Early-stage fintech startups just got a new source of funding

Welcome to The Exchange! If you received it in your inbox, thank you for subscribing and for your vote of confidence. If you read this as a post on our site, subscribe here so that you can receive it directly in the future. Each week, I’ll take a look at the hottest fintech news from the previous week. This will include everything from funding rounds and trends to analysis of a particular space and hot shots on a particular company or phenomenon. There’s a lot of fintech news out there and it’s our job to stay up to date – and make sense of it – so you can stay up to date.

Good morning! I am delighted to announce the introduction of two new additions to this newsletter. First, the amazing Christine Hall will be co-writing with me in the future. Christine and I have known each other for 19 years, having worked together at the Houston Business Journal. She’s been covering fintech for a few years and I’m excited to have her working on The Interchange with me moving forward. Second, if you read to the end, you’ll see a logo created especially for Interchange by TC’s amazing graphic designer, Bryce Durbin. I’m ridiculously excited about this. — Mary Ann

Many thanks to Mary Ann for this greeting! I’m excited to work with her to cover the vast world of fintech and look forward to contributing to what I biasedly consider to be this industry’s go-to newsletter. — Christina

Now on to the news.

Celebrating women-led businesses

Like many of you, I’m sure, I continue to be disappointed by the lack of LP (corporate limited partnership) dollars flowing to women-led venture capital firms. So you can imagine my excitement when I received an email about a new venture capital firm, called Vesey Ventures, which was founded by three former managing directors of Amex Ventures who had recently closed an initial fund of 78 millions of dollars.

Vesey’s self-proclaimed mission is to support companies “transforming financial services” from seed to Series B. He plans to invest $1.5-3 million as initial checks and larger amounts for follow-ups. Based in the United States and Israel, the fund has so far backed five startups, including Coast, Cyrus, Grain, Equi and Proper.

The trio didn’t say if Amex is an LP in their new fund, but hinted there were no hard feelings when they all decided to leave (at the exact same time in late 2021, mind you). Personally, besides the fact that it means more money for fintech startups, I love that Dana Eli-Lorch, Lindsay Fitzgerald and Julia Huang worked together for about a decade and got along so well as colleagues and friends that they decided, “Hey, let’s do this on our own.

Clearly, their track record impressed enough LPs – including seven unnamed “prominent” financial institutions – that they were able to close the fund in a very challenging macro environment. During their time at Amex, they worked on investments in companies such as Plaid, Stripe, Melio and Trulioo. They’ve also done a lot of work helping fintechs partner with incumbent financial institutions — an experience they plan to use to offer portfolio companies bespoke “strategy sheets” alongside term sheets.

Vesey defines fintech in its broadest sense, that is, investing outside of traditional financial services categories such as consumer and B2B. It also looks at vertical software, integrated fintech, the future of commerce, and the infrastructure layer, like cybersecurity, risk, and compliance.

It’s been my week to have the opportunity to cover this news, I’m not going to lie. Here’s more money for women investors and founders too!!

Speaking of which, I also covered the $15 million raise for Kindred, a home exchange network. Although this company is more proptech than fintech, I mention it because it was also founded by women who previously worked together – in this case, at Opendoor – and saw an opportunity to branch out on their own. -Mary Ann

Fintech funding in Q1

This week, we looked at global fintech funding for the first quarter of 2023 and found some notable insights.

First, funding for the quarter totaled $15 billion, a 55% increase from the fourth quarter, but clearly showing a market correction due to the staggering amounts fintech companies raised in 2021 and 2022.

And, it’s important to note that of that $15 billion, $6.5 billion was Stripe’s raise. Without the deal, CB Insights said the funding would have been $8.5 billion, a 12% drop in funding from the fourth quarter of 2022.

Meanwhile, 2022 has seen fintech companies achieve unicorn status, with 72 unicorns minted that year and 38 in the first quarter alone. However, this has probably been facilitated by the plethora of available capital flowing into the sector; in the first quarter of 2023, only one fintech company received a unicorn: Egyptian company MNT-Halan, which raised $260 million in equity funding in early February at a valuation of $1 billion. According to the latest State of Fintech report from CB Insights, this is the first time this has happened since late 2016.

