Zebeth Media Solutions

The Interchange

The latest in Plaid’s payments push • 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 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

What goes up must come down • 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 Like many of you, I’m sure, I was caught up last week watching the downfall of FTX unfold. It was a startling development in the world of crypto, and while I don’t cover the space directly, I couldn’t help but be fascinated by the goings-on — and not in a good way. For more on that debacle, check out our crypto-focused Chain Reaction podcast here and our general coverage here. I also couldn’t help watching the train wreck of Elon Musk taking over Twitter and Meta’s letting go of 11,000 people. But I digress. Last week, I ended the newsletter saying I hoped this week would come with more uplifting news. Unfortunately, that was not the case. Real estate fintech Redfin announced on November 9 that it was laying off 13% of its staff, or 862 people, in response to the continued slowing of the housing market. This followed Opendoor’s layoff of 550 people, or 18% of its workforce, the week before and Zillow’s cuts of 300 in late October. It also follows Redfin’s letting go of 470 employees in June. Notably, Redfin also said it is shuttering RedfinNow, its iBuying division. To that end, CEO Glenn Kelman wrote in an all-hands email: “One problem is that the share gains we could attribute to iBuying have become less certain as we rolled it out more broadly, especially now that our offers are so low…And the second problem is that iBuying is a staggering amount of money and risk for a now-uncertain benefit. We’ve tied up hundreds of millions of dollars in houses that you yourself wouldn’t want to own right now.” Kelman went on to say that the company’s June layoff was in response to Redfin’s expectation that it would sell fewer houses in 2022. The latest layoff “assumes the downturn will last at least through 2023.” Redfin’s, Zillow’s and Opendoor’s layoffs aren’t the only ones in the industry. Digital mortgage lender Better.com conducted yet another layoff or two in the past couple of weeks. One source told me 240 employees were let go on November 4. And San Francisco Business Times reporter Alex Barreira tweeted on November 11 that dozens more workers were let go, sharing colorful details of the company’s WARN notice, in which Better.com said it was not able to provide notification earlier as the separations were the result of a “dramatic deterioration” in the company’s business. When I reached out to the company about the layoffs, a spokesperson wrote via email: “Better is focused on making prudent decisions that account for current market dynamics.” Okay, back to Redfin. One thing that stood out most to me with regard to that company’s latest round of layoffs was Kelman’s candor as he addressed employees. In his email, he said: “To every departing employee who put your faith in Redfin, thank you. I’m sorry that we don’t have enough sales to keep paying you.” Interestingly, Kelman appears to be putting his own personal bets into real estate markets outside the U.S. In September, he co-invested in a Seattle startup called Far Homes that was founded by Redfin alums and is focused on “buying and selling real estate in foreign markets,” as reported by GeekWire. CEOs as of late have been particularly remorseful as their companies either deteriorate or lay off staff. Besides Kelman, other examples this week include Meta CEO Mark Zuckerberg admitting he overestimated how long the post-pandemic revenue surge would last, saying: “I got this wrong, and I take responsibility for that.” Also last week, FTX CEO and founder Sam Bankman-Fried admitted he “fucked up” and “should have done better” right before FTX declared bankruptcy and he stepped down from his role. This is after the crypto exchange was valued at $32 BILLION earlier this year. In Early August, Robinhood CEO Vlad Tenev took responsibility for the company’s letting go of 23% of its staff, saying: “This is on me.” Even Better.com CEO Vishal Garg admitted at one point that he had not been disciplined over the previous 18 months, telling employees: “We made $250 million last year, and you know what, we probably pissed away $200 million.” What does this tell us? CEOs are human, yes. Flawed humans just like the rest of us. In some cases, decisions such as over-hiring were made out of genuine (or foolish) belief that the people hired would be needed in years to come. In other cases, decisions were less honorable and more about furthering the executive’s own agenda. Unfortunately, either way, thousands of employees are paying the price. Image Credits: Kuzma / Getty Images Weekly News Months after acquiring gamified finance mobile app startup Long Game, Truist Financial Corporation has introduced the Truist Foundry, an innovation division that it says “will function as a startup within the bank.” The goal will be to deliver “game-changing projects” and serve the bank’s lines of business. A spokesperson told me via email that specifically, the Truist Foundry will work on “building software solutions that drive value and market leadership for the bank.” In other words, it looks like one of the United States’ largest banks is getting even more serious about its digital efforts. Instacart has tapped Dutch payments giant Adyen to serve as “an additional payments processing partner.” As part of the new partnership, the

