Fintech

Suma Wealth helps Latinos build credit through gaming, in-culture content • ZebethMedia

By zebethcontrolPosted on October 21, 2022Posted in Beatriz Acevedo, build credit, Fintech, Startups, Suma WealthNo Comments

Just when Beatriz Acevedo thought she was out, an opportunity to start Suma Wealth pulled her back in. The California-based company, which exhibited as part of the Battlefield 200 at ZebethMedia Disrupt, is designed for Latinos and offers in-culture financial content, products and experiences to help them gain control of their economic power and build wealth. Beatriz Acevedo, co-founder and CEO of Suma Wealth (Image credit: Suma Wealth) “The ‘secret sauce’ is in-culture not in language,” Acevedo told ZebethMedia. Suma Wealth is at the intersection of edtech and fintech and is innovating on the blockchain. Some of the features include Sumaversity with master classes and boot camps on finance. It is using the blockchain to certify everyone via proof of learning and attendance. Users collect non-transferable tokens (NTT) and get perks. There is also a Music Money Plaza where users can understand the concept of credit and build it. The Credit Cocina, an activity food truck, helps users learn about their finances through their favorite recipes. There is also a financial gym where Acevedo said users can “sweat out their debt” by speaking with a debt expert. Users can pick an avatar, chat or turn on their camera and get coaching in “a non-threatening way.” The app is free to download, and there are some freemium features with a subscription tier for the coaching. Acevedo is not your typical early-stage entrepreneur. Now in her 50s, she started her career as a radio and television host and went on to start a company with her husband, Doug Greiff, called mitú, a digital media brand for young Latinos in the U.S. Between 2012 and 2020, the company raised $52 million in funding before Acevedo and Greiff sold the company to Latido Networks. Her plan was to move fully into philanthropy and work on her family’s foundation, but Acevedo told ZebethMedia that when the global pandemic hit, she saw that Latinos were not only the hardest hit in terms of COVID deaths, but also economic hardship. It wasn’t that she wanted to found a company that could solve that problem, but after talking to financial institutions that consistently told her that they were challenged in their ability to connect with young Latinos, she decided to start Suma Wealth with Mary Herandez and Javier Gutierrez. “No matter how much money Latinos spend, they are always an afterthought,” Acevedo said. “Fintechs could tell me that they already translated their website, and that was the biggest red flag for me because they didn’t need to do that because their audience already speaks English.” She went on to explain that when she told them that, their immediate reaction would be one of surprise and then relief, saying “We are reaching them through the general market then.” To which she would respond, “You probably are reaching them, but not touching them.” “They’re still not feeling like they belong in this money conversation,” Acevedo added. “There is just that big disconnect there.” The company is already working with large financial institutions including JP Morgan Chase, Wells Fargo and Morgan Stanley. It has also raised $3.3 million over the past two years. Acevedo told ZebethMedia that Suma Wealth just started fundraising for its seed round and is adding an enterprise offering. The first enterprise partnership is with Verizon Wireless, which will offer Suma Wealth as a benefit to employees and customers, she said. The company is also talking to other consumer goods companies. “We are excited to have all these partnerships,” Acevedo said. “We thought we would be B2C, but saw so much demand on the enterprise side, that we are launching that model for employee benefits.” Meanwhile, she believes Suma Wealth is solving the disconnect through its content and features. And the traction the company has seen so far is proof: it has a community of 615,000 unique users and is growing 27% month over month. In addition, it recently completed a VIP pilot with 2,000 users over a period of 90 days and calculated 72% growth in connected accounts — an average of 3.5 accounts — within the last 30 days and that customers were coming back 2.5 times per week, which Acevedo noted was interesting, considering Suma Wealth is in the early stages of content development. So far, 800 people have completed the bootcamp program and are staying in Sumaversity sessions for an average of 60 minutes. The company is also seeing a 96.3% click-through rate to resources, a number Acevedo is proud of, explaining that when it comes to click-through 3% to 5% is considered “a good number.” “This generation is asking for help,” she added. “The top two questions we get are ‘Who do you trust?’ and ‘Who can we trust?’ Where we are in economy today, not just Latinos, but Americans, want to know how to protect their capital, and there has never been a better time for us to exist than now.”

