buffett–backed Brazilian banking firm that offers credit cards and personal loans and that is more commonly known as Nubank, posted a nearly threefold jump in Q3 revenue on Monday. While publicly traded Nu has seen its U.S. shares lose over half their value this year, its customer base has grown to over 70 million following a dramatically expanded footprint in Mexico. Nu’s total revenue in Q3 reached $1.3 billion, up 171%, while profit climbed to $427 million, up 90%. Five years ago, Revolut, the British fintech company with an expanding portfolio of banking services, made the news when it reached over a million customers across Europe. That seems quaint now; this week, Revolut hit 25 million customers globally as the firm prepares to expand into new markets, including India, Mexico, Brazil and New Zealand. Revolut was last valued at $33 billion, but as of last year at least, the company wasn’t yet profitable; Revolut reported a £167 million (~$197.94 million) net loss in 2021, its largest ever. Are valuations retreating and the backlog of IPOs growing in fintech, as chatter across the Twitter-verse implies? Silicon Valley Bank says yes on both counts in its State of the Markets report out this week. According to the firm, the steepest declines in valuation have occurred for late-stage fintech companies; “enterprise value” to “next 12 months” revenue multiples for public fintechs have dipped 55% since the market peaked in early January. Meanwhile, since the end of 2021, the number of U.S. fintech unicorns has grown by 38% to 159 — standing at a staggering $656 billion in aggregate valuation, highlighting the massive backlog looking to exit. According to a study by the National Institute of Mental Health, 72% of startup founders are affected by mental health issues. Stepping out of its lane somewhat, fintech giant Brex launched a program, Catharsis, which is designed to provide resources dedicated to mental health. Brex says it’ll facilitate access to therapists via a partnership with Spring Health as well as extend a discount on the sleep-tracking Oura Ring. Seems like a worthwhile cause, but part of us wonders whether the effort is intended to distract from Brex’s poorly received pivot away from supporting small businesses. Charge cards are big business. According to Research and Markets, the segment could be worth over $2 billion by 2026, growing from $1.96 billion this year. That’s probably why banking-as-a-service startup Unit is investing in it — the company on Tuesday launched a service that’ll allow customers to build custom charge cards for their own end users. Unit handles nearly all aspects of the back end, including card printing, compliance and transaction tracking. In this way, it’s a different approach than corporate card issuers Brex and Ramp, Unit CEO Itai Damti argues, which are strictly business-to-business — Unit sees its offering as more “business-to-business-to-consumer.” If you’re itching for reading material on the forecasted economic woes in the tech sector, Ukraine-based fintech investor Vadym Synegin wrote an excellent piece for TC+ on what founders can do to help their companies prosper in times of crises. Among other steps, he suggests that founders double down on developing and proving the quality of their products, manage risk and look for ways to shore up their company’s ranks with high-performing talent. Just over a year ago, Wise — the company formerly known as TransferWise — went public

Google clamps down on illegal loan apps in Kenya, Nigeria • ZebethMedia

By zebethcontrolPosted on November 18, 2022Posted in Fintech, kenya, Loan apps, NigeriaNo Comments

Google is requiring loan apps in Kenya to submit proof of license to operate in the country by its apex bank, failure to which they risk removal from Play Store, its digital distribution service. Those that have applied for licensing, and can produce evidence of the same, may also be spared. Google’s action has, however, been sluggish, coming two months after the Digital Credit Providers Regulations took effect to protect borrowers from rogue apps, many of which had predatory lending practices and used debt-shaming tactics to recover their money. New and old loan apps in Kenya are now expected to submit the requisite documents and information, or risk being locked out at the end of January next year. “Developers with personal loan apps targeting Kenyan users must complete [a] declaration form and submit the necessary documentation before publishing their personal loan app … Personal loan apps operating in Kenya without proper declaration and license attribution will be removed from the Play Store,” said Google in a policy update that also requires apps in Nigeria to get a “verifiable approval letter” from the Federal Competition and Consumer Protection Commission (FCCPC). While less stringent than Kenya’s new law, the FCCPC rules, which came into effect in August this year to protect borrowers, expects lending apps to declare their fees and demonstrate how they receive feedback and solve complaints, among other requirements. Kenya and Nigeria are major tech hubs in Africa, and have witnessed the proliferation of loan apps, offering quick unsecured personal loans of up to $500. However, the lack of stringent regulations has attracted rogue operators necessitating authorities to take apt measures to protect citizens. In Kenya, Only 10 of the 288 loan apps that applied for licenses from the country’s Central Bank have been permitted. Some of the popular ones, like Zenka and silicon-valley backed Tala are yet to be licensed. The digital lenders in Kenya are expected to avoid the use of threats or debt-shaming actions, including posting of personal information on online forums, unauthorized calls and messages to customers, and access to their contacts lists for purposes of contacting them in case of default. Loan apps collect borrowers’ phone data, including contacts, and demand access to messages to check the history of mobile money transactions — for credit scoring and as conditions for disbursing loans. Rogue lenders have been sharing some of the contact information collected with third-party debt collectors. Already, 40 loan apps in Kenya are under investigation by the office of the data protection commissioner over data breach, following complaints from users. The new law requires loan apps to also reveal their pricing model, terms and conditions to consumers in advance, unlike in the past when they were unsupervised. The apps are also expected to notify the regulator before introducing new products or making changes to existing ones, in addition to disclosing and providing evidence of their sources of funds.