Although MNT-Halan was the only company to earn a horn, the first quarter was ripe with “megarounds,” the term for deals valued at $100 million or more. There were 16 deals like this, totaling $9.2 billion, a 179% increase from Q4 2022 and representing 61% of total funding in Q1, CB Insights reported. After Stripe’s $6.5 billion deal, Rippling raised $500 million in mid-March as Silicon Valley Bank collapsed. Notably, the number of transactions declined, dropping 24% quarter over quarter. — Christina

Apple pushes further in fintech

Do all tech companies want to become a fintech? As Romain Dillet reports, “Apple Card customers in the US can now open a savings account and earn interest through an Apple Savings Account. To learn more about Apple’s new offering, click here. When the company initially announced the new financial product in October, Apple said it couldn’t share the interest rate that would be paid on those accounts because rates fluctuate so much these days. Starting today, Apple will offer an APY of 4.15%.” You can read more details about the move here.

Meanwhile, Moody’s Investors Service has released a new report summarizing its view that consumers’ ability to earn higher returns on their money through the tech giant’s new savings account (which is offered in partnership with Goldman Sachs) – if well integrated into the Apple ecosystem – “is a negative credit for incumbent banks and cash alternatives such as money market funds.”

As we know, the new savings account deepens Apple’s financial services product offering, which already includes a digital wallet, a credit card, and its credit offering buy now, pay later, Apple Pay Later. . As Moody’s points out, “The expansion aligns with a common strategy among technology companies to increase the reach, usefulness and appeal of their digital platforms.”

“If Apple promotes the savings product aggressively, it could draw a significant amount of savings into the Apple ecosystem and away from traditional banks. Through this partnership, Goldman Sachs could benefit from increased deposit funding through broad reach of Apple’s digital ecosystem,” Stephen Tu, vice president of Moody’s Investors Service, said in a written statement.

Moody’s added, “While there are already many high-yield cash alternatives available to most consumers, Apple’s above-average interest rate on the account, combined with its simple, easy-to-use ecosystem use, could encourage consumers to transfer funds to Apple’s platform for incumbent financial institutions – Mary Ann

(Disclosure: My husband works for Apple, but in no capacity related to this project.)

Other weekly news

Lili claims super app status with a new accounting platform

Greenwood – a digital banking platform for black and Latino individuals and businesses – goes live for all and cancels the waitlist (TechCrunch covered the company’s $40 million increase in 2021 here.)

UK-based Finastra partners with Plaid to give users access to fintech apps

Airbase adds guided procurement to its spend management platform

Online real estate company Opendoor cuts 22% of its workforce (TechCrunch has covered the previous round of layoffswhich affected 18% of its workforce at the time, last November.)

Matt Harris of Bain Capital Ventures posted about how banks should work with startups: Lessons from Ancient Rome: How Banks Can Learn to Love Startups

Financing and M&A

Seen on TechCrunch

Autotech Ventures’ new $230 million mobility fund adds fintech and circular economy to its investment strategy

Accounting automation startup Trullion lands $15 million investment

And elsewhere

Wealthtech-proptech-fintech crossover Plotify raises $12.5M in equity funding

Actor Ryan Reynolds buys a job at Canadian payments technology company Nuvei

Insurtech Capitola raises $15.6M Series A from Munich Re

Clerkie Raises $33M in Series A Funding From Top Investors to Fix Broken Debt System

French Spend Management Company Mooncard Wins €37M Series C Funding

College Funding Startup YELO Funding Announces $1.2M Pre-Seed Funding

TiiCKER, a Loyalty and Shareholder Engagement Platform, Raises $5M in Fundraising Round

Home tech company Habi receives $100 million credit facility from Victory Park Capital

Waste management payments startup CurbWaste raises $4 million

Now here’s that logo I promised! Isn’t that pretty?!

It’s all for this week. It was a bit slow but hey, sometimes it’s ok 🙂 Hope you all have a fantastic and fun weekends! See you next time. xoxoxo, Mary Ann and Christine