Silicon Investor - Fintech

[benbuffett] Yes Marco I own a few shares that I got via ipo through SoFi platform. Definitel...

benbuffett — 1/26/2026 3:55:22 PM

Yes Marco I own a few shares that I got via ipo through SoFi platform. Definitely a fast grower in South America and Mexico.

[Marco Vincenzo] Fast growing Brazilian fintech Nubank (NYSE:NU) worth watching. They are an onl...

Marco Vincenzo — 12/11/2025 1:41:57 AM

Fast growing Brazilian fintech Nubank (NYSE:NU) worth watching.

They are an online bank that offers services such as credit cards, checking account, investing support, transactions, etc. Strong financials, tremendous growth rate, filed for U.S Bank Charter in September 2025.
Lmk your thoughts if you heard about it before.

Marco.

[benbuffett] Very fast growing fintech bank SoFi became the first U.S. nationally chartered b...

benbuffett — 11/21/2025 9:10:08 AM

Very fast growing fintech bank SoFi became the first U.S. nationally chartered bank to offer crypto trading to consumers on November 11, 2025. The service, called SoFi Crypto, allows customers to buy, sell, and hold cryptocurrencies like Bitcoin and Ethereum directly within the SoFi app. Its growth is driven by its "one-stop shop" digital platform and an expanding product suite, including lending, deposits, investing, and crypto trading.

[benbuffett] Anyone follow SOFI TECHNOLOGIES fast growing bank/fintech? Led by CEO Anthony No...

benbuffett — 9/22/2025 1:13:47 PM

Anyone follow SOFI TECHNOLOGIES fast growing bank/fintech? Led by CEO Anthony Noto ex Goldman Sachs, NFL and Twitter executive. There target mkt is the HENRY's high earners not rich yet.

[David] 2025 IDC FinTech Rankings www.idc.com/research/industry/fintech-rankings/

David — 9/20/2025 6:14:11 PM

[Glenn Petersen] HOOD up approximately 4% this morning, Robinhood buys back shares once owned by...

Glenn Petersen — 9/1/2023 11:28:10 AM

HOOD up approximately 4% this morning,

Robinhood buys back shares once owned by Sam Bankman-Fried

Dan Primack, author of Axios Pro Rata
Axios
September 1, 2023

Stock-trading app Robinhood on Friday said it paid nearly $606 million to repurchase shares held by an affiliate of jailed crypto king Sam Bankman-Fried.

Why it matters: Robinhood shares jumped on the news, as it became the latest company to disentangle from the former FTX CEO.

Details: The repurchase covers all 55,273,469 shares bought in May 2022 by Emergent Fidelity Technologies, which represents over 7% of Robinhood's outstanding shares.

-- It was conducted via an agreement with the U.S. Marshal Service.

Robinhood buys back shares once owned by Sam Bankman-Fried (axios.com)

[Julius Wong] Why did Upstart stock jump up today? Many fintechs rally Jun. 01, 2023 4:21 PM ...

Julius Wong — 6/1/2023 9:26:49 PM

Why did Upstart stock jump up today? Many fintechs rally

Jun. 01, 2023 4:21 PM ET
Upstart Holdings, Inc. (UPST) LC, LDI, RKT, BLND
By: Max Gottlich, SA News Editor
2 Comments

solarseven/iStock via Getty Images

Upstart Holdings (NASDAQ: UPST) stock ended Thursday's session 9.2% higher as traders raised their expectations for no interest-rate hike at the rate-setting Federal Open Market Committee's June 13-14 meeting.

A slew of fintech stocks caught a bid, including Blend Labs ( BLND) +3.1%, LendingClub ( LC) +1.1%, loanDepot ( LDI) +2.7% and Rocket Companies ( RKT) +1%, though UPST, which provides lending platforms for banks and other financial institutions, was among one of the biggest winners. To be sure, all three major U.S. stock market indices closed comfortably in the green.

Federal funds futures traders priced in a 77.3% chance of no rate hike in June, up from 73.6% a day ago and 48.3% in the prior week, according to CME's FedWatch tool, as Philadelphia Fed President Patrick Harker called for skipping an increase.

While a skip does not necessarily mean that rate hikes will not come back to effect, the potential for such a move offers some relief in the sense that consumers and business are less likely to borrow in a higher rate environment.

[IcYYachtY] Hey all, Short seller Edwin Dorsey posted a short sell on Hercules capital (HTGC...

IcYYachtY — 4/21/2023 5:38:08 PM

Hey all,
Short seller Edwin Dorsey posted a short sell on Hercules capital (HTGC). Basically accusing HTGC of owning numerous tech and biotech stocks that have crashed over the past 1-1.5 yrs. No other news or short sellers seem to have picked up on this. Also, various sites still list HTGC as a buy. Just curious if anyone has more insight into Hercules?

[Glenn Petersen] Stripe says in annual letter that it processed $817B in transactions in 2022, bu...

Glenn Petersen — 4/5/2023 5:01:45 PM

Stripe says in annual letter that it processed $817B in transactions in 2022, but growth has definitely slowed

Ingrid Lunden @ingridlunden
TechCrunch
11:31 AM CDT•April 5, 2023

Stripe, the payments and fintech giant currently valued at $50 billion, sometimes feels like it has been forever on the brink of a public listing. But in the absence of any concrete IPO moves and the transparency that the listing process brings with it, today it published an annual update with a few new numbers that paint a picture of where the company is standing right now.

According to the update signed by co-founders and brothers Patrick and John Collison (CEO and president, respectively), Stripe processed transactions totaling $817 billion in 2022, up 26% from 2021 (when it processed $640 billion), and its big company list has grown. Stripe now has more than 100 companies each processing more than $1 billion in payments over the platform.

The number of new customers is up by 19% this year, averaging out to 1,000+ new businesses joining daily. And Stripe also seems to be finding that its resonance with new customers is expanding geographically: While the U.S. is still Stripe’s biggest market, it said that 55% of new customers came this year from other countries. (Stripe’s active in 50 markets currently.)

This is the second year running that the Collisons have published this note ( here is the one from April 2022). I’ve been told that they’ve been writing them for years for internal purposes, and so you might think that publishing more openly may speak to building a more public profile. But if that is the case, it’s one that is very well controlled.