Daylight, the LGBTQ+ neobank, raises cash to launch subscription plan for family planning • ZebethMedia

By zebethcontrolPosted on November 18, 2022Posted in Anthemis Group, Apps, Bank, citi ventures, daylight, Fintech, funding, Gaingels, Kapor Capital, lgbtq, neobank, queer, startup, StartupsNo Comments

A day after a bill that would codify same-sex marriage in the U.S. cleared a key hurdle in the Senate, Daylight, a digital bank that pitches itself as LGBTQIA+-friendly, closed a $15 million Series A round led by Anthemis Group with participation from CMFG Ventures, Kapor Capital, Citi Ventures and Gaingels. Daylight Co-founder and CEO Rob Curtis says that the new capital will be used to, in his words, “build the financial products and services to help queer people live their best lives” — starting with a subscription plan called Daylight Grow designed to help prospective queer families with financial planning. “There are over 30 million LGBTQ+ Americans with a spending power of around $1 trillion and yet the community lacks access to the suite of products and services they need to live their best lives,” Curtis told ZebethMedia in an email interview. “Daylight was created with a single mission: to build the financial products and services to help queer people live their best lives.” Curtis co-launched Daylight with Billie Simmons, a trans woman, and Paul Barnes-Hoggett in early 2020. Prior to starting Daylight, Curtis worked for several organizations supporting the LGBTQ+ lifestyle and causes, including Gaydar, a dating site for gay and bisexual men. He also co-founded Squad Social and Helsa Helps, startups aiming to improve access to mental health for members in the LGBTQ+ community. Daylight is a part of wave of recent neobanks — bank-like fintech companies that operate online, without physical branch networks — organized around aspirational causes and missions. Rapper Killer Mike’s Greenwood aims to help Black and Latinx communities build generational wealth. Majority, which launched the same year as Greenwood (2020), seeks to build banking tools and resources for immigrants. Purpose Banking, Aspiration and One all promise to never let deposits fund fossil fuels. Image Credits: Daylight With the wealth of ethics-forward fintechs out there, why found a neobank for LGBTQ+ people? According to Curtis, most mainstream banking products simply weren’t designed with U.S.-based queer folks in mind. (Pride Bank, a neobank with similarly queer-forward branding, is based in Brazil.) For example, Daylight provides debit cards with customers’ chosen names, which aren’t always the same as what’s on their ID. It offers members 10% cash back every time they spend with a queer and allied business that Daylight has partnered with. And it offers guided goals for gender-affirming procedures like top surgery and facial feminization. Beyond cash management features like a checking account, free ATMs and the ability for members to get paid two days early, Daylight hosts communities where customers can ask questions around “queer financial literacy,” such as family planning, in what Curtis claims is a safe and supportive environment. “At Daylight, our mission has always been to break down the financial barriers that hold LGBTQ+ people back … In this post-Dobbs world, Daylight’s commitment to supporting queer families has never been more necessary,” Curtis said, referring to the Supreme Court case that legalized abortion bans in the U.S. and opened the door to legal challenges of marriage equality. Certainly, members of the LGBTQ+ community face fiscal challenges that many cisgender, straight adults never do. Some suffer the consequences of being kicked out of their homes by unaccepting parents. Others find themselves on the hook for HIV/AIDS treatment, hormone therapy and fertility procedures. Most queer people gravitate toward pricey metro areas because they’re more accepting and progressive, and many queer people lack a safety net — whether because they lack family support or don’t have children who can take care of them. For those reasons and others, LGBTQ+ people frequently earn less, live in poverty and have less in pension savings than their cisgender counterparts. The situation for transgender people is particularly dire, with the poverty rate for the transgender community in the U.S. averaging around 30% — close to double the rate of cisgender adults — according to a 2019 study from the UCLA School of Law’s Williams Institute. Transgender people are also twice as likely to be unemployed and four times as likely to have a household income below $10,000; the 2021 U.S. federal poverty was $12,880. The aforementioned Daylight Grow isn’t a cure-all, but targets the major hurdles many queer couples encounter in starting a family. This is a significant portion of Daylight’s customers. A recent poll by the Family Equality Council found that nearly two-thirds of LGBTQ millennials — 63% — are considering becoming parents for the first time or expanding their family. Image Credits: Daylight When the product launches in early 2023, Simmons says that Daylight Grow will offer a personalized “family creation plan” covering financial, legal and logistical milestones tailored to individual states and needs, “family planning concierges” to provide financial advice and logistical support, a “family-building marketplace” with vetted family attorney networks and recommendations for IVF and surrogacy clinics, and in-person financial and fertility education events. “Family creation is a major life event for queer people and the challenges we face are increasingly more complex than those for non-LGBTQ people,” Simmons told ZebethMedia via email. “The launch of Daylight Grow will help queer people navigate through the complex legal and financial challenges involved with starting a family, making it faster and easier to start a family, and unlocking critical intergenerational wealth for our community.” Daylight Grow will also offer access to family-building loans, a potential game-changer for queer customers who’ve dealt with discrimination from traditional banks. According to a 2019 study, same-sex borrowers were 73% more likely to be denied a mortgage or be approved for a mortgage at a higher-than-average interest rate. Daylight plans to offer hundreds of free Grow subscriptions to low-income, marginalized families in states where LGBTQ+ rights are under significant legal attack, Curtis said. Which states — and Grow’s pricing — are still being decided. Daylight has raised $20 million in capital to date. Curtis wouldn’t answer questions about revenue and hiring plans, preferring, at least for now, to keep the focus on the company’s core mission.