Uils wants to lend LatAm’s rideshare drivers cash based on their driving record • ZebethMedia

By zebethcontrolPosted on October 21, 2022Posted in Battlefield 200, Disrupt, Fintech, LATAM, Startups, TechCrunch Disrupt 2022, Transportation, UilsNo Comments

When Uils launched in 2021, it was a car rental service for rideshare drivers. But after the founders realized that many rideshare drivers don’t have access to credit, particularly in Latin America, the Buenos Aires-based company pivoted to fintech, offering financial services to drivers through a behavioral scoring engine based entirely on a person’s driving history. Rideshare vehicle lending is a crowded market. Both Uber and Lyft host marketplaces where approved vehicle rental companies can show their wares; Uber has piloted a short-term credit program offering up to $500 to drivers. One of the largest ridesharing companies in China, Didi, started offering loans to drivers in 2019. Meanwhile, lenders like Giggle Finance have long extended credit lines for ridesharing vehicle purchases, maintenance and upkeep. But Costanzo argues Uils (pronounced “wheels”), which is one of the Battlefield 200 at ZebethMedia Disrupt, stands apart in its ability to give a “360-degree” view of drivers in the mobility gig economy. “Being integrated with all the mobility applications available in Latin America, we have a total vision of the driver’s work activities, being able to determine a credit offer that is more adjusted to reality,” he told ZebethMedia in an interview. To use Uils, drivers download an app, fill out an application, and connect the app to the ridesharing platforms for which they drive via an API (e.g., Uber). Uils analyzes their history using a machine learning model to determine whether they qualify for a “micro” or consumer loan, considering various factors. The interest rates range from 0% for the micro loans (for a weekly subscription of $1 to $2) to 145% for the consumer loans. That’s quite a wide range — and sounds sky-high — but Costanzo says it’s reflective of the equally high inflation rate in Argentina, the country where Uils first launched. “The app has an embedded banking account where drivers collect their earnings from mobility apps,” Costanzo explained. “In that same account, they receive loan funds and pay their installments every week. We have a collection process that runs every 15 seconds so as soon as the mobility app sends the money, we will collect the pending installments before the driver notices … The rent-to-own loans are a leasing, so technically we can get the car back as soon as the driver goes into delinquency, therefore there is a tendency to 0% default.” It’s a relatively new idea in the lending domain, although services that track driver behavior to offer discounts and benefits have been around for some time. For example, Zendrive collects data about driving habits and awards drivers for making safe decisions. Root Insurance calculates car insurance premiums based on driving patterns, and Avinew rewards customers for using autonomous safety features. But there are obvious surveillance — and bias — implications. It’s unlikely every driver would be comfortable with the idea of sharing driving histories with Uils, particularly given that the company uses that data to create a risk profile of them. And where algorithms are involved, there’s always the possibility that flaws in the model could lead some drivers to be treated unfairly or poorly. Consider traffic in a driver’s area that forces them to make frequent, sudden stops that under normal circumstances might be considered reckless. There’s another risk to consider: the challenge of paying back loans in a downtrending economy, especially as interest rates climb and inflation impacts the price of fuel. An April poll from The Rideshare Guy, a ridesharing blog and forum, found that nearly half of rideshare workers quit or starting driving less that month because of spikes in gas prices. Image Credits: Uils For its part, Uils says that it requires customers to reauthorize the connections between the app and ridesharing platforms every month, so that tracking doesn’t continue indefinitely. (The company does require customers verify their identity to receive loans, however.) Uils is keeping the details of its algorithm close to the chest, save for revealing 70% of users who’ve applied for loans through the platform have received them. The company also isn’t saying exactly how many of those users have failed to make payments, if any. “The scoring engine has more than 200 data points for each driver. We have variables like their work schedule, how many trips per day, how many apps do they use, how many cars they have used, among others,” Costanzo said. “After processing the driving history, we will get a score from one to 1,000. Based on our current lending policies, that score will let us know what is the maximum that a driver can receive as a loan.” After that, Uils has the second layer that’s based on earnings. Depending on how much money the driver makes, they’re able to allocate up to 30% to loan repayment. But opaqueness aside, Uils’ terms and approach might be less onerous than, for example, those around rentals from Lyft or Uber — which some drivers say make achieving a profit nearly impossible. A 2019 investigative piece found that Lyft paid drivers participating in its Express Drive rental program less per mile than drivers who used cars leased through dealerships. The program imposed restrictions on drivers as well, prohibiting them from making money using their vehicles to work for other services. Costanzo stresses, again, that these are drivers without access to traditional credit — making their financial situations particularly precarious. “The biggest competitive advantage is that we apply a matching fund strategy around the installments amount,” Costanzo said. “Drivers will pay the same amount that he pays to rent the car in the informal market, offering a frictionless solution. On top of that, we are the only fintech in Latin America that offers major consumer loans and rent-to-own loans without consulting credit bureaus or asking for a credit card or any other guarantees.” Image Credits: Uils Uils is currently raising its second round funding round — totaling $1 million — through a simple agreement for future equity (SAFE), which grants the investors the right to purchase