You won’t find simple answers to tough questions — or much mention of the tough questions, either.

Stripe raised $6.5 billion on a $50 billion valuation last month, a major step down from the $95 billion valuation it had two years prior. In 2022, we asked if Stripe was “cheap” at $95 billion. Well, we have an answer to that now: It looks now like it was opposite, that it was overvalued by some $45 billion. That begs the question of whether it’s still overvalued now at $50 billion. That’s a topic not explored in the letter.

Nor does the letter touch on one of the very biggest themes of the last year in tech: layoffs. Not only is this, and the bigger layoff trend, omitted in the year in review, but Stripe notably doesn’t include any mention at all about its employees, employee numbers or where it currently stands on hiring. Stripe has not been immune to these itself, letting go of 14% of its staff in November, so obviously it’s a theme that is pretty close to the company and its strategy.

There are other things it would be great to know more about, such as where the company currently sits with revenue and profit (or loss).

Or what percentage of its business is attributable to its core payments product these days, versus the performance of its newer and adjacent lines of business tools in areas like tax, fraud protection, company incorporation and so on?

And while Stripe has been a major story on the venture investing front for years, it’s also been amassing quite a big portfolio of investments itself. Some of these are financial, the company has said in the past, but some might be interesting maneuvers to help. How are they doing, and is there a big-picture strategy behind that activity?

One thing that you can glean from the letter — although it’s not explicitly stated — is that growth is most definitely slowing. Transaction volumes this year may have been up 26%, but the year before the rate was 60%. And 1,000 new companies a day is an impressive number, but not as impressive as 1,400/day a year ago.

Granted, part of the expansion in business last year was due to the huge boost in online payments during the peak of the COVID-19 pandemic, but it underscores how any company working in digital commerce, even the most golden of them, still are facing very different realities now, some of them are quite difficult.

The company’s strategy for years has been one of diversification: It’s rolled out many services that complement its core payments product, banking on these being a great way to build stronger relationships with customers, and to hopefully build out bigger revenue streams and margins, too. That’s likely something that we will see a lot more from the company, sometimes chasing the newest shiny concept — be it cryptocurrency or generative AI — or sometimes just addressing very classic pain points for those running businesses online, such as collecting sales tax in multiple jurisdictions.

It’s clearly a massive business, and a massive opportunity. As Jareau Wadé eloquently lays out in a recent essay, Stripe’s impact and place in the market in the last decade have been undoubtedly huge, but its success is not inevitable, and with a plethora of competitors and choices for users out there, that success may not look like a boom in the greater scheme of things. Not something you might read in Stripe’s letter, but a salient point all the same.

Stripe says in annual letter that it processed $817B in transactions in 2022, but growth has definitely slowed | TechCrunch

[Old Stock Collector] $FDCT FDCTech, Inc. fdctech.com (877)445-6047 info@fdctech.com The Compa...

Old Stock Collector — 3/9/2023 11:03:58 AM

$FDCT FDCTech, Inc.

fdctech.com

(877)445-6047

info@fdctech.com

The Company is headquartered in Irvine, California.

Investor Deck: fdctech.com

FDCTech specializes in buying and integrating small to mid-size legacy financial services companies. The Company develops and delivers a full suite of technology infrastructure solutions to FX, Crypto, Wealth Management, and other future-proof financial sectors. We are building a diversified global financial services company driven by proprietary Condor trading infrastructure, complementary regulatory licenses, and a proven executive team. The Company was incorporated on January 21, 2016, as Forex Development Corporation, under Delaware laws. On February 27, 2018, the Company changed its name to FDCTech, Inc.

FDCTech has two primary business segments, (1) Wealth Management and (2) Technology and Software Development.

FDCTech Simplified and Gamified Condor Stocks & ETFs App for Stocks, ETFs, and other high-growth financial securities

The Company expects to build the next-generation trading technology, multi-jurisdiction market access, transparent revenue model, and disclosures of any conflicts1 between end-users ("Investors"), the Company, and its liquidity provider. As a result, the Company expects to deliver a cost-effective and seamless experience, distinct from existing offerings.

Highlights of the Condor Stocks and ETFs platform:

Server Side & Back Office Enhancements to Support up to 12,000 symbols with enhanced symbol management and symbol icon display.

End-user creation of watch lists for up to 100 trading symbols at a time.

Advanced trading features such as social and copy trading, and much more.

FDCTech Completed 51% Acquisition of AD Advisory Services Pty Ltd.

Digital wealth management company with annualized revenue of $5.91 million and well-positioned for rapid growth through FDCTech's software development capabilities combined with ADS' proven executive team and client-centric financial advisors.

$540 million funds under management (FUM) through approximately 28 licensed advisers with 20 offices across Australia.

Access to the Australian Financial Services License (AFSL) enables the Company to provide a wide variety of financial services, including but not limited to financial product advice for various asset classes and deal in financial products with retail and wholesale clients.

FDCTech reports 1,985% leap in six-month revenue reflecting the continued successful integration of its wealth management business

For the six months ended June 30, 2022, the company posted revenue of $3,066,971 up from $147,078 in the same period of 2021

Jonathan Thomas of AD Advisory Discussing Work with FDCTech

youtube.com

FDCTech has Digital solutions Robo Advisory game changer in Australia

Since then they acquired a 80% interest in a USA broker and a 50.1% interest in an international broker in Malta

CIM Securities, LLC
cimsecurities.com
CIM Securities, LLC (herein referred to as "CIM Securities") is a broker-dealer registered with the United States Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). As a broker-dealer, CIM and our Investment Professionals offer brokerage services.

NSFX Ltd.
nsfx.com
NSFX Limited (the "Company") is a limited liability company registered under the Companies Act, Cap. 386 of the Laws of Malta with registration number C 56519. The Malta Financial Services Authority regulates NSFX with a License Number IS/56519. NSFX is authorized to deal on its account as a Category 3 licensed entity by the MFSA, receive and transmit orders on behalf of retail and professional clients, and hold and control clients' money and assets. NSFX trading platform services in the English, French, German, Italian, and Arabic markets, whereby customers can trade in currency, commodity, equity, and cryptocurrency-linked derivatives in real time.

