Welcome to The Interchange! If you received this in your inbox, thank you for your subscription and vote of confidence. If you are reading this as a post on our site, please register over here So you can receive it directly in the future. Every week, I look at the hottest fintech news from the previous week. This includes everything from funding rounds to trends to niche analysis to hot takes on a specific company or event. There’s a lot of fintech news out there and it’s my job to stay on top of it – and understand it – so you can stay informed. – Mary Ann
Last week, I dug into CB Insights’s State of Fintech 2022 report. We’ve already discussed that fintech funding is not only low, it’s low.
And I’m not foolish enough to attempt any accurate predictions about the state of fintech in 2023.
Instead, I will highlight some of the findings of that report that stood out to me and that I did not write about.
Digital loan funding is down 53% to $11.5 billion by 2022. In the fourth quarter, dollar increases and deal volume fell to their lowest level since 2020 – with $1.6 billion collected on 121 deals. That’s a big drop even in the first quarter of 2022, when we saw $5.3 billion raised across 198 deals.
It’s not too hard to guess why this is. In the year In 2022 we have seen inflation and interest rates rise and startups are paying the price with higher defaults and defaults due to loose underwriting standards. So when investors think about where to put their money, frankly, digital lending startups are bound to be high on their list.
But guess where we’ve seen more money cuts? Banking. Globally, bank financing slipped by 63 percent, or nearly two-thirds, according to CB Insights. Throughout 2022, banking startups raised $9.4 billion in 299 deals. That compares to $25.3 billion raised in 447 deals by 2021.
There have been many challenger banks that have been born in recent years, it is not surprising that the sector is overcrowded. My guess is that In 2023 and beyond we will see the true existence of the figures. Heck, even Decacorn Chime struggled, as evidenced by his sack in the fourth quarter.
Meanwhile, payments remain the darling of the fintech space, with the segment leading overall funding and deals in the fourth quarter of 2022. About $3.4 billion was raised in 188 deals in Q4 — nearly double the $1.8 billion raised in 62. Deals by bank startups during the same three-month period. With more businesses and consumers choosing to pay for things digitally, even in a post-pandemic world, this is hardly surprising.
And finally, wealth technology has put on an impressive show in terms of investor interest. Wealth technology companies brought in $1.7 billion in 164 deals in the fourth quarter. And I think this reflects an effort on the part of all generations to think ahead about their money, not just for short-term gratification.
Anisha KotappaCB Insights’ lead fintech analyst, believes last year’s funding numbers reflect more of a correction than a bubble.
Of course I still believe fintech is still in its infancy, I think people will go a little too crazy, too fast and probably too many companies in 2021. Shouldn’t They received financial support. So it’s hard to say whether it’s a correction or a bubble. Either way, let’s hope 2023 brings more diligence, less ego, and more effective business models.
We certainly don’t need a repeat of last year.
A failed fintech startup Bolt Last week, it announced the launch of a multimedia campaign featuring the ad, which will air on Hulu, Peacock, ESPN, ABC, NBC and other networks, as well as a new brand that includes a meme generator “for any internet user to play along with.” to find their own superhero,” a company spokesperson told me in an email. The company will soon “run an influencer campaign where creators can dive into #doltalk,” a spokesperson said. AdAge speculates that fintech startups are using memes in an effort to “connect with Gen Z.”
From Axios: “The Retail Platform Robin Hood He is launching Sherwood, an independent media brand led by veteran tech editor and media entrepreneur Joshua Topolsky. The entity builds on the success of Robinhood’s popular daily markets newsletter, Snack, and serves as a branding and customer acquisition tool. Sherwood Media is structured as an independent LLC that exists as a subsidiary of Robinhood, in part to ensure that content produced at Sherwood remains editorially independent.
Snafus can happen even when defaults and fintechs are partners. According to The Charlotte Observer: “Bank of America Online transactions are experiencing delays. Cell For most of the day on Wednesday (January 18), however, those problems were resolved by afternoon, the bank said. On outage tracker DownDetector.com, angry customers reported losing funds and unexpected negative balances due to problems with the digital payment network.
How can fintech startups survive the VC winter? BaaS startup founder and CEO Peter Hazlehurst. SyntheraHe shares his thoughts in this TC+ article here.
CFO Dive reports: “Based in Wilmington, NC nCino CFO David Rudo will leave Cloud Banking effective January 31, according to a Wednesday press release and a company spokesperson. Greg Orenstein, chief corporate development and strategy officer, will move to the CFO seat.
Nihar Boba has left Wharton “deep down” to join a fintech-focused venture firm. A better tomorrow venture As a principal, accordingly Twitter. He has been a venture partner there since last March, according to his LinkedIn profile.