Will alternative investments become a staple in all investors’ portfolios? • ZebethMedia

By zebethcontrolPosted on October 20, 2022Posted in alternative investments, EC venture capital, Fintech, portfolios, vc interview, VentureNo Comments

We no longer live in the era of the 60/40 portfolio, VC says A 60/40 investment portfolio, in which 60% is invested in stocks and 40% in bonds, was long considered classic. But that’s no longer the case, as many investors are now diversifying beyond publicly traded assets. Alternative investments, or alts, are a direct corollary to diversified portfolios. And they are not just for institutional funds: Individual investors too are showing increasing interest in this asset class, which encompasses all sorts of supports, from wine and watches to gold … and startups. Startups can be on the receiving end of investments into alts, but some of them have also facilitated this trend. California-based fintech VC firm Broadhaven Ventures invests in companies on the tech side of enabling alts, with a portfolio including Allocate, Alongside, Alt, Capital (known until recently as Party Round), Caplight, Carta, Latitud, Pipe, Republic, Syndicate and others. Talking to ZebethMedia, Broadhaven co-founder and partner Michael Sidgmore said that when investing in the sector, the early-stage fund has “focused on helping to build out the alts ecosystem by investing in many of the enabling technologies across various areas of alternative investments.” Sidgmore himself has spent a large part of his career in alts and launched a podcast and content platform called Alt Goes Mainstream in January 2021. We spoke with him about alts beyond crypto and what’s next for a space that’s seeing some of its tailwinds fade. His answers below were edited for length and clarity.

One month after entering the spend management space, Rippling goes after global payroll • ZebethMedia

By zebethcontrolPosted on October 20, 2022Posted in Disrupt, Fintech, human resources, parker conrad, Rippling, Startups, TechCrunch Disrupt 2022No Comments