GoTo cuts 1,300 jobs as it anticipates ‘uncertainties’ to linger for long • ZebethMedia

By zebethcontrolPosted on November 18, 2022Posted in Commerce, Fintech, GoTo, Goto GroupNo Comments

GoTo Group is cutting 1,300 jobs, or 12% of its workforce, it informed staff early Friday, as Indonesia’s largest internet company attempts to trim costs and improve finances. “Achieving financial independence more quickly has a profound cost for us, because when we take a hard look at how we fundamentally need to change (business focus and ways of working), it also includes you, the people who are the backbone of this company,” wrote GoTo Group chief executive Andre Soelistyo in an email to staff, seen by ZebethMedia. “It pains me to say that, as a result of our organizational review, we have to part ways with some of you,” he wrote. “I know you are filled with many emotions right now, pain, anger, sadness, and most of all, grief. I feel the same way.” GoTo joins scores of local and global peers in its decision to cut workforce to navigate economic slowdown, rising interest rates, or as what the Indonesian firm described in the email Friday, “uncertainties will linger for a while, and there is not much that we can do to change that.”

Plaid names former Meta exec as its new payments head • ZebethMedia

By zebethcontrolPosted on November 17, 2022Posted in Fintech, payments, Plaid, StartupsNo Comments

Plaid today announced that it has named Meta veteran John Anderson to serve as its new head of payments. The fintech startup has slowly been evolving its offerings beyond its core product of account linking. Earlier this year, it moved into identity and income verification. Payments feels like a natural evolution of its business. In an interview with ZebethMedia, Anderson explained that while Plaid will be personally facilitating payments through its Transfer offering, it will also continue working with its dozens of payments partners, which include the likes of Square, Stripe, Marqeta, Gusto and Silicon Valley Bank. Its end goal is to generally give consumers more choice when it comes to bank payments. “There has been so much innovation on POS [point of sale] in the last 10 years, but purely digital — no physical interaction — experiences for payments is still nascent,” he said. “This is where we are focused.” In its own way, Anderson pointed out, Plaid has been involved in digital payments for years, by enabling nearly a billion ACH transactions for things like account funding and account-to-account transfers. Along the way, the company partnered with nearly 50 payments companies. In other words, Plaid has its services for clients that range from account verification to risk assessment and processing. It also has built its data products to be modular with the goal of “maximizing choice” for its customers and “ultimately expanding the use of bank payments.” “This time last year, same-day ACH grew by nearly 75% year over year with numbers in the trillions — that’s a lot of growth for an already sizable number,” Anderson said. “There is a lot of market for many players and overall Plaid works with a broad network of payment partners. We plan to invest — not shift — in that ecosystem and strategy.” So generally, when it comes to payments, Anderson said, Plaid is focused on building products that help companies have “more cost-effective, efficient and flexible bank payments.” “Much of that work is through our partners as we ultimately want to maximize choice for consumers and businesses,” he said. “This is why we take an ecosystem approach to payments. It is not an us versus them, but instead a ‘we’ working together to innovate and create better infrastructure that is safer, smarter and faster for all participants.” As mentioned, among Plaid’s payments partners is frenemy Stripe, which in May unveiled a new product of its own. Specifically, Stripe’s