FDCTech received regulatory approval from MFSA's Investment Services Supervision Department in October 2022. On January 6, 2023, FDCTech, Inc. Completed the acquisition of 50.1% in NSFX Limited.

FDCTech acquired a majority controlling position in New Star Capital Trading Ltd. and its subsidiary, strengthening its strategic focus on the online retail brokerage business.

$FDCT Acquire, Transform, Scale. Online Brokers, Financial Services, Crypto Providers.

fdctech.com

Software Driven Acquisition Company

FDCTech plans to achieve transformative development milestones for the Company, employees, shareholders, and the clients we serve.

FDCTech wants to be like eToro

What has been FDCTech been working on to get there like eToro?

FDCTech CFO Imran Firoz

youtube.com

Other youtube: youtube.com

OTC MARKETS: FDCT

OTCQB Member

OTCQB Current Information

Authorized 500 Million

O/S 216,584,729

Float 24,913,953

[Glenn Petersen] Stripe Can’t Lose But the the payments company’s dominance no longer seems inev...

Glenn Petersen — 2/9/2023 4:40:37 AM

Stripe Can’t Lose

But the the payments company’s dominance no longer seems inevitable
BY JAREAU WADÉ
Every
FEBRUARY 7, 2023

For the last decade, Stripe could do no wrong. When the payments technology company—used by companies such as Amazon, Instacart, and Shopify—launched in 2010, it revolutionized the industry, making it much easier for small companies to accept payments. Entrepreneurs and software developers adored Stripe. Venture capitalists loved the company even more, pouring billions of dollars into the business, which made it, for a time, the most valuable private company in the U.S. at $95 billion.

Within the broader tech industry, buyers have thirsted after Stripe shares on the secondary market, and working at Stripe began to signal the same level of intelligence and future potential that working at Google and eBay had in previous eras. Today, in the midst of a tech recession, many are hoping that Stripe can save the rest of the industry by being the first to go public, thereby opening up the opportunity for other companies to do the same.

But the picture is decidedly less rosy for Stripe than it was, say, two years ago. The company has had its wins—announcing partnerships with Amazon, launching new products, being named a Forrester Wave Leader—but for perhaps the first time in the company’s history, Stripe finds itself in a seemingly unfamiliar scenario: not everything is going its way.

There was the unfortunate public kerfuffle with fellow fintech darling Plaid in May 2022, in which Stripe defended itself against allegations of unscrupulous conduct after it released Financial Connections, a product directly competitive to Plaid’s core offering—after Stripe had offered Plaid to its clients instead of its own product.

Then came reports that mutual funds like Fidelity Investments and T. Rowe Price were marking down their holdings in Stripe by as much as 64%. Stripe has marked down its internal valuation three times since June 2022.

In November 2022, amid a broader tech slowdown, the company laid off 14% of its staff, stating that the company " grew operating costs too quickly." Recent reporting from The Information has revealed that Stripe plans to provide liquidity to employees—some of whom have restricted stock units, or RSUs, that are set to expire 10 years after they were initially issued—by going public through a direct listing or by continuing to raise funds from private investors. The Information’s reporting also uncovered concerns about the company’s financials: slowing revenue growth and a lack of profitability.

Stripe isn’t doomed—but its success is not inevitable. Nor will it be the only winner in the payments industry.

Stripe is an innovative company that is facing competition as it moves upmarket and fends off new entrants as the market expands. As Stripe approaches an eventual public offering, it must become more disciplined in its spending, learning to balance investments in long-term growth with near-term profitability. Let’s take a look at where Stripe started from and what it’s up against in 2023 and beyond.

Early innovation

Stripe is famous for catering to developers, an overlooked but increasingly important buyer persona in internet-economy companies, but the company’s real innovation in the early days was making payments more accessible and invisible than other offerings at the time. When Stripe launched in 2010 there were two advantages that made it stand out relative to the competition: it offered a white-label solution and (nearly) instant access to payments acceptance at the exact right time.

The most popular payments product of the 2000s was PayPal. A website using PayPal to accept payments required users—both the buyer and the seller—to have PayPal accounts and complete a transaction on PayPal’s site instead?? of its own. Many startups in the 2010s were trying to emulate the online experience of marketplaces like Airbnb, where the entire transaction took place on site. Using front-end frameworks like Node and later React made it easier for Stripe to offer a white-label checkout experience without bouncing customers to a third-party site like PayPal.

Around the same time, mobile payment experiences were being refined. The ability to complete transactions within an app without going to the PayPal app—think card-on-file experiences like Uber or in-app purchasing like Instacart—was necessary for startups of the era, when the iPhone and App Store began to flourish. In-app purchases for digital goods were fairly straightforward at the time: you would use iOS’s built-in payments capabilities, but for purchases of items or services in the real world, there was a big gap in payments capabilities. There were companies—a combination of legacy payment processors, one of thousands of Independent Sales Organizations (ISOs, which offer standalone credit card processing services), and/or a few dozen payment gateways (which don’t offer wallet or stored balance functionality)—that merchants could use to set up white-label transactions, but they were difficult to work with.

The conventional path to obtaining a merchant account (i.e., as a retailer or an accountant) in 2010 involved emailing or faxing in paperwork to an ISO, waiting days or weeks for that information to be reviewed by a processor, and going through a cumbersome process to register that merchant account with a separate payment gateway. Stripe did all of that in minutes—an immeasurably better experience than the competition, even if, in the early days, its founders were doing everything manually behind the scenes.

Increasing competition

Today, Stripe is competing against other modern payments companies, well-funded upstarts, and formidable incumbents that offer much of the same functionality as Stripe. The payments landscape in the U.S. can be split into two categories:

Legacy payment processors

-- Chase Merchant Services

-- First Data by Fiserv

-- Worldpay from FIS

-- Global Payments

Modern payment processors

-- Adyen

-- Stripe

-- Braintree

-- Checkout.com

For the last decade, modern payment providers like Adyen and Stripe have, for the most part, been eating the legacy providers’ lunch—especially when it comes to winning the business of up-and-coming companies. For reasons similar to what I explained above, the modern providers’ products were better suited for digitally native applications and were easier to use than the incumbents’. During the pandemic, not only did the modern processors, which have a higher concentration of e-commerce payments volume, do well; their more flexible technology was a key asset to brick-and-mortar merchants that suddenly found themselves accepting payments across multiple channels: in-person, in-app, and online.