When Parker Conrad founded Rippling in 2016, the HR company initially focused on the process of onboarding employees. It has since evolved to manage all aspects of employee data, from payroll and benefits, to the apps employees use, to a device management platform that enables Rippling’s customers to retrieve, wipe clean and store employee computers when staffers part ways with a company, as ZebethMedia’s Connie Loizos reported last year. Today, at ZebethMedia Disrupt, Rippling unveiled what Conrad describes as the “biggest launch” of his career — its new global payroll product. As we all know, the COVID-19 pandemic led to a surge in remote work with companies who had previously resisted hiring employees globally suddenly being forced to embrace the concept. One of the reasons companies resisted the move for so long is the myriad compliance and administrative headaches that come with paying people in other countries. In the past couple of years, a number of startups have emerged to tackle the problem — including Deel, Remote and Remofirst. And now, Rippling is out to take on all those startups — including Deel, which is actually a client of Rippling’s — with its new global offering. He says it will give U.S.-based companies a way to pay workers all over the world — whether they be full-time or contract — more “seamlessly.” Conrad claims his startup has an edge on its competition because its payroll product is integrated with its existing workforce platform — making it easier for companies to integrate it with all of their existing data. This full-stack approach is intentional, the executive says. An employee graph, which houses all employee data, sits at the bottom of Rippling’s tech stack. Then on top of that, the company has what it calls middleware components, such as reports and analytics, custom policies and permissions such as role-based permissions workflow automation. “Companies can now hire, pay and manage a workforce across the world in one unified system, with the same powerful automation, policies and analytics no matter where employees are based,” he said. Conrad also touts the speed at which businesses can move — saying that companies can onboard employees and contractors in 90 seconds, run payroll “in minutes” in everyone’s local currency and automate global compliance. The executive also makes a lofty charge — that other players in the space are “actually payroll aggregators.” “They’re companies that are sitting on top of a series of other local partners in terms of the actual payroll systems that they’re using. And so they’ve got these different systems in different countries, and that creates this sort of like shitty experience for clients,” Conrad charges. “Rippling is the first one that’s actually built a single payroll system that can pay people around the globe. I swear this is the world’s first global payroll system.” Conrad is no stranger to the HR tech game. He previously founded Zenefits, which actually launched on the Disrupt stage at Battlefield in 2013. The entrepreneur resigned after that company faced compliance issues, and just months later, he founded Rippling. His return to the space has thus far proven to be more successful than his first venture. Exactly one year ago today, Rippling raised $250 million in a round that valued the company at $6.5 billion. As TC’s Loizos pointed out, that deal made Rippling more valuable than Zenefits ever was before it sold a controlling interest earlier this year to a private equity firm. Then in May of this year, the startup raised an additional $250 million at a staggering $11.25 billion valuation, officially propelling it to decacorn status. And now, with Rippling’s expansion into new verticals, the startup is branching out its offerings — and revenue streams. Just last month, Rippling unveiled its new spend management offering, putting it in direct competition with the likes of Brex, Ramp, TripActions and Airbase, among many other players in the space. By adding global payroll, Conrad believes Rippling’s product suite is stronger than ever. “I think that a lot of the advice around how to build technology companies is wrong. I think that people have for 20 years told startup founders that what you want to do is to build something extremely narrow. And so people have been building hundreds of these little, extremely narrow, like point solution SasS businesses,” Conrad told ZebethMedia. “We’ve sort of forgotten about the benefits of deep systems integration and bundled contracting and pricing because 20 years ago, you could count the number of business software vendors on one hand.” In his view, the shift to the cloud changed that and created an opportunity for entrepreneurs to turn individual features from companies such as SAP and Microsoft and rebuild them into standalone SaaS services. The founder is confident about Rippling’s multi-pronged approach of building multiple products in parallel. “The shift to the cloud is largely complete and now we’re seeing a shift back to all-in-one, cloud native systems, where I think, Rippling is going to dominate,” Conrad said.

Banyan raises $43M to grow its network of item-level purchase data • ZebethMedia

By zebethcontrolPosted on October 20, 2022Posted in Commerce, Enterprise, Fin Capital, Fintech, funding, M13, startup, StartupsNo Comments

Banyan, a platform for product purchase data that allows customers such as banks, fintechs, hotels and merchants to automate expense management and more, today announced that it raised $43 million in a Series A funding round — $28 million in equity and $15 million in debt — led by Fin Capital with participation from M13, FIS Impact Ventures and TTV Capital. A source familiar with the matter tells ZebethMedia that the valuation is in the “mid-$100 million” range. CEO Jehan Luth says that the new capital will be put toward product research and development and infrastructure growth, as well as toward expanding Banyan’s headcount from 46 employees to 50 by the end of the year. “This funding round positions Banyan well with ample runway to grow,” he told ZebethMedia in an email interview, noting that it brings the company’s total raised to $53 million. Banyan maintains a database of “SKU-level” data and a platform that leverages the database to enable companies to use purchase data in various ways (e.g., fraud prevention, loyalty programs and card-linked offers). For example, Banyan can integrate item-level purchase data into business banking or expense management apps, removing the need to organize receipts and expense reports. Elsewhere, the platform organizes, classifies and standardizes receipt data to enable merchants and their partners to target offers to specific items, categories and aisle-level subcategories they want to reward (think ad campaigns like “buy grilling equipment at grocer X and get 20% cash back”). Luth — who holds an associate’s degree in computer science from the University of Cambridge, a bachelor’s degree in food science from the Culinary Institute of America, and master’s degrees in epidemiology and law from the University of Pennsylvania — founded Banyan in 2019 after serving as technology director of Harvard’s T.H. Chan School of Public Health. He claims one of the company’s major differentiators is that its network obtains data directly from first-party sources, such as merchants, and doesn’t collect personal information — addresses, phone numbers, email addresses and the like — “unless absolutely necessary” to deliver a service. “Merchants are a key collaborator in our network, providing secure purchase receipt data so that there is no need for screen scraping or problematic receipt snapshots with a mobile phone,” Luth said. “We are organizing and standardizing item-level data across all merchants so that it can be accurate and consistent when integrated into banking institution customer platforms.” Banyan claims to have processed billions of transactions and receipts from the over 35,000 merchant partners in its network. Luth, who declined to reveal the size of the company’s customer base, says it’s made up largely of banks and fintechs (he wouldn’t name names). “In an environment where many consumers are tightening their belts and rethinking brand loyalty, item-level data can be a key for retailers to offer real savings leveraging strategic ‘aisle’ budgets, while also managing inventory levels and efficiently driving sales retention,” Luth said, demurring when asked about Banyan’s revenue numbers. “Our investments will enable financial institutions to increase customer engagement by delivering personalized digital experiences, and enable merchants to streamline the purchase experience and create new sources of sales revenue along with improving their ability to manage inventories.”

