Welcome to The Switch! If you received this in your inbox, thank you for signing up and your trust. If you read this as a post on our site, please subscribe here so that you can receive it directly in the future. Every week I check out the latest fintech news from the past week. This includes 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 our job to stay on top of it – and understand it – so you stay informed.
Hello! I am pleased to announce the introduction of two new additions to this newsletter. First, the wonderful Christine Hall will co-write with me to continue. Christine and I have actually known each other for 19 years, having worked together at the Houston Business Journal. She has been covering fintech for the past few years and I am thrilled that she will be working on The Interchange with me. Second, if you read to the end, you’ll see a logo created specifically for the Interchange by TC’s incredible graphic designer, Bryce Durbin. I’m ridiculously excited about it. — Mary Ann
Thank you so much to Mary Ann for that greeting! I am thrilled to be working with her in covering the wide world of fintech and look forward to contributing to what I biasedly consider to be the go-to newsletter for this industry. — Christine
Now on with the news.
Celebrating women-led businesses
I am, as many of you are sure to know, still disappointed with the lack of LP (limited partner) dollars flowing into female-led venture capital firms. So you can imagine my excitement when I received an email about a new venture called Vesey Ventures, which was founded by three female former Amex Ventures executives who had recently closed a $78 million debut fund.
Vesey’s self-described mission is to support companies in “transforming financial services” from inception through the Series B phase. It plans to invest $1.5 million to $3 million as initial checks, and larger amounts for follow-ons. Based in the United States and Israel, the fund has backed five startups to date, including Coast, Cyrus, Grain, Equi And Correct.
The trio wouldn’t say whether Amex is an LP in its new fund, but suggested there was no resentment when they all decided to leave (right at the same time in late 2021, mind you). Besides the fact that this means more money for fintech startups, I personally think it’s great that Dana Eli-Lorch, Lindsay Fitzgerald and Julia Huang have worked together for about a decade and got along so well as colleagues and friends that they decided: ” Hey, let’s do this alone.
Clearly, their track record impressed enough LPs — including seven “prominent” public limited 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 worked extensively helping fintechs establish partnerships with established financial institutions – experience they plan to use to offer portfolio companies customized “Strategy Sheets” alongside term sheets.
Vesey defines fintech in its broadest sense, meaning investing outside of traditional financial services categories such as consumer and B2B. It also looks at vertical software, embedded fintech, the future of commerce and the infrastructure layer, such as cybersecurity, risk and compliance.
It made my week to be able to cover this news, not to lie. On to more money flowing to female investors and founders!!
Speaking of which, I also reported on the $15 million raise for Kindred, a home exchange network. Although that 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 continue independently. — Maria-Ann
Fintech financing in Q1
This week we took a look at global fintech funding for the first quarter of 2023 and found some noteworthy tidbits.
To begin with, funding for the quarter totaled $15 billion, which is 55% more than in Q4, but there is clearly a market correction due to the staggering amounts fintech companies have in both 2021 and 2022 fetched.
And it’s important to note that of that $15 billion, $6.5 billion was Stripe’s raise. Without that deal, funding would have been $8.5 billion, or a 12% drop in funding from Q4 2022, according to CB Insights.
Meanwhile, 2022 was tied with fintech companies achieving unicorn status, with 72 unicorns minted that year, and 38 in the first quarter alone. That was likely aided by the abundance of available capital pouring into the industry; in the first quarter of 2023, only one fintech company got a unicorn: Egypt-based MNT-Halan, which raised $260 million in equity financing at a $1 billion valuation in early February. This is evident from the latest State of Fintech from CB Insights reportthis is the first time since the end of 2016.
While MNT-Halan was the only company to earn a horn, the first quarter was ripe for “megarounds,” the term for deals valued at $100 million or more. There were 16 deals like this, totaling $9.2 billion, up 179% from Q4 2022 and accounting for 61% of total funding in Q1, CB Insights reported. After Stripe’s $6.5 billion deal came Rippling, which raised $500 million in mid-March as Silicon Valley Bank was melting down. In particular, the number of deals fell, with a 24% quarter-on-quarter decline. — Christina
Apple pushes further into fintech
Does every tech company want to become a fintech? As reported by Romain Dillet, “Apple Card customers in the US can now open a savings account and receive interest through an Apple savings account. Click here to learn more about Apple’s new offerings. When the company originally announced the new financial product in October, Apple said it couldn’t share what interest rate would be paid on these accounts because rates fluctuate so widely these days. As of today, Apple offers 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 realize higher returns on their money through the tech giant’s new savings account (offered in partnership with Goldman Sachs) — when properly integrated into the Apple ecosystem – “is credit negative for established banks and cash alternatives such as money market funds.”
As we know, the new savings account deepens Apple’s financial services product offerings, which already include a digital wallet, credit card and the buy now, pay later credit offering, Apple Pay Later. As Moody’s notes, “the expansion aligns with a common strategy among technology companies to increase the scope, utility and appeal of their digital platforms.”
“If Apple aggressively promotes the savings product, it could attract a significant amount of savings into the Apple ecosystem and away from traditional banks. The partnership would allow Goldman Sachs to benefit from increased deposit financing through the broad reach of Apple’s digital ecosystem,” said Stephen Tu, vice president at Moody’s Investors Service, in a written statement.
Moody’s added: “While there are already much higher-yielding cash alternatives available to most consumers, Apple’s above-average interest rate on the account, combined with its simple and easy-to-use ecosystem, could encourage consumers to transfer money to the Apple accounts.” platform of established financial institutions.” — Maria-Ann
(Disclosure: My husband works for Apple, but is not related to this project in any capacity.)
Other weekly news
Greenwood – a digital banking platform for black and Latino individuals and businesses – goes live for everyone, cancels waiting list (ukbusinessupdates.com covered the company’s $40 million raise in 2021 here.)
Online real estate company Opendoor is cutting 22% of its workforce (ukbusinessupdates.com covered the company previous round of layoffswhich affected 18% of the workforce last November.)
Matt Harris of Bain Capital Ventures published a piece about how banks should work with startups: Lessons from Ancient Rome: How Banks Can Learn to Love Startups
Financing and Mergers and Acquisitions
Seen on ukbusinessupdates.com
Autotech Ventures’ new $230 million mobility fund adds fintech, circular economy to its investment strategy
Accounting automation startup Trullion secures $15 million investment
Here’s that logo I promised! Isn’t it beautiful?!
That’s it for this week. It felt a bit slow, but hey, sometimes that’s okay 🙂 Hope you all have fantastic and fun weekends! Until next time. xoxoxo, Mary Ann and Christine