Financial Connections was designed to give that company’s customers a way to connect directly to their customers’ bank accounts, to access financial data to speed up or run certain kinds of transactions — exactly what Plaid has done historically. In working with its payment partners over the years, Anderson said that Plaid saw a consistent challenge — that it usually took several days for an ACH transfer to complete. “That’s because it provides settlement time to cover assessing returns and fraud,” he said. “But that speed of transfer is very limiting to many of our customers — if you’re someone like Robinhood who wants to be able to have customers fund their account instantly and immediately start trading, 2-3 days ACH clearing time feels like a lifetime.” Trying to solve that challenge led to the genesis of Plaid’s Signal offering, which uses machine learning to analyze more than 1,000 risk factors and provide scores and insights that Plaid says provide “more certainty that a transaction will settle,” so a company can accelerate access to those funds without increasing risk. “We wanted to use intelligent data signals to be able to identify low-risk ACH funding events that can clear immediately,” he said. “By accurately predicting risk and fraud, we can help companies build much more real-time funding solutions so their consumers can get going on their financial goals immediately. Signal today is moving out of beta, during which Robinhood was a pilot customer. In addition to Robinhood, fintechs like WeBull and Uphold have incorporated Signal into their risk models “to unlock instant ACH,” Anderson said. “We currently de-risk nearly 3 million transactions valued at nearly $1.5 billion each month,” he said. “We’re excited to offer this service to more customers and empower them to expand the applicability of ACH-based bank payments and transfers more safely and securely.” Looking ahead, he said, Plaid is actively building and partnering on real-time payment rails. Plaid’s RTP and FedNow products are designed to help drive further adoption of bank payments, Anderson said, “not only because of the speed and certainty of settlement, but also through further innovation across the financial and payment ecosystem.” “We want to unlock the next phase of bank payments with a focus on a great consumer experience, adapting Signal for emerging risk and fraud vectors, and other activities that will accelerate the adoption of real-time payments in the U.S. through our payment partners and customers,” Anderson said. Also, in an interview with ZebethMedia, Anderson explained his decision to join Plaid. The executive left Meta in March after a 10-year stint that included him serving as that company’s head of payments and commerce. Anderson said he was drawn to the space because simply, “finances are at the heart of everyone’s lives.” Acknowledging that the “world is increasing in inequity,” the executive described financial access as an “uneven playing field getting ever more bumpy.” “Across so many of this amazing generation of new financial services, the common thread is Plaid is there in the background helping them build secure data accessibility, fast payments and managing risk and compliance,” he said. It’s not Anderson’s first foray into fintech. He developed a fintech app called GroupCard that went on to be acquired by InComm, a $13 billion prepaid and payments technology company. He also at one time worked in payments at eBay. “As a developer of an early fintech app, I experienced firsthand the challenges that many of Plaid’s customers face today,” he said. “On a very personal level, I came to Plaid because I

Zulu banks $5M for its LatAm digital wallet amid shaky ground for crypto • ZebethMedia

By zebethcontrolPosted on November 17, 2022Posted in Cadenza Ventures, Crypto, Esteban Villegas, Fintech, Venture, zuluNo Comments