N26 adds crypto trading with new Bitpanda integration • ZebethMedia

By zebethcontrolPosted on October 20, 2022Posted in challenger bank, Crypto, crypto trading, Fintech, N26, StartupsNo Comments

Challenger bank N26 is launching a new trading feature in its app — N26 Crypto. Users will be able to easily trade crypto assets using money in their N26 account. Behind the scenes, N26 is partnering with Bitpanda to handle trading and custody. N26 is going to slowly roll out N26 Crypto across Europe. At first, only some users in Austria will be able to access the new feature. Other countries should get the feature at some point over the next six months. N26 will let you buy, sell and hold 100 different crypto assets. The startup plans to add another 94 crypto assets later down the road. And I’m sure the company will expand to stocks and other asset classes soon. N26 Crypto will be accessible from the second tab, which has been renamed “Finances”. From this screen, you will find your spaces — those are sub-accounts that you can use to set some money aside in a different pocket of money. Spaces can also be used as shared accounts with someone else. Below your list of spaces, there is a new “Trading” section with your crypto portfolio. N26 lists all your crypto assets, the value of your positions and how they have changed over the last 24 hours, week, month or year. Whenever users want to buy or sell some cryptocurrencies, they can hit the buy or sell button, choose a crypto asset (or search for it) and enter an amount. N26 displays both the exchange rate and how much you will pay in fees. Image Credits: N26 N26 plans to charge 1.5% for bitcoin trades and 2.5% for all other cryptocurrencies. That’s the same fee that users pay in Bitpanda’s own app. Users who pay €16.90 per month for N26 Metal will pay 1% and 2% in transaction fees on bitcoin and other cryptocurrencies respectively. The main advantage with N26 Crypto is that it is directly tied with your existing bank account. You don’t have to upload money to a different trading account, switch to the Bitpanda app (ot another app) and then start trading. Similarly, when you cash out with N26 Crypto, you will get EUR in your main N26 account — no need to transfer money back to your bank account. N26 isn’t the first fintech startup that builds a deep integration with Bitpanda. French payment app Lydia also partnered with Bitpanda to introduce the ability to trade stock, precious metals, cryptocurrencies and ETFs in its app last year. In my experience, it works really well. Last week, N26 shared its 2021 financial results. While gross revenue grew by 50% to reach more than €180 million, its operating costs also grew at a rapid pace, resulting in a €170 million net loss. Of course, N26 has also raised hundreds of millions of euros. Thanks to these deep pockets, the company has plenty of time to figure out how to get more revenue from its users while keeping its operating costs under control. As N26 and Bitpanda have likely agreed to share revenue coming from N26 Crypto, the new feature should contribute to the company’s bottom line.

