Fintech investors appear to be favoring later-stage deals as the sector takes a hit, recent data shows – TechCrunch


Welcome to The Exchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you are reading this as a post on our site, please sign up here so you can receive it directly in the future. Every week, I will take a look at the latest fintech news from the previous week. This will include everything from funding rounds to trends, an analysis of a particular space, and opinions 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 informed. Let’s go! — Mary Anne

I was mostly free last week, so this edition of The Interchange may be a bit less dense than normal. However, some observations. We saw fewer layoffs, but also less fintech-related news in general. In general, things were pretty calm and not filled with as much controversy as in recent weeks. Honestly, we can’t wait for this quarter to end so we can dig into the numbers and see how much the funding landscape has changed compared to 2021. Until then, we take a look at some recent numbers.

Fewer deals, bigger rounds, but still way down

My dear friends and co-hosts in the stock podcast, Alex and Natasha, last week discussed the fintech funding market not once, but twice, here and here. Meanwhile, there seemed to be an increase in fintech-related funding announcements. That made me curious to approach my old friends in Crunch base for some data on how much fintech startups have raised in recent weeks. (Note that this is preliminary and there is also a lag, so there will almost certainly be more transactions and dollars reported for the same time periods in the future.) I was mainly hoping to see an increase in numbers. And I did, more or less. Here’s what the data showed: Globally, funding was up very slightly in terms of dollars raised, but transaction volume was down significantly last week compared to previous weeks. Specifically, Crunchbase found that fintech startups raised $1.5 billion from June 16-23 in 39 deals, compared to $1.4 billion raised in 53 deals the week before and $1.2 billion in 59 deals 2 weeks earlier. . This tells us that there were more earlier stage deals closing earlier this month, whereas last week we saw far fewer deals but larger round sizes.

We saw a similar trend here in the US. According to Crunchbase, fintech startups in the US raised $400 million in 10 deals from June 16-23. That compares with $300 million raised in 14 deals the week before and $300 million raised in 17 deals 2 weeks earlier.

But particularly, and perhaps even more surprising, is the difference between these numbers compared to June 2021. Globally, fintech startups raised a total of $8.2 billion in 272 deals from June 1-23, 2021. 2021. That compares to a total of $4.2 billion worldwide. 151 deals during the same time period this year. Meanwhile, US-based startups raised $1.9 billion in 101 deals from June 1-23, 2021. That compares with a total of $1 billion in 41 deals during the same time period. this year. Wow. That’s like almost half of the dollars raised both globally and in the US. So while this is just a little snapshot in time, it’s still indicative of what we all know is happening: a slowdown. global funding and proof that fintech is not immune. .

For the record, Crunchbase defines fintech as companies that integrate technology into the financial services sector.

Takeaways: Fewer financing deals are being closed in the fintech space, and at least through June, investors seemed to bet more on later-stage companies, so dollars raised increased as the month progressed. This means it is likely to be increasingly difficult for early-stage companies to win over venture capitalists, who are reportedly doing more due diligence and requesting more traction than in the whirlwind that was 2021.

Photo: PM Images/Digital Vision/Getty Images

weekly news

buy it now, post payment market (BNPL), estimated to be worth $120 billion in 2021, has grown significantly in recent years. But for most of its rise to virtual checkout prominence, BNPL focused heavily on everyday consumer goods like clothes from Urban Outfitters or Peloton. Now the credit method is moving beyond its e-commerce roots. In recent months, large companies have joined the BNPL market, also hoping to quickly approve consumers for installment loans. Rebecca Szkutak digs deeper here.

Speaking of BNPL, Sweden’s Klarna has (finally) launched a new loyalty card feature in its app, which it says allows users to store and access all of their physical loyalty cards as digital versions, eliminating the need to carry physical cards while shopping in-store. The company is clearly working to increase its user base considering its valuation has been cut from $45bn to $15bn, a cut that our own Alex Wilhelm considers “high enough.”

Scoop: Three more senior executives digital mortgage lender Better.com have resigned, I reported last week. Those three executives are Jillian White, general manager of Better’s affiliated businesses known as Better+, which consists of its title/settlement, insurance and home inspection departments; Megan Bellingham, who was senior vice president of sales and operations; and John Moffatt, who served as vice president of sales.

Brex issued a mea culpa this week after his shocking announcement last week to stop working with SMEs. Pedro Franceschi, founder and co-CEO, addressed the stumble in a blog post titled simply “On Last Week’s Announcement.” In the post, Franceschi expressed his regret for the “bad job of explaining this decision, which eroded some of the valuable trust” that Brex had built over the years. He also outlined what criteria a company must meet to qualify to remain a Brex client.

Speaking of Brex and SMEs, Tillful: A Free Business Credit App created by VC-backed startup Flowcast – announced last week that it will launch a new feature for its users via a direct partnership with Experian in an effort to better report business credit scoring on SME and SME loans. The startup claims it is a “first-of-its-kind partnership” between a fintech and a major credit reporting agency “in an effort to make credit risk assessment more ‘open’.” Flowcast has developed AI-based credit models for lenders and is backed by ING Ventures and BitRock Capital. From To Full was releasedsays more than 50,000 small businesses have signed up to help manage and build their business credit.

This is where it gets even more interesting in light of recent Brex news: Flowcast’s latest move, a spokesperson told TechCrunch, reflects its “doubling down on SMBs.” Brex, that spokesperson added, was actually one of their partners, but Flowcast hadn’t heard from them “for quite some time, as they stopped engaging” with the company months ago: “We also haven’t received any communication from them in a long time.” “. time Brex cardholder and lending partner, but we are moving from their platform and will use our own card instead.”

Meanwhile, Mercury, a digital bank targeting startups, claims it has already seen hundreds of new accounts on its platform in the wake of the Brex announcement and is “seeing more every day,” a spokesperson told TechCrunch on 24 June. June.

Brazilian digital real estate broker QuintoAndar launched last week in Mexico City, the first time that the startup has expanded outside its country of origin. It will operate in the country under the “Benvi” brand, which will be the international name of proptech. Last August, QuintoAndar announced that it had raised $120 million at a valuation of $5 billion. In April, the company laid off 160 peopleor 4% of its staff, making it one of the few highly valued Brazilian startups to cut jobs.

Since we are on the topic of LatAmBrazilian digital bank Neon has announced that it has hired a Silicon Valley tech veteran who has worked at Google, Snap, and Coinbase as its new chief technology officer. Andre Madeira is the former co-founder and CEO of Meemo, which was acquired by Coinbase last year.

Vishal Garg layoffs Better.com, admits that

Image credits: Leaked meeting recording/Better.com (TechCrunch)

Financing and M&A

Spotted on TechCrunch

Ghanaian fintech Fido raises $30M to launch new products and expand in Africa

Neobank Stashfin Raises $270M, Surpasses $700M Valuation

Fintech Kasheesh wants financially troubled customers to say ‘goodbye’ to BNPL

SumUp raises $624 million at an $8.5 billion valuation, with its merchant and payment technology now used by 4 million SMEs

and elsewhere

Agent-focused home insurer openly closes $75 million funding round

UK-based B2B fintech BNPL Hokodo raises $40M in Series B funding round

Fintech giving access to earned wages Tapcheck lands $20M Series A

Deel participates in a public offer to acquire the Australian-based payroll company PayGroup

Well, that’s all for this week. Once again, thanks for reading. Enjoy the rest of your weekend! See you next time. xoxo, mary ann

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