The legacy processors responded mostly by buying other payments companies to boost their total payments volume (TPV), culminating in a handful of mega-mergers in 2019. Today, despite the pandemic-fueled growth of modern players, legacy players still control the bulk of the market and are growing trillions of dollars worth of TPV ~9% year over year. But modern players are growing hundreds of billions of dollars of TPV ~60% year over year, so it’s not hard to imagine the relative market share between the two categories flipping over the next decade.

But Stripe hasn’t won yet. Neither has Adyen or Checkout, for that matter. The legacy providers process payments for massive customers that are unlikely to switch over to modern processors any time soon. Worldpay, for example, powers payments for some of the country’s leading grocery and pharmacy brands, including Kroger, which sold $137.9 billion worth of goods (excluding fuel) in 2021. Over the two years, Stripe has been making it a point to showcase how many of its customers are processing over $1 billion annually.

As the pandemic has begun to ease, consumer spending is shifting again. Visa and Mastercard’s latest earnings show a surge in in-person (what they call card-present) spending for 2022 relative to 2021, specifically within the travel category.

That lagging green line—"Card Not Present, Excluding Travel"—is from where the bulk of Stripe’s payments volume and therefore revenue comes. U.S. Census Bureau data shows the pullback in e-commerce spending even more clearly: it’s basically back to the pre-pandemic trend line.

A portion of the e-commerce slowdown is due to the impact of Apple’s App Tracking Transparency (ATT) policy, a collection of technology and rule changes that Apple began introducing over the past two years. ATT requires apps using Apple’s mobile operating system to allow users to opt into being "tracked." Apps are then allowed to share user data with third parties that a user may not have dealt with directly. This third-party tracking is the basis for digital advertising platforms, specifically direct-response advertising for e-commerce products and mobile apps on platforms like Meta, Snap, and YouTube.

Due to ATT, direct-to-consumer companies like Warby Parker and the e-commerce platforms that support them (i.e., Shopify) are struggling. In turn, Stripe’s revenue growth has dropped considerably, down to 20% in 2022 from 60% the year prior. By comparison, Amsterdam-based digital payments company Adyen grew its net revenue by 37% year over year in the first half of 2022—a slowdown from the 70% growth rate it posted in 2021 but not as severe as Stripe’s. Worldpay’s revenue growth rate also contracted as of Q3 2022, but only from 14% to 9%, and the company is expected to fare well in 2023 as in-person payments continue to grow.

Among the modern providers, Stripe’s fiercest competition is from Netherlands-based Adyen, arguably the best-run payments company in the world. Historically, these two have largely avoided each other. Stripe spent the first part of its life focused on winning smaller businesses while Adyen served enterprise customers from day one. Adyen is a European powerhouse; Stripe has mainly operated in the U.S. More recently, the two companies have been going head to head. Stripe is now co-headquartered in San Francisco and Dublin, Ireland, and has more than doubled its geographic footprint in the past five years, mostly in Europe. Adyen is growing its North American volume 60% year over year and has a banking license under a San Francisco-based charter. Adyen’s stated goal is to access more small businesses through its Adyen for Platforms offering, while Stripe is focused on closing larger enterprise deals that will meaningfully add to its revenue.

The enterprise segment is where Adyen shines and is beginning to challenge the legacy players. Over the past few years, Adyen has moved from winning deals to process non-U.S. payments for digitally native companies like Uber and Netflix to winning deals to handle payments around the world for traditional large businesses like McDonald’s and Subway As a result, its in-person payments volume grew a whopping 97%, according to its most recent investor filings. To fight back, Stripe acquired BBPOS, " a leading card reader provider," for an undisclosed sum in January 2022.

Both companies have spent most of the past 15 years putting up impressive revenue growth rates, and these dynamics have attracted competitors. There are a few well-funded ($100 million-plus) payments companies that have already gotten a foothold in the market and are growing quickly to challenge Adyen and Stripe:

-- Rapyd is a Tel Aviv-based payments provider doing more than $20 billion in TPV for more than 12,000 small- and medium-sized businesses and platforms as of August 2021.

-- Mollie is an Amsterdam-based payments provider estimated to be processing €20 billion-plus in payment volume for 120,000 monthly active merchants as of June 2021.

-- Finix is a San Francisco-based payments provider moving billions of dollars a year for more than 12,000 monthly active merchants as of May 2022 (disclaimer: I was an early employee and executive at Finix).

Those are just some of the payments companies that have reached a meaningful scale as of 2023. In 2021, a record amount of funding flowed from global venture capital funds to payments startups. Adyen was founded in 2006 and Stripe in 2010. If the latest batch of payments startups evolve on a similar timeframe, it won’t be clear whether those investments will bear fruit until the end of this decade.

All of these companies will do fine. Fundamentally, payments infrastructure is a many-winner market. There are few network effects. The capital investments required and economics of scale may mean that some entrants are scared off, but when global revenue for an industry is measured in the trillions, as it is for payments, there’s usually plenty of revenue to go around for a handful of players. There are also secular forces—like the increasing adoption of e-commerce—that are pushing digital payments forward. My best guess is that the payments infrastructure market can accommodate several winners in each region and category (and combinations thereof). May the best payments companies win.

Questionable capital allocation

For most of its history, Stripe’s research and development (R&D) strategy has been focused on supporting its core payments offering. It didn’t launch many new products, opting instead to invest in the basics: improving uptime and reliability, expanding internationally, and adding new payment methods. Of the new products it did launch, Stripe Connect (payments for platforms and marketplaces), Radar (a payments fraud engine), Atlas (a business creation tool), and Identity (an identity verification tool) resulted in more merchants using Stripe’s core payments offering. Products like Stripe Terminal (software and devices used to accept payments in the physical world) and Billing (a subscription billing management tool) helped Stripe win and keep deals, like Glossier, over Adyen, FIS, or Fiserv, which could already handle in-person payments and complex recurring billing scenarios.