The fintech layoffs just keep on coming • 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 Wow, I take off one week and come back to all hell breaking loose in the fintech world. Sadly, it felt like we got news of layoff after layoff. I’ll attempt to round up as many of them as I can here: Chime confirmed that it is letting go of 12% of its employees. This equals about 160 people. According to an internal memo obtained by ZebethMedia, Chime co-founder Chris Britt said that the move was one of many that would help the company thrive “regardless of market conditions.” In the memo, Britt said that he and co-founder Ryan King are recalibrating marketing spend, decreasing the number of contractors, adjusting workspace needs and renegotiating vendor contractors. Opendoor announced it was letting go of 18% of its staff. This is around 500 people. Opendoor co-founder and CEO Eric Wu said his company, a publicly traded real estate fintech, was navigating “one of the most challenging real estate markets in 40 years.” Chargebee has laid off about 10% of its staff. As reported by Jagmeet on November 2, “Chargebee, backed by marquee investors including Tiger Global and Sequoia Capital India, has laid off about 10% of its staff in a ‘reorganization’ effort due to ongoing global macroeconomic challenges and growing operational debt. The Chennai and San Francisco–headquartered startup, which offers billing, subscription, revenue and compliance management solutions, confirmed to ZebethMedia that the update impacted 142 employees.” Stripe lays off 14% of its staff. As reported by Paul, “Stripe has announced that it’s laying off 14% of its workers, impacting around 1,120 of the fintech giant’s 8,000 workforce.” In a memo published online, Stripe CEO Patrick Collison conveyed a familiar narrative in terms of the reasons behind the latest cutbacks: a major hiring spree spurred by the world’s pandemic-driven surge toward e-commerce, a significant growth period and then an economic downturn ridden with inflation, higher interest rates and other macroeconomic challenges. Danish startup Pleo may lay off 15% of its workers. Jeppe Rindom, co-founder and CEO of Pleo — which less than one year ago raised $200 million at a $4.7 billion valuation — revealed that the company’s new strategy will impact 15% of its roles. He added that “up to 150 of our colleagues may have to leave.” Pleo is a developer of expense management tools aimed at SMBs to let them issue company cards and better manage how employees spend money. Credit Karma, now a subsidiary of Intuit, has “decided to pause almost all hiring.” This is according to an internal email sent to employees by chief people officer Colleen McCreary. McCreary referenced “revenue challenges due to the uncertain environment.” This was reiterated in Intuit’s fourth quarter earnings call, during which the company shared on November 1 that “all Credit Karma verticals have been negatively impacted by macro uncertainty. Credit Karma experienced further deterioration in these verticals during the last few weeks of the first quarter.” Remote online notarization services provider Notarize cuts its team by 60 people. A spokesperson told me via email that “the reorganization impacted nearly all teams and the decision was in service to the larger strategy we have been enacting at Notarize, and will enable us to move faster to best serve our customers.” The spokesperson added that in September, one small real estate–focused team was laid off in response to both its strategy shift and “the drastic drop in demand from the specific customers that they served.” The recent layoffs follow a larger layoff in June that impacted 110 people. Prior to that reduction, Notarize had about 440 employees. It currently employs 250 people across the United States. I wrote this newsletter on November 3 because I’m leaving on a trip to celebrate my 20th wedding anniversary, so it’s possible that more layoffs took place between then and now. 🙁 What this means for the broader fintech world is not yet clear, but when well-funded companies such as Chime, Stripe and Pleo are cutting staff, it is no doubt sobering for all the players — small or large — in the space. Special thanks to TC senior reporter and very nice guy Kyle Wiggers for helping me draft the Weekly News and Fundings and M&A sections below so I could get offline and pack for my trip! Weekly News Jeeves, the fintech startup that recently raised $180 million at a $2.1 billion valuation, told ZebethMedia via email that it has launched a service called Jeeves Pay that it’s billing as a “credit-backed business payments solution” for enterprise customers. At a high level, Jeeves Pay lets customers use their existing credit line to send wires or pay vendors, ostensibly solving the problem of having to rely on cash or revenues to fund local and cross-border business and vendor payments. Jeeves Pay is available now to all Jeeves customers “where permitted by applicable local laws and regulations,” the company says. Brex sees startups as one of the key avenues to growth in the corporate card and spend management market. To that end, the company on Wednesday announced a partnership with Techstars to extend Brex services to companies within the accelerator, following similar tie-ups with Y Combinator and AngelList. For the duration of the accelerator, Techstars participants will get a Brex platform support team, access to exclusive Brex events and free use of Brex’s Pry financial forecasting