Klarna launches new creator features and shoppable video • ZebethMedia

By zebethcontrolPosted on October 19, 2022Posted in Apps, Commerce, e-commerce, Fintech, Klarna, online shopping, retailersNo Comments

As consumers turn to content creators to influence their online shopping habits, Klarna, the buy now, pay later platform, today launched a new Klarna Creator app for retailers and influencers to collaborate on brand campaigns and to track earnings, performance and sales. Klarna’s creator platform allows over 50,000 vetted creators to have access to leading brands and retailers. Retailers can use the app to direct message a creator they want to partner with and send them products for content. The app also has a tracking feature to watch sales and commissions. The new creator tool is available for desktops, iOS devices and Android devices. Separately, the company also announced new features and updates to its Klarna platform, which rolled out to the U.S. today. These include shoppable video content, a new search and discovery tool, as well as a donations feature and an upgraded CO2e tracker. Image Credits: Klarna Over 150 million global consumers use Klarna’s platform for its flexible payment options. Consumers can shop from 400,000 retailers on the app while having the choice to pay immediately, pay later or pay over time. With today’s announcement, the Sweden-based company hopes to move beyond being just a payment platform but a place for consumers to search and discover, for influencers to create content and for retailers to promote their products. “Seventeen years ago, Klarna started as a place where you could pay…With this latest product release, we strengthen our position as a true shopping utility for consumers and a growth partner for retailers and lay the groundwork for a new era of shopping where the entirety of the world’s commerce will be condensed into one single point,” Klarna co-founder and CEO Sebastian Siemiatkowski told ZebethMedia. The most notable feature added to Klarna’s platform is the “Watch and shop” widget. According to Klarna’s 2022 Holiday report, 65% of Gen Z favor video content when shopping online. So, as Gen Z shoppers turn to video-based platforms like TikTok and Instagram, consumers can also go to Klarna for video content that’s specifically tailored for shopping and discovering products by well-known brands. At launch, 70 cosmetics brands use the feature, such as Haus Labs By Lady Gaga, e.l.f. Cosmetics, Keys Soulcare and more, with videos on the app ranging from unboxings, tutorials and reviews. Consumers can also save videos of brands they like or add them to their wishlists. Since soft launching “Watch and shop” three months ago, the brands “see an average click-through rate 3x higher than click-through rates of social media platforms,” Siemiatkowski claimed. Image Credits: Klarna The new search and compare tool allows consumers to look up what products are on sale, the lowest price, rankings, ratings, shipping options and what’s in stock. Consumers can also use automated coupons at check-out to save even more money. Klarna is also expanding its sustainability efforts with an upgraded CO2 tracker and a new donations feature. The tracker displays emissions from over 50 million products, bringing more awareness to carbon footprints. Consumers can use the donations feature to donate products to high-impact organizations.

Thunes integrates with Visa Direct’s digital payments network • ZebethMedia

By zebethcontrolPosted on October 19, 2022Posted in Asia, cross-border payments, Fintech, Singapore, Southeast Asia, Startups, thunesNo Comments

Cross-border payments startup Thunes is partnering with Visa, in a move that will add more than 1.5 billion new endpoints to Visa Direct’s digital payments network. This enables many more consumers and small businesses to send funds to markets in Africa, Asia and Latin America, where digital wallets are often the default payment method. Based in Singapore and San Francisco, Thunes is backed by investors including Insight Partners, GGV and Checkout.com, and has raised $130 million in funding to date. Customers of its payments infrastructure include Uber Eats, Grab, MoneyGram, Remitly and Western Union, and it currently processes more than 180 million transactions a year across 130 countries. One of Thunes’ focuses is emerging markets where there are a lot of unbanked people. Many use digital wallets as an alternative to traditional financial services, since they can top-up cash without needing a bank account or credit card. CEO Peter De Caluwe told ZebethMedia that Thunes was created to fix gaps in payments market’s slow traditional banking infrastructure. He cited research that shows half of the world’s population will use mobile wallets by 2025, but says Thunes believe adoption will happen faster than that, with its network connected to 2.7 billion mobile wallet users by 2022. “Digital wallets are one of the fastest growing financial instruments for many small businesses and for unbanked individuals in emerging markets,” said De Caluwe. “Three billion people globally are still left out or poorly served by the formal economy. For these unbanked individuals in emerging markets, digital wallets are gaining traction as an empowering first entry point to the financial system.” The partnership means that about 14,900 financial institutions that are Visa clients can integrate send-to-wallet services for customers, retailers and SMEs through Visa Direct. Visa’s network is now connected to Thunes’ B2B platform, which means Visa Direct can reach more than 1.5 billion new endpoints (for a total of 7 billion) and that the 78 digital wallet providers already integrated with Thunes get a new send-to-wallet capability. Some examples of how Thunes’ software and APIs are used include connecting Paypal and Paypal Xoom payouts with top mobile wallets in Asia and Africa, including in Bangladesh, Indonesia and Kenya and facilitating payments for digital remittance companies like Remitly, World Remit and Moneygram. Grab used Thunes’ platform to localize payments, enabling it to accept mobile payment options and give on-demand payouts to drivers, which gave it an edge over Uber.