The strategy seems to have changed around 2018 with the launch of products like Stripe Corporate Card, Issuing (a platform to create virtual and physical pre-paid cards), Treasury (a banking-as-a-service product), and Financial Connections (a data aggregation tool), which are only tangentially related to card-based payments acceptance—from where most of Stripe’s revenue is assumed to come. Stripe has not released much information about the usage of its products, so it’s difficult to tell if these investments have been worthwhile, but ostensibly they expand its total addressable market by generating non-payments revenue.

This level of investment in non-payments offerings requires a lot of people. Stripe’s headcount ballooned t 8,000 employees in the fall of 2022 before it laid off 14% of its staff. Adyen, by comparison, had only 2,575 employees at the end of the first half of 2022. This difference in headcount appears to be the main driver of the profitability difference between the two companies. Last month, The Information reported that Stripe was burning a “meaningful amount of cash for the first time and was also unprofitable when measured by earnings before interest, taxes, depreciation and amortization (EBITDA). The cash burn reflected investments in new projects aimed at producing more revenue in areas outside of payments.”

At the same time, Stripe’s core payments offering wasn’t necessarily benefiting from the larger workforce. For example, in February 2022, Stripe was selected to be the first payment platform to offer Apple’s new Tap to Pay to beta users on iPhone. But by July, it was actually Adyen that made the functionality available to the general public. Stripe’s Tap to Pay product just came out of a limited beta in early 2023. You’d expect an R&D-focused company like Stripe to be first to market with new payment methods like Tap to Pay—otherwise, what is all that headcount for?

Stripe has also been investing in smaller companies—another form of R&D. It led an $8 million funding round for Nigeria-based Paystack, co-led a $40 million Series B for Tel Aviv-based payments provider Rapyd, and led a $12 million Series A for Philippines-based payment platform PayMongo. On the surface, these deals make sense, as they support Stripe’s core payments acceptance offering, just in different regions. In 2020, Stripe acquired Paystack for $200 million. Investors could take issue with Stripe’s use of funds for an investment that may not bear fruit until 2040 or beyond, but investment as outsourced R&D seems to have worked in Stripe’s favor.

Other investments are decidedly less advantageous to Stripe. Take Rapyd, for example. After bringing on Stripe as an investor in 2019, the company went on to raise a total of $770 million and acquire two European-based payments processors, bringing it into direct competition with Stripe. I wouldn’t think that seeding its own European competition was the intended goal of Stripe’s venture capital initiative.

Stripe has also invested in companies that directly compete with its products. There’s one-click checkout company Fast, which burned through $120 million in venture funding in only a few years and competes with Stripe’s own products, Checkout (a low-code payment integration used to quickly collect payments information) and Link (an online checkout tool that automatically detects when a customer has previously saved payment and shipping details). Stripe also began investing in corporate card startup Ramp in 2021. Just 18 months earlier, Stripe had announced its own corporate card, which it still offers today. Aside from being a questionable use of capital to pursue both strategies at the same time, I can’t imagine morale on the Stripe Corporate Card or Checkout team was high the day it was announced their employer was leading a funding round in a direct competitor.

Stripe’s capital allocation outside of supporting its core payments offering is confusing at best—not ideal for a company that is increasingly being compared to Adyen, which has a history of profitability, rapid growth, and zero acquisitions. Whether appropriate or not, professional investors are expecting Stripe’s R&D, headcount, and EBITDA margin profile to look like Adyen’s eventually. Unfortunately, Stripe’s EBITDA margins in 2022 were reported to be negative due to investment in non-payments products and the workforce required to support them.

Regardless, anticipating Stripe’s inevitable public stock offering, investor Max Friedrich of ARK Invest put together a valuation model that has Stripe achieving a $92 billion valuation—close to its 2021 valuation of $95 billion—only if it can achieve Adyen-caliber EBITDA margins of 60%. By comparison, legacy player Fiserv’s most recently reported operating margin was 34.1%.

Yet there’s reason to believe the company will turn a profit again if it reigns in spending. CEO Patrick Collison recently shared that 2021 was the first time the company was unprofitable and “has cumulatively consumed less than $150 million after 12 years of operation.” But even if Stripe returns to its traditional operating margins of 20%-30%, the company could be worth only about $30-$45 billion when it goes public, according to ARK’s model.

Can Stripe win?

When we’ll see a Stripe public offering is anyone’s guess. The company is reportedly taking steps to give employees liquidity by selling stock to private investors rather than go public (disclaimer: I am a Stripe shareholder). This hasn’t stopped some on Twitter— in earnest and in jest—from hoping the company will go public sooner rather than later to open up the public markets for other startups.

That’s a lot of pressure for a payments company, especially one that has its work cut out for it. Stripe faces increasingly tough competition from Adyen, legacy players, and upstarts; is suffering from declining revenue growth due to structural changes in consumer behavior and advertising technologies; and must get its spending under control after years of investing in non-payments products and companies that haven’t always worked out. But Stripe will turn it around. They can’t lose, right?

Jareau Wadé has spent the last 15 years building e-commerce and payment products and now writes about his experiences at Batch Processing. Follow him on Twitter.

Stripe Can’t Lose - Every

[Glenn Petersen] Thrive Capital Said to Lead Potential Investment in Stripe Thrive has committed...

Glenn Petersen — 1/31/2023 4:58:52 AM

Thrive Capital Said to Lead Potential Investment in Stripe

Thrive has committed $1 billion, which would value the payments provider Stripe at about $55 billion to $60 billion, people with knowledge of the matter said.

By Lauren Hirsch and Maureen Farrell
Lauren Hirsch is a reporter for DealBook, and Maureen Farrell is a finance reporter.
New York Times
Jan. 30, 20232 MIN READ

Thrive Capital, the investment firm founded by Joshua Kushner, is leading a potential investment in the payments provider Stripe at a valuation of $55 billion to $60 billion, down sharply from two years ago, two people with knowledge of the matter said.

Stripe is aiming to raise roughly $2.5 billion, one of the people said. Thrive has committed $1 billion, said another person familiar with the situation, who requested anonymity because the talks are confidential.