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

‘Last year was the party. This year is the hangover.’ • 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 Mark Goldberg has been a partner at Index Ventures since 2015, investing in — and sitting on the boards of — financial services companies such as Plaid, Persona, Lithic, Cocoon and Pilot. Currently the firm’s fintech lead, Goldberg has plenty of thoughts about what’s on the horizon for startups operating in the space today. I recently sat down (virtually) with Mark to talk all things fintech, and lucky for me, he’s not afraid to speak his mind! Here are the highlights of that conversation (edited for brevity and clarity). TC: How would you say this year’s fundraising environment is different compared to last (besides the obvious, of course)?  MG: The crude analogy I’ve been using internally is last year was the party and this year is the hangover. That’s really how it feels to me — that we’re starting to understand the excesses of last year. We’ve seen now the retrenchment period after the fact. At Index, we’re probably more aggressively investing in what we think the next generation of fintech companies is going to be right now. Oh yeah? So what do you think the next generation of fintech companies is going to be? It’s funny because if you look at my portfolio, a lot of what I’m invested in is the infrastructure side of fintech…I probably have five or six investments in the picks and shovels. I think there’s resiliency there, but it’s also just a function of the inherent volatility or lack of volatility on the infrastructure side of the market. This year, and this is a little bit more contrarian, I’m actually spending a huge amount of time looking at early-stage consumer finance, which I think is probably the most — well, I don’t know, maybe that or crypto — unloved category or subcategory of fintech today. But I think that’s exactly where the opportunity is when we’re on the other side of this hype cycle, especially when I think about how people are going to do banking five or 10 years from now. I think one of the lasting effects of the pandemic is that people want to do banking from their phone — not to walk down the street and go to a branch or get in the car and go to a branch. I think there is just going to be this massive transformation in consumer finance. Yes, a lot of things were overvalued last year, but I think we’re gonna see a wholesale transformation from an old guard to a new guard in the next few years and this might be a really good entry point when we look back on it. What do you think is the biggest trend happening in fintech right now? One of the enduring things from last year’s excesses is going to be this fusion of fintech and culture, which I think is probably the most interesting trend happening in fintech that will outlast the bull market and bear market. I think it’s just changed the market. I think the best example of this is Cash App in the Block ecosystem, where they have a clothing store. I actually as a joke sent a bunch of my hedge fund friends a bunch of their clothes. In the Wall Street banking world, you would never wear a Morgan Stanley or a Goldman Sachs shirt to a party. But Gen Zs are buying clothes from the Cash App clothing store and wearing them. And there’s a really fun commercial that Cash App just put out with Kendrick Lamar and Ray Dalio from Bridgewater, which I think is just so emblematic of this fusion of pop culture, hip hop and the consumerization of fintech. So, whether we’re in an up market or a down market, the advantage that a neobank has over a legacy bank is that it’s not saddled with 1,000 retail locations. I think the biggest opportunity for the next generation of neobanks is the fact that they can compete in this brand war with an authentic voice that consumers actually care about. What do you expect we’ll see happening in the short-term, and the long-term? High level, it’s still going to be a slower year for fintech. The velocity of deals has generally dropped by 75% since the peak last year. If I saw four deals last year, now I’m seeing one. I think that’s actually healthy for everyone. If I look at my portfolio, I don’t have any companies that are raising right now because they all raised last year and have three years of runway, and are just building and have to grow into the valuations they set last year. From the investor side, it’s really nice to not have a gun to your head in 48 hours to make a decision on a large investment. What we’re doing right now is taking our time doing the work around what are the areas we’re interested in, what are the best companies, and spending time with the founder is in a way that feels much healthier than it did a year ago. I expect this is kind of a new norm for the next few quarters. But there are deals getting done, especially in the early stages. We’re spending a lot of time trying to figure out not just who’s raising, but

Subscribe to Zebeth Media Solutions

You may contact us by filling in this form any time you need professional support or have any questions. You can also fill in the form to leave your comments or feedback.

We respect your privacy.
business and solar energy