With new information coming to light about the FTX saga every day, it’s certainly an interesting time for cryptocurrency. Just ask our ZebethMedia colleagues at TC Sessions: Crypto today. As we figure out if any of this has damaged trust in the industry and funding for startups, adoption of crypto in Latin America continues to grow — Chainalysis puts the adoption growth number at 40%. In addition, the region represents “a 9.1% share of the global crypto value received in 2022 with remittances and high inflation the highest drivers of adoption.” Even venture capitalists believe Latin America’s thirst for crypto. For example, former Binance executives created a fund earlier this year to pump $100 million into this region and others. VCs even believe this might be one of the regions that could stay red hot despite a crypto winter. That’s a good indication as to why we continue to see investment going into Latin America-focused startups offering a crypto feature. Today, Colombia-based Zulu, a digital wallet for Latin America consumers, is the latest company to bring in new funding. The $5 million seed round was led by Cadenza Ventures, which was joined by Nexo Ventures, Simplex, CMT Digital, Gaingels, and a group of startup founders, including Caterine Castillo of Neivor; Jose Jair Bonilla, Carolina García and Oscar Sarria of Chiper; Andrew Chang, former COO and Advisor of Paxos; and Man Hei Lou of Treinta. Here’s how it works: its platform enables Android and iOS users to save in secure digital dollars and send cross-border payments at no cost. In addition, it protects users from the currency devaluations that often occur in countries like Colombia, Venezuela and Peru, the company said. “Zulu is a decentralized wallet where each user holds their own keys and personally custodies their assets within a great user experience and with tools that are typically provided by centralized exchanges,” Esteban Villegas, co-founder and CEO told ZebethMedia via email. “Blockchain technology needs to be easier for the individual user to navigate and can help leapfrog Latin America to being one of the most financially democratized regions in the world.” Villegas and co-founders Jaime Varela and Julian Delgado started the company in March 2022 after meeting while students at Universidad de Los Andes. Their goal was to bring web3 services to the population of Latin Americans who are traditionally overlooked by banks. The company said it has approximately 500,000 users across Colombia, Venezuela, Peru and Mexico and has plans to expand into other LatAm countries and the U.S. in 2023. Speaking to the ongoing challenges in the cryptocurrency world today and what it might mean for companies in Latin America trying to get funding, Villegas remains optimistic that funding will continue to flow into these kinds of companies that have demonstrated a clear path to success. “Fundraising will be harder within our industry, but this is net-positive,” he added. “Companies and projects that had no clear roadmap or product-market fit will be removed from the scene, and companies with clear use-cases and real impact will be moved to the front of the stage.” Zulu joins companies that have also taken in funding recently, including Ping’s $15 million seed round, a fairly large raise in the current VC environment, to continue developing a digital payment tool that facilitates international payments for remote workers, contractors and freelancers in both their local currency and in fiat and cryptocurrency. And in September, DolarApp announced $5 million in seed funding for its platform for users to open a bank account and move from pesos to dollar dominated stablecoin USD Coin (USDc) and back in seconds. As to whether this could affect crypto regulation in Latin American countries, Villegas said consumers do need to be protected from fraud, but any regulations shouldn’t ultimately “stifle the type of innovation that will eventually level a playing field into the region.” “Crypto regulation is necessary in Latin America to remove bad players, but it should be flexible enough to allow for new players who are working to create a positive impact, but are not heavily financed, to thrive,” he added.

With fresh capital, Symend aims to build a better debt collection system • ZebethMedia

By zebethcontrolPosted on November 17, 2022Posted in BDC Growth Venture Co-Investment Fund, BDC Women in Technology Fund, debt collection, EDC, Fintech, funding, Growth Venture Co-Investment Fund, Impression Ventures, iNovia Capital, Mistral Venture Partners, Plaza Ventures, Robotics & AI, startup, Startups, symend, Women in Technology FundNo Comments