MaxAB, an Egyptian B2B e-commerce platform for food and grocery supplies, nabs $40M • ZebethMedia

By zebethcontrolPosted on October 19, 2022Posted in africa, b2b e-commerce retail, Commerce, e-commerce, Fintech, MaxAB, StartupsNo Comments

Last year, MaxAB, the food and grocery B2B e-commerce and distribution platform serving a network of traditional retailers across Egypt and Morocco, raised its $55 million Series A in two tranches; the latter accompanied its acquisition of the Morocco-based and YC-backed WaysToCap. The moves signaled MaxAB’s ambition to dominate Egypt’s and North Africa’s B2B retail and e-commerce market, which includes Cartona and the troubled Capiter, other players that have raised significant capital to compete within the past year. To continue growth due to the rising demand for food and groceries and fuel its expansion across the MENAP region, MaxAB has raised more money, this time a pre-Series A to the tune of $40 million. Although smaller than last year’s prized round, CEO Belal El-Megharbel told ZebethMedia that the pre-Series A was neither a down round nor a flat round in terms of valuation. He also noted that the company raised new capital, not because it needed the money but because “there are many opportunities that we believe we can tap into quicker the more capitalized we are.” The asset-heavy MaxAB has raised over $100 million in total. Small traditional retailers serve as the backbone of the FMCG industry across Africa. For most B2B e-commerce platforms across the continent, groceries are one of the many consumer goods they help retailers source from suppliers. For MaxAB, that’s its sweet spot. And since its launch in 2018, MaxAB has connected suppliers with over 150,000 unique traditional retailers in this food and grocery supply chain across Egypt and Casablanca, Morocco, delivering over 2.5 million orders within this timeframe. MaxAB’s perspective of going deep rather than wide with its product offerings also extends to how it regards geographical expansion. After scaling its B2B grocery delivery across Egypt for over three years, it intends to utilize its network and relationships with local and multinational suppliers and advance full distribution into Morocco, which now accounts for 10% of MaxAB’s business, and entry into Saudi Arabia by the end of 2023. The company estimates that more than 750,000 mom-and-pop businesses require its services in Egypt and Morocco alone. At the same time, Saudi Arabia is appealing due to the government’s drive to digitize the informal sector and the FMCG’s willingness to explore new business models. “We’re trying to offer more services to the grocery stores since they are the foundation of the economy we operate in before jumping into these other supply chains. Think about Amazon; they kept selling books for eight years before adding another category. And that’s the school of thought we like to go with,” said the CEO who founded MaxAB with Mohamed Ben Halim. “In Egypt, we focused on launching the grocery supply chain and we’ll use the learnings that have come from that to launch across multiple markets. It’s easier to launch the grocery supply chain in various markets than launch, for example, electronics in our core market because it’s just a completely different business model that we have to relearn from scratch.” Another growth stream for MaxAB is the fintech business launched last year, which leverages its large pool of merchants and operational capacity to carry out cash collections. And its entry approach to offering financial services differs from the competition; it launched a bill aggregation product — which has grown 5x in transaction value since the start of the year — rather than a BNPL product that many B2B e-commerce platforms introduce to merchants first. It didn’t take long for MaxAB to delve into the popular B2B fintech category, though; last month, the platform launched a working capital product to its merchant base. However, like Wasoko, another B2B e-commerce platform based in sub-Saharan Africa, MaxAB opted not to raise debt financing to scale that part of its operations. According to El-Megharbel, who was an ex-general manager at Careem, MaxAB currently gets a lot of supplier credit that helps it finance the working capital without raising debt, at least for now. “And because the buy now, pay later product is still early, we can still do some financing with equity without having to pay for debt that we won’t be utilizing in the short term,” the CEO added. MaxAB’s equity round includes an impressive list of new investors: DisruptAD, ADQ’s venture capital platform; the British International Investment (BII); and the Menlo Park–headquartered private equity firm Silver Lake — its first check of any form in an African startup. Silver Lake invested through its Long-Term Capital strategy with Mubadala Investment Company. “We’re always proud of our ability to attract top-tier investors to the region. Historically, since our seed round, we’ve always had at least one VC that has invested in Egypt, North Africa or Africa for the first time,” said El-Megharbel on the investment, referencing firms such as 4DX Ventures and Flourish Ventures. They participated in this round alongside other existing investors, Beco Capital and Africa Platform Capital.