If completed, the funding could give Stripe breathing room amid a tough market for public listings. The money is expected to be used to pay the start-up’s tax liabilities and to allow its employees to sell their company shares. Many privately held tech companies use stock options to help recruit employees, but a faltering market for public offerings has made it difficult for employees to cash out of those shares. Some Stripe employees have stock grants that will start expiring next year if the company does not go public or raise new funding, a person familiar with the situation said.

The Wall Street Journal previously reported that Stripe had considered raising new funds.

Stripe’s moves are being scrutinized because it was once the most highly valued private company in the United States. How it responds to an inhospitable market for public offerings could be a harbinger for how others manage it.

The company, which the brothers John and Patrick Collison founded in 2010, hired Goldman Sachs and JPMorgan Chase to advise it on a potential public listing in the next year. It told employees last week that it was considering multiple routes to letting its employees cash out within 12 months.

Among the options is listing Stripe’s shares on the public market. Another is to raise money privately followed by a tender offer, in which the company would sell employee shares to other investors while staying private. The new funding does not mean a public listing is off the table, one of the people with knowledge of the matter said.

A valuation of $55 billion to $60 billion would be a steep drop for a company that last raised money at a roughly $95 billion valuation in 2021. Stripe sells payment processing software to companies including Peloton, Wayfair and Amazon.

Over the last year, the start-up funding environment has deteriorated amid rising interest rates and a renewed focus on profits. Some tech companies have found it harder to attract new investments and many start-ups have had to cut their costs.

For Thrive, known for its investments in start-ups like Skims, Warby Parker and SpaceX, a $1 billion bet is a big check. Mr. Kushner has been trying to steer the firm out of the shadow of his older brother, Jared, who was a top adviser to his father-in-law, former President Donald J. Trump.

Thrive closed a $3 billion fund, its largest ever, last year. Last week, it announced that it had sold a minority stake in the firm to executives including Robert Iger, Disney’s chief executive, and Henry Kravis, a co-founder of private equity firm KKR. The deal valued Thrive at $5.3 billion. It is also in talks to invest in the artificial intelligence company OpenAI.
---------------

Erin Griffith contributed reporting.

Lauren Hirsch joined The Times from CNBC in 2020, covering business, policy and mergers and acquisitions. Ms. Hirsch studied comparative literature at Cornell University and has an M.B.A. from the Tuck School of Business at Dartmouth. @laurenshirsch

Maureen Farrell is a business reporter, covering a wide-ranging beat that includes private equity, hedge funds and billionaires. @maureenmfarrell

A version of this article appears in print on Jan. 31, 2023, Section B, Page 3 of the New York edition with the headline: Thrive Capital Said to Commit Funds to Stripe.

Thrive Capital Said to Lead Potential Investment in Stripe - The New York Times (nytimes.com)

[Glenn Petersen] he fintech reckoning is upon us. Here’s what to expect next year PUBLISHED WED,...

Glenn Petersen — 12/29/2022 7:32:11 AM

he fintech reckoning is upon us. Here’s what to expect next year

PUBLISHED WED, DEC 28 20227:59 AM EST
UPDATED 2 HOURS AGO
Hugh Son @HUGH_SON
CNBC.com

KEY POINTS

-- Top-tier startups that have three to four years of funding can ride out the storm, according to Point72 Ventures partner Pete Casella.

-- The flood of venture money during the past few years led to copycat companies getting funded anytime a successful niche was identified.

-- Many private companies created in recent years had one central assumption: low interest rates forever, according to TSVC partner Spencer Greene.

-- Eventually, incumbents and well-financed startups will benefit, either by purchasing fintechs outright to accelerate their own development, or picking off their talent as startup workers return to banks and asset manag
Bill Harris, former PayPal CEO and veteran entrepreneur, strode onto a Las Vegas =Presentation]stage in late October to declare that his latest startup would help solve Americans’ broken relationship with their finances.

“People struggle with money,” Harris told CNBC at the time. “We’re trying to bring money into the digital age, to redesign the experience so people can have better control over their money.”

But less than a month after the launch of Nirvana Money, which combined a digital bank account with a credit card, Harris abruptly shuttered the Miami-based company and laid off dozens of workers. Surging interest rates and a “recessionary environment” were to blame, he said.

The reversal is a sign of more carnage to come for the fintech world.

Many fintech companies — particularly those dealing directly with retail borrowers — will be forced to shut down or sell themselves next year as startups run out of funding, according to investors, founders and investment bankers. Others will accept funding at steep valuation haircuts or onerous terms, which extends the runway but comes with its own risks, they said.

Top-tier startups that have three to four years of funding can ride out the storm, according to Point72 Ventures partner Pete Casella. Other private companies with a reasonable path to profitability will typically get funding from existing investors. The rest will begin to run out of money in 2023, he said.

“What ultimately happens is you get into a death spiral,” Casella said. “You can’t get funded and all your best employees start jumping ship because their equity is underwater.”

‘Crazy stuff’

Thousands of startups were created after the 2008 financial crisis as investors plowed billions of dollars into private companies, encouraging founders to attempt to disrupt an entrenched and unpopular industry. In a low interest rate environment, investors sought yield beyond public companies, and traditional venture capitalists began competing with new arrivals from hedge funds, sovereign wealth and family offices.

The movement shifted into overdrive during the Covid pandemic as years of digital adoption happened in months and central banks flooded the world with money, making companies like Robinhood, Chime and Stripe familiar names with huge valuations. The frenzy peaked in 2021, when fintech companies raised more than $130 billion and minted more than 100 new unicorns, or companies with at least $1 billion in valuation.

“20% of all VC dollars went into fintech in 2021,” said Stuart Sopp, founder and CEO of digital bank Current. “You just can’t put that much capital behind something in such a short time without crazy stuff happening.”

The flood of money led to copycat companies getting funded anytime a successful niche was identified, from app-based checking accounts known as neobanks to buy now, pay later entrants. Companies relied on shaky metrics like user growth to raise money at eye-watering valuations, and investors who hesitated on a startup’s round risked missing out as companies doubled and tripled in value within months.

The thinking: Reel users in with a marketing blitz and then figure out how to make money from them later.