Squeezed by the recessionary COVID-19-era economy and the rising prices of everyday goods, some consumers are increasingly turning to lines of credit to make ends meet. According to a September 2021 survey from Bankrate.com, 42% of U.S. adults with credit card debt increased their balances since the pandemic began in March 2020. A more recent report from the Federal Reserve Bank of New York estimates that total household debt in Q3 2022 reached $16.51 trillion, $2.36 trillion higher than at the end of 2019. The New York Fed’s study also showed that the share of current debt becoming delinquent climbed for nearly all debt types, from mortgages to auto loans. But even before the pandemic and crippling inflation struck, the U.S. had a delinquent debt problem. A 2016 whitepaper from the Association of Credit and Collection Professionals International found that debt rose from $150 billion to over $600 billion in the previous five years. During the same timeframe, collection agencies — who take between 20% to 50% of money recovered — had an annual success rate of 7%. To solve it — an ambitious goal, to be sure — Hanif Joshaghani and Tiffany Kaminsky co-founded Symend, a company that employs AI and machine learning to automate processes around debt resolution for telcos, banks and utilities. Symend today announced that it raised $42 million in a Series C round led by Inovia Capital with participation from Impression Ventures, Mistral Venture Partners, BDC’s Growth Venture Co-Investment Fund, BDC Capital’s Women in Technology Fund, Plaza Ventures and EDC. While substantially smaller than Symend’s once-extended Series B round ($95 million), Joshaghani, Symend’s CEO, noted that it’s “all equity” and brings the company’s total capital raised to date to $140 million. “We have maintained and continue to maintain a very conservative balance sheet profile,” Joshaghani told ZebethMedia in an email interview. “This latest injection of growth capital allows us to meet the growing demand for our behavioral engagement technology around the world. While this is not an optimal time for many businesses to turn to funding, for Symend, this was an ideal time as our product demand rises and the realities of the market create a deepening white space for us to capture.” Joshaghani hails from the financial industry, having worked as a corporate finance manager and investment banking association. Kaminsky’s background is marketing — prior to co-founding Symend, she was the head of sales and marketing strategy at Frog3D, a CNC fabrication business. Examples of messages customers might see from brands working with Symend. Both Joshaghani and Kaminsky personally experienced the negative impact of debt, they say. Joshaghani grew up in a household frequently targeted by calls from debt collectors, and Kaminksi ran into trouble with collections with her first credit card as a young adult. “To this day, I remember the anxiety I felt when receiving calls from collections and knew there had to be a better way — both for customers and businesses,” Joshaghani said. “We founded Symend to help consumers like us and as we’ve grown over the past six years, that mission has remained the same — our vision is to transform the science of engagement on a global scale.” Symend identifies when customers are having trouble paying bills and provides analytics and tools aimed at helping companies develop debt remediation programs. Via the platform’s workflows, businesses can engage with nearly-delinquent customers at points likeliest to drive turnaround. For example, they can configure Symend to create payment plans and limited-time payment discounts for certain segments of customers, or they can have the platform connect at-risk customers with financial planning tools, resources and credit rehabilitation programs. As Joshaghani explained to me, Symend works with a company’s existing systems to “optimize engagement” with customers falling behind on bills due to illness, job loss, family trouble and other foreseen and unforeseen circumstances. The platform allows a business to send “hyper-personalized” messages via a customer’s preferred channels (e.g. text and email) while providing that business access to playbooks for various debt collection scenarios (e.g., delinquent credit card). “Our clients continue to use general-purpose engagement platforms to manage their broad-based customer communications but deploy Symend specifically to solve complex challenges around their past-due customer base,” Joshaghani said. “Our ability to productize behavioral science is one of three key innovation areas of our technology, which uses AI, machine learning and data science to develop proven behavioral engagement playbooks to deliver impact out-of-the-box for companies in various industries.” Symend is rather vague about the functionality and technical underpinnings of its platform — its website prefers jargony buzzwords to plain-English descriptions. But that hasn’t scared away customers, it’d seem; Joshaghani claims that Symend is currently serving financial institutions, alternative lenders, utility companies and the majority of telecom providers in North America, including Telus. No doubt, the rise in buy now, pay later (BNPL) services — which let users split up purchases into equal installments over a fixed short-term period — is driving new business to Symend. A recent U.S. Consumer Financial Protection Bureau report found that delinquencies on BNPL services are rising sharply as vendors approve more customers for loans. “As with many businesses right now, the current market conditions and economic uncertainty has led to us seeing clients with tighter budgets and streamlined decision-making,” Joshaghani added. “However, this latest funding highlights the market need, growing consumer demands for an empathetic, personalized approach as consumers face financial stress, and investor confidence in the company’s proven track record with some of the largest financial institutions and telecommunications providers during a time where every dollar and customer has become more important than ever.”

Virgil helps you buy bigger apartments in exchange for home equity stakes • ZebethMedia

By zebethcontrolPosted on November 17, 2022Posted in Fintech, home equity, proptech, VirgilNo Comments