Egypt’s Nexta to launch “next-gen banking” app with fresh $5M • ZebethMedia

By zebethcontrolPosted on October 19, 2022Posted in Fintech, StartupsNo Comments

Nexta, an Egyptian startup that plans to launch its banking app in the coming months, has secured a $5 million investment from eFinance Group, a state-owned provider of digital payments solutions. This news follows the $2 million pre-seed round Nexta announced this March, which Egyptian early-stage VC Disruptech led. Last year, Nexta obtained a provisional license from the Central Bank of Egypt (CBE) and will look to fulfil further requirements and meet certain obligations before obtaining the CBE’s final approval for the agent banking license it needs to launch its services in the country. The Nexta app will have a partner bank to handle settlements and act as an intermediary between itself and the CBE–however, it’ll power its cards and tech. Founded by Ahmed Hisham in 2021, Nexta wants to disrupt the Egyptian fintech scene with its “next-generation banking” app and card. According to the company, the Nexta card will aggregate users’ existing payment cards, allowing more effortless money transfer, and tracking spending, among other features. “We’re trying to build next-generation banking and provide a seamless user experience to the consumer. We want to make easy and instant onboarding, card aggregation, linking all of your cards and several methods of cash-in features,” the co-founder and CEO told ZebethMedia in an interview, adding that the company plans to make revenue from interchange fees. “That’s the first thing we are going in with the soft launch, and budgeting and tracking spending. And then we’ll add more features every month or quarter more features to solve the pinpoints of Egyptians.” Egypt is among the highest consumer spending markets across Africa. It is also one of the region’s most cash-reliant markets, meaning there’s an immense opportunity for fintechs to bring consumers spending online by launching card services. Egyptians looking for fresh alternatives that do not include telco-powered mobile wallets and digital channels from legacy banks can turn to Nexta and Telda, the Sequoia-backed fintech that announced a $20 million seed round last week. Unlike Telda, which allowed signups from its yet-to-be-launched apps (it didn’t bode well with its over 30,000 users after waiting almost a year to use the app), Nexta has limited its waitlist to signups from its website, engaging them through content marketing in preparation for its launch. Hisham declined to reveal how many subscribers are on the company’s waitlist. Like Sabbah, in an interview with ZebethMedia last week, Hisham agrees that both consumer-facing fintech apps ultimately compete with cash. “I believe that the competition is very healthy and thanks to Telda for the awareness they made to consumers and taking the first step. The Egyptian market needs not only Telda and Nexta but four or five other players like us,” the CEO added. In a statement, Ibrahim Sarhan, eFinance’s chairman and CEO, said the investment in Nexta is in line with Egypt’s digital transformation plan and vision for 2030, including the Group’s plan to maximize its assets and investments by investing in the fintech space. “Nexta is among the promising companies financed by the Group within several targeted investments,” Sahar said. “It’s worth noting that the Group took part in establishing Nclude—an investment fund—to invest in emerging fintech companies, thus improving the current and future direction of fintech in Egypt.” Hisham, who describes this investment as a strategic partnership rather than a funding round, said Nexta is glad to have e-finance on board as the demand for financial services in Egypt increases. “We believe there is a huge opportunity for us to offer a differentiated and outstanding experience to different users in such a promising market,” he said. Proceeds from the investment will help Nexta prepare for its launch, hire talents and invest in its technology.