“We overfunded fintech, no question,” said one founder-turned-VC who declined to be identified speaking candidly. “We don’t need 150 different neobanks, we don’t need 10 different banking-as-a-service providers. And I’ve invested in both” categories, he said.

One assumption

The first cracks began to appear in September 2021, when the shares of PayPal, Block and other public fintechs began a long decline. At their peak, the two companies were worth more than the vast majority of financial incumbents. PayPal’s market capitalization was second only to that of JPMorgan Chase. The specter of higher interest rates and the end of a decade-plus-long era of cheap money was enough to deflate their stocks.

Many private companies created in recent years, especially those lending money to consumers and small businesses, had one central assumption: low interest rates forever, according to TSVC partner Spencer Greene. That assumption met the Federal Reserve’s most aggressive rate-hiking cycle in decades this year.

“Most fintechs have been losing money for their entire existence, but with the promise of ‘We’re going to pull it off and become profitable,’” Greene said. “That’s the standard startup model; it was true for Tesla and Amazon. But many of them will never be profitable because they were based on faulty assumptions.”

Even companies that previously raised large amounts of money are struggling now if they are deemed unlikely to become profitable, said Greene.

“We saw a company that raised $20 million that couldn’t even get a $300,000 bridge loan because their investors told them `We are no longer investing a dime.’” Greene said. “It was unbelievable.”

Layoffs, down rounds

All along the private company life cycle, from embryonic startups to pre-IPO companies, the market has reset lower by at least 30% to 50%, according to investors. That follows the decline in public company shares and a few notable private examples, like the 85% discount that Swedish fintech lender Klarna took in a July fundraising.

Now, as the investment community exhibits a newfound discipline and “tourist” investors are flushed out, the emphasis is on companies that can demonstrate a clear path toward profitability. That is in addition to the previous requirements of high growth in a large addressable market and software-like gross margins, according to veteran fintech investment banker Tommaso Zanobini of Moelis.

“The real test is, does the company have a trajectory where their cash flow needs are shrinking that gets you there in six or nine months?” Zanobini said. “It’s not, trust me, we’ll be there in a year.”

As a result, startups are laying off workers and pulling back on marketing to extend their runway. Many founders are holding out hope that the funding environment improves next year, although that is looking increasingly unlikely.

Neobanks under fire

As the economy slows further into an expected recession, companies that lend to consumers and small businesses will suffer significantly higher losses for the first time. Even profitable legacy players like Goldman Sachs couldn’t stomach the losses required to create a scaled digital player, pulling back on its fintech ambitions.

“If loss ratios are increasing in a rate increasing environment on the industry side, it’s really dangerous because your economics on loans can get really out of whack,” said Justin Overdorff of Lightspeed Venture Partners.

Now, investors and founders are playing a game of trying to determine who will survive the coming downturn. Direct-to-consumer fintechs are generally in the weakest position, several venture investors said.

“There’s a high correlation between companies that had bad unit economics and consumer businesses that got very large and very famous,” said Point72's Casella.

Many of the country’s neobanks “are just not going to survive,” said Pegah Ebrahimi, managing partner of FPV Ventures and a former Morgan Stanley executive. “Everyone thought of them as new banks that would have tech multiples, but they are still banks at the end of the day.”

Beyond neobanks, most companies that raised money in 2020 and 2021 at nosebleed valuations of 20 to 50 times revenue are in a predicament, according to Oded Zehavi, CEO of Mesh Payments. Even if a company like that doubles revenue from its last round, it will likely have to raise fresh funds at a deep discount, which can be “devastating” for a startup, he said.

“The boom led to some really surreal investments with valuations that cannot be justified, maybe ever,” Zehavi said. “All of these companies across the world are going to struggle, and they will need to be acquired or shut down in 2023.”

M&A flood?

As in previous down cycles, however, there is opportunity. Stronger players will snap up weaker ones through acquisition and emerge from the downturn in a stronger position, where they will enjoy less competition and lower costs for talent and expenses, including marketing.

“The competitive landscape shifts the most during periods of fear, uncertainty and doubt,” said Kelly Rodriques, CEO of Forge, a trading venue for private company stock. “This is when the bold and the well capitalized will gain.”

While sellers of private shares have generally been willing to accept bigger valuation discounts as the year went on, the bid-ask spread is still too wide, with many buyers holding out for lower prices, Rodriques said. The logjam could break next year as sellers become more realistic about pricing, he said.

Eventually, incumbents and well-financed startups will benefit, either by purchasing fintechs outright to accelerate their own development, or picking off their talent as startup workers return to banks and asset managers.

Though he didn’t let on during an October interview that Nirvana Money would soon be among those to shutter, Harris agreed that the cycle was turning on fintech companies.

But Harris — founder of nine fintech companies and PayPal’s first CEO — insisted that the best startups would survive and ultimately thrive. The opportunities to disrupt traditional players are too large to ignore, he said.

“Through good times and bad, great products win,” Harris said. “The best of the existing solutions will come out stronger and new products that are fundamentally better will win as well.”

Fintech startups 2022, 2023: A reckoning is upon us. Here’s what to expect (cnbc.com)

[Glenn Petersen] Inside Nigeria's Ambitious Push of Cashless Society, eNaira CBDC Nigeria is cap...

Glenn Petersen — 12/19/2022 6:01:15 AM

Inside Nigeria's Ambitious Push of Cashless Society, eNaira CBDC

Nigeria is capping cash withdrawals in order to drive adoption of its CBDC the eNaira—but will people embrace the central bank’s vision?

By Chidirim Ndeche
Decrypy
Dec 18, 2022
6 min read

Nigeria’s push to adopt digital currency and move towards a cashless society shifted into high gear on December 6, when the country’s central bank announced a cap on cash withdrawals, either over the counter or via ATMs. The new policy affects more than 200 million people, and its impact could be far-reaching and dramatically unpredictable.

The Central Bank of Nigeria said in a memo to deposit money banks (DMBs) that withdrawals should not exceed ?100,000 ($225) per week for individuals and ?500,000 ($1,123) for businesses. ATM withdrawals will be capped at ?20,000 ($45) per day, with cash machines only issuing ?200 ($0.45) notes and smaller denominations.

"Withdrawals above these limits shall attract processing fees of five percent and 10 percent, respectively," the CBN said.