French startup Virgil has raised a $15.6 million funding round (€15 million). The company invests in apartments alongside home buyers before they even get the keys for their new home. This way, future homeowners can buy a bigger place in exchange for an equity stake in their apartment. Home equity is a much more fluid market in the U.S. than in France. The vast majority of homeowners in France hold 100% of the equity of their place as soon as they sign the paperwork that officially transfers legal ownership of the place. Of couse, most people also get a mortgage. In the U.S., your home equity is the value of your home minus the amount you owe on your mortgage. In France, you already own the place but you have a huge credit line to pay back over time. Virgil wants to switch things up by becoming a minor home investor in exchange for a down payment on your mortgage. The idea is that Virgil can help you get a bigger place, or a smaller loan. With today’s funding round, the startup is setting €7 million aside to invest in property transactions. Global Founders Capital is investing in the company for the first time. Existing investors Alven, LocalGlobe and Evolem are participating in a founding round once again. Aquasourca and business angels like Clément Alteresco, Emmanuel Amon and Victoria van Lennep are also investing in the startup. Virgil can hand you up to €100,000 to finance your home acquisition. There’s a simple 1.5x ratio on the share of your home equity. Here’s an example: on average, customers get €50,000, which represents 10% of the value of the apartment they want to buy (€500,000). As a result, Virgil owns 15% of the customer’s home. The startup limits its investments to 20% of the initial home value. In that case, the startup would own 30% of the home equity, which is quite a lot. When it’s time to sell your place, Virgil gets its investment back. The business model becomes particularly interesting in a bull housing market. But there’s also some risk for Virgil if the housing market drops significantly. In that case, some homeowners might not want to sell either so you have to factor that in as well. But what if you have found your “forever place” and you don’t want to sell? In that case, Virgil still wants to close its position after 10 years. Homeowners will have to set some money aside or get a second loan to buy out Virgil’s stake. In the worst case scenario, homeowners may have to sell their apartment. Over the past three years, Virgil has allocated €50 million in home financing in the Paris area. And the startup has ambitious goals as it wants to finance €50 million worth of housing transactions every month. If Virgil becomes massively successful, it could lead to some artificial inflation on the housing market in Paris as the Virgil stake will be baked in. So it’s going to be interesting to see the effect of a startup like Virgil on expensive cities like Paris.

Fiat Ventures, with $25M for first fund, brings ‘insider’ approach to investing in early-stage fintechs • ZebethMedia

By zebethcontrolPosted on November 16, 2022Posted in Alex Harris, Drew Glover, Fiat Ventures, Fintech, Marcos Fernandez, VentureNo Comments

Fiat Ventures general partners Drew Glover and Alex Harris, along with managing partner Marcos Fernandez, are out to find and invest in fintech’s next generation of startups, and are leveraging their unconventional backgrounds to find equally unconventional founders. The early-stage VC firm started in 2021 is now armed with $25 million in capital commitments to close its first fund; the partners are targeting financial services and financial technology startups building for the 90% of Americans who don’t already have enough savings or don’t know how to start managing what they do have. And they don’t just want to invest capital. The firm has taken a unique approach in the way it works with its companies, coming in initially as more of a marketing and strategic partnership. This came about when the partners started Fiat. They didn’t have capital to invest right away, so they asked founders for advisory shares and the right to invest eventually, Glover said. As such, Fiat focuses on ownership percentage, taking about 2% to 2.5% in companies the firm invests in, Glover told ZebethMedia. That might look like a $100,000 to $500,000 check with available funds to double and triple down on some of its more successful companies. That initial approach turned into half of a business with partnerships, like affiliates, strategics and influencers, and the other half being everything that touches performance and growth. “Think of us as basically a turnkey fractional CMO where we can walk in and help with strategy and execution,” Glover added. “Don’t hire a $400,000 a year CMO, but let us come in with our team of former VPs and CMOs and work with you to build out your growth ecosystem.” Fernandez told ZebethMedia that he believes this approach is one of Fiat’s “greatest strengths and advantages,” and something that typical venture capital firms hire an operating team to do when they reach their third, fourth or fifth fund, not the first fund as Fiat has been able to do. The partners have formed this type of relationship with more than 100 companies so far, working with them for a minimum of three months. In 2021 when they established a more formal venture business, they say it gave them unique insight into the companies — the good, the bad and the ugly — which helped them pinpoint where best to deploy the capital, Harris said. “Two out of the three of our investments have been from these relationships,” Fernandez added. “It’s given us the extra due diligence to see if they have product market fit and to see founder dynamics, for example if they can raise funding, recruit and know where their gaps are. You can’t get that from getting on calls or data rooms.” Investors into the new fund include Invesco Private Capital, which anchored the fund, DAHG Capital Partners, Joint Effects LLC, Full Spectrum Capital, Temerity Capital Partners, Now Investments, Mountaineer Capital, Permit Ventures and a group of fintech founders, including Bestow’s Jonathan Abelmann, Chime’s Kyle Daley and Mulberry’s Chinedu Eleanya. Some notable investments among the 22 companies in Fiat’s portfolio so far include teen-focused banking app Copper, which raised $29 million in April; insurance company Breeze, which grabbed $10 million last year; and Sleek, a one-click checkout company that bagged $1.7 million earlier this year. In addition, the Fiat team itself has diverse backgrounds, and the partners said it was equally important to show that in the companies they invest in as well. Sixty-seven percent of investments are in underrepresented founders, 30% are female founders and 40% are minority led. “It really comes down to our backgrounds and that’s what we cherish the most,” Glover said. “Marcos is Hispanic-American, I’m African-American and Alex is 100% our people and also Jewish.” He went on to describe growing up in East Oakland with exposure to all forms of socioeconomic classes, and with parents who were deeply ingrained in civic action. Meanwhile, Marcus grew up in Texas and in a similar type of environment, while Alex grew up in Stockton. “We all grew up with this mindset of investing in the best ideas that are making the greatest impact,” Glover added. “The networks that we grew up in bred other networks and gives us the access to see some of the best underrepresented founders and ideas that are making the largest impact.”