Anyone who has recently tried to buy a new car will appreciate this. Publicly traded. FirstThe artificial intelligence (AI) lending marketplace has added two new applications to its auto retail platform — digital financing and online sales — to give dealers a “seamless online to in-store car buying experience, from search to underwriting.” Listen to this week’s Fairness Podcast to hear more shout-outs on this topic and other fun stuff.
A recent panel discussion between VCs Mercedes Benz Lightspeed Venture PartnersVictoria Traeger of Happy venture and Jillian Williams of Cowboy Venture Connie Loizos, TC editor and founder of StrictlyVC, tackles a number of hot topics in the fintech world. As Connie writes: “If you’re a fintech founder, investor or regulator, you’ll want to get the full discussion — which covers regulation, talent in the industry, and crypto” in the video linked here.
Eric Neumer, a very talented tech journalist, still says, “It’s amazing JPMorganThe decision to sue the founder of the student loan company FrankAfter she bought the startup for $175 million, she accused CEO Charlie Javis of “helping defraud millions of customers to get the bank to buy her company.” (We still appreciate it!) I agree 100% here: “While I admire JPMorgan for holding an alleged fraudster accountable, the bank seems foolish for not noticing.” before It seems that many of Frank’s customers were defrauded by buying the company. All of this leads Eric to ask: “If JP Morgan sues a start-up founder, will 2023 be the year of accountability?”
Mass market Fair It announced last week that it was building what it described as a “brands app” to give independent brands a way to manage their businesses – “all from their phone.” So what is the fintech tie? A spokesperson told me via email: “With this brand new app, customers can manage orders from anywhere at any time – meaning they’ll never miss an order to earn extra cash.
Reported fintech finance news: Turkish fintech companyImpatient . . . [announced] Starting an insurance arm. Currently live are mobile and pet insurance products, with more coming in the first half of the year…. This is the first time that Papara’s product line has been launched outside of its core banking and money management products since its inception six years ago. It marks the next step in Papara’s mission to become one of Europe’s leading financial super apps, providing consumers with all the accessible and affordable financial services they need in one place. More here.
The relationship between incumbents and upstarts has long been complicated. Cartoonist Ian Foley depicts the start of the consolidation and MA process that the fintech market is beginning in earnest. over here.
QED-backed Nigerian fintech team Apt launched a new brand in 2019, piloting its flagship product Moniepoint, which uses POS devices to meet the financial needs of underbanked and unbanked customers in Nigeria.
However, the platform has since evolved into a complete commercial banking solution. While Moniepoint retained its agency banking core, it began offering banking and operational tools such as working capital, business expansion loans, expense management (business payment cards), accounting and bookkeeping solutions, and insurance to small businesses that still operate as agents.
Moniepoint’s interactive nature among thousands of small businesses and millions of customers has made TeamApt’s most popular brand, among others, a white-labeled digital banking product for banks and enterprise software for small business management.
When we started in 2015, we were mainly providing back payment infrastructure to banks and needed a suitable team, hence the name TeamApt. Since then, we have evolved significantly and our flagship commercial banking solution, Moniepoint, has become our main focus and where we see the future,” CEO Tosin Enilorunda, founder and CEO of Moniepoint, said of the rebrand.
The Moniepoint brand has also monetized fintech. It currently accounts for the majority of POS transactions in Nigeria with an annual gross payment volume (TPV) of over $170 billion and over 600,000 businesses as customers, enabling it to more than double its annual revenue by 2022. In the year It has issued more than $1.4 billion in working capital loans through 2022.
With all this in mind, it’s easy to see a rebrand fit. Now, Moniepoint, a London-based company, claims to be profitable (as of 2020). QED’s first African investment, the US fintech-focused firm, led a $50 million+ pre-Series C round last July, and MoneyPoint’s price jumped into Sunnycorn territory.
Funding and M&A
Featured on TechCrunch.
Kenyan fintech Quara raises $3 million in seed funding, signs deal to reach over 4,000 credit unions
Link raises $30M to help merchants accept direct bank payments
P2P lending platform PeopleFund has raised a $20M Series C round led by Bain Capital.
Grazie wants to stop letting people use ‘no money’ as an excuse not to tip
Splitero raises $12 million to expand home equity investment operations
Insurtech iLife Technologies has raised $17 million
Fraudulent viewDayForward, a digital-only, full-stack life insurance startup, this week announces the closing of a $25 million round of funding led by AXA Venture Partners, along with existing investors HSCM Ventures, Juxtapose and Munich Re Ventures. In an effort to expand its own life insurance nationwide, it acquired Commercial Travelers Life Insurance. In the year Founded in 2021, the company says its term life insurance “guarantees that the policyholder’s family will receive their income in the event of the policyholder’s death.” The company’s latest funding round brings the total capital raised to $45 million. The funding will be used to grow the business nationally, develop new insurance products and “launch proprietary solutions through strategic partners”.
That’s it for this week. Thanks again for reading and sharing this. See you later! xoxo, Mary Ann