Valar Ventures leads $20M round in online brokerage platform baraka • ZebethMedia

By zebethcontrolPosted on November 16, 2022Posted in Dubai, Fintech, valar venturesNo Comments

Stock-trading apps have multiplied over the past couple of years, targeting varying demographics and audiences that they feel need to partake in investment activities to live healthier financial lives. In the latest development, baraka, a two-year-old commission-free investment platform based in the Middle East, is announcing that it has closed a $20 million Series A round led by Peter Thiel’s Valar Ventures with participation from global investment firm Knollwood to expand across the region and reach more users. CEO Feras Jalbout‘s years of investment experience working with Barclays, Standard Chartered and a Dubai-based family office led him to launch baraka in 2020. His upbringing also played a part. In an interview with ZebethMedia, Jalbout told how he learned about investments such as stocks and government-assisted retirement funds while growing up in Canada, where investing was institutionalized. However, in the Middle East, it was a different ballgame. For years, people in the region have invested via traditional savings options such as bank deposits and real estate, according to Jalbout; hence, baraka brings much-needed variety. “When I moved to the region, it was surprising to see that people didn’t invest in digital assets much as there were little to no provisions for that,” said the founder and chief executive. “Many people in the region earn tax-free income and don’t invest. It’s a big part of why I launched baraka because very few fintechs offered investment options. I wanted to make an app I would’ve loved to use based on my experience as a professional investor.” Prior to getting its license to launch its trading app, baraka was a content platform using newsletters and a podcast to educate retail investors in the Middle East, particularly in the UAE, about stock investing and financial knowledge. It launched its app a year ago armed with Y Combinator’s backing and a $4 million seed round. This arsenal has propelled baraka to offer its “thousands” of investors access to more than 5,000 U.S. stocks and 1,000 Exchange Traded Funds (ETFs). Investors can start investing with as little as $1 (~3.79 dirhams) on the platform. Jalbout added that the platform has users in the “tens of thousands” who actively trade and consume in English and Arabic. Of this user base, 56% are younger than 30, a sign of the young regional population seeking digital investment solutions. More than 50% are first-time investors, indicative of high interest in learning about equity markets through baraka’s content and starting their investment journey on the platform. Also, 83% have traded three times or more in at least one month throughout their lifetime on the baraka app. Image Credits: baraka Since baraka is a zero-commission platform, it doesn’t make revenue off commissions, trades or spreads. Instead, it’s from a subscription service, about $10 (~37.99 dirhams) per month, that retail investors can use to access more financial data about companies and stock reports from baraka’s partner Refinitiv. Baraka is exploring other revenue streams, one of which is to launch commission- or asset management-based products that will generate an annuity over time. With this new investment, the Robinhood-esque platform will double down on its presence across the GCC and Egypt, its new market (where it’ll face competition from Thndr), and drive customer acquisition. The company said it would add new services over the next 12 months, including access to features like dividend reinvestment plans and extended-hours trading. Offering local stock trading is also on the cards. Taduwal, the Middle East’s most prominent stock exchange, raised $4.7 billion through 27 new listings in the first half of 2022, contributing to a nearly 300% increase in IPOs across the region’s exchanges this year. As such, baraka is committing a large portion of this investment to work with local stock exchanges such as Tadawul and regulators to secure licensing in order to democratize access to local stocks. “Our ambition is to offer local equities as well by partnering with Taduwal, which is the Saudi stock exchange, the Dubai financial market (DFM), and the Abu Dhabi exchange (ADX),” said Jalbout of baraka’s plans of offering retail investors local stocks. Baraka has raised $25 million in total venture capital funding from investors such as Class 5 Global, Global Founders Capital and Venture Souq. Its new investor Valar Ventures has also backed similar digital brokerage startups such as Bitpanda and Shares (also backed by Global Founders Capital). General partner at Valar Ventures, Andrew McCormack, said this is his firm’s first investment in the Middle East’s emerging fintech ecosystem filled with potential. “We’re encouraged by the early signs of traction that baraka has been able to showcase. We’re really looking forward to working closely with the company as they enter this exciting new phase of growth across the region,” he added.