The new policy will take effect from January 9, 2023, about three weeks before the country phases out all old ?200, ?500 and ?1000 notes.

Banking on the eNaira

Nigeria’s phasing out of physical cash goes hand-in-hand with its push to encourage adoption of its central bank digital currency (CBDC), the eNaira.

Launched in October 2021, the eNaira was the second central bank digital currency after the Bahamas’ Sand Dollar, and uses similar blockchain technology to cryptocurrencies—though unlike cryptocurrencies, it’s ultimately overseen and managed by the country’s central bank.

While not acting as a store of value in the same way as cryptocurrency, the CBN said the eNaira would help further promote financial inclusion. It’s also accessible on all bank apps and USSD (Unstructured Supplementary Service Data), a “quick code” used on GSM cellphones to communicate with the network’s computers.

The eNaira’s launch is part of a wider policy on the part of the CBN, outlined in a 2013 policy document that encourages the adoption of agent banking, mobile payments, promotion of linkage models that enhance cooperation between traditional lenders, the government and microfinance institutions, and the implementation of an aggressive push for financial literacy.

The bank said its new policy direction was in line with its cashless policy and that “customers should be encouraged to use alternative channels (internet banking, mobile banking apps, USSD, cards/POS, eNaira etc.) to conduct their banking transactions.”

The launch of eNaira also followed a crackdown by the authorities on financial institutions dealing with crypto—which prompted a surge in peer-to-peer Bitcoin trading in subsequent months.

Nigeria’s informal economy

With Nigeria’s largely informal economy powered by cash transactions, adoption of the eNaira has been somewhat tepid.

A banker, Ahmad* [not his real name], told Decrypt that customers are not keen on using eNaira, even when they make electronic transactions, citing no clear difference between the value of naira and eNaira.

Ikemesit Effiong, head of research at Lagos-based socio-economic research firm SBM Intelligence, said the policy will hurt those it is supposed to benefit the most and encourage the hoarding of cash.

“The new policy, while hailed as a path to increased adoption of cashless transactions, is likely to turn off customers from utilizing formal banking structures,” Effiong told Decrypt. “The thriving agency banking business, where POS (point of sale) kiosks facilitate cash withdrawals, will suffer as the new policy wipes off most of that business.”

POS kiosk operators, who act as foot soldiers for many banks in inner streets of major cities and hard-to-reach areas, have become an integral part of the banking system in the past few years, helping to bridge the financial inclusion gap. While acting as the endpoint for the formal banking sector, they largely feed off the informal economy.

The policy is “too drastic and does not favour many of us,” Adeolu, a POS cash point operator, told Decrypt. “Limiting how much people can collect will affect the commission we earn every day. It’s like CBN is taking food out of our mouths and killing our business.”

Additional burdens

A digital investment platform, Rise, said that the many charges attached to the country’s cashless policy were burdensome. It explained that the country’s informal economy is largely cash-driven and not primed for cashless transactions.

“Fifteen million Nigerian adults regularly engage in informal financial transactions, and in that sector, cash is king,” Rise said in an email to its subscribers. “This makes sense because, from entering danfo (minibuses) to buying suya (spicy meat kebabs) at night, many transactions don't have an effective digital payment alternative.”

Still, CBN governor Godwin Emefiele said the policy is reversible, made in the best interest of Nigerians and should be seen “the way we have presented it”.

“We will be reviewing from time to time how this is working because I cannot say that we will be rigid,” he said on December 7 after meeting with President Muhammadu Buhari.

Cashless aspirations

Emefiele said that the ramping up of Nigeria’s cashless policy was long overdue, noting that the country has not made significant progress since the policy was first launched in 2012.

“We cannot continue to allow a situation where over 85% of cash that is in circulation is outside the banks,” Emefiele said. “More and more countries that are embracing digitisation have gone into cashless.”

Officials and operators in the Nigerian finance sector have long believed that going digital would help shrink the country’s large pool of the unbanked—and boost the economy. As of 2020, 64% of Nigerian adults were financially included, Enhancing Financial Innovation and Access (EFInA) said in a 2020 report. But while the country aimed to provide access to formal financial services to 70% of Nigerians by 2020, it could only cover 50.5 %. The report also showed that Nigerians aged 18-25 were more likely than older adults to be financially excluded, an important consideration when the median age of the country’s population is 18 y
“Although Nigeria has a higher proportion of banked adults than many comparator countries, it also has a high proportion of financially excluded adults at 36%,” said EFInA noted in its 2022 report.

Encouraging a cashless society has ancillary benefits for the authorities, too. Taiwo Oyedele, fiscal policy partner and Africa tax leader at PwC’s office in Lagos state, said that going cashless might help Nigeria rake in more taxes, as more small businesses will “become visible to the tax authorities”. He explained that the policy will also enable tax authorities to “get the intelligence to track your income and net worth making it easier to fish you out if you are a tax evader.”

Regardless of the central bank’s aspirations, Effiong said the eNaira may see slow adoption owing to a lack of trust in government institutions—including the CBN, which he said is necessary to power cashless transactions.

“This new policy may be perceived by many as the government foisting unnecessary controls over how people use their monies,” Effiong said, adding that “customers are likely not to trust the intentions of the regulator and turn away from some of its initiatives, including the eNaira.”

Inside Nigeria's Ambitious Push of Cashless Society, eNaira CBDC - Decrypt

[Glenn Petersen] Shares of Block jump on earnings beat Published Thu, Nov 3 20224:37 PM EDT Upda...

Glenn Petersen — 11/4/2022 6:12:55 AM

Shares of Block jump on earnings beat

Published Thu, Nov 3 20224:37 PM EDT
Updated 5 Hours Ago
Kif Leswing @kifleswing

Key Points

Block stock rose in extended trading after the payments company reported third-quarter earnings that beat Wall Street expectations for profit.

Block stock rose over 11% in extended trading after the payments company reported third-quarter earnings that beat Wall Street expectations for profit.

Here's how Block did versus Refinitiv consensus expectations:

EPS: $0.42, adjusted, versus expectations of $0.23
Revenue: $4.52 billion versus expectations of $4.49 billion

Block posted $1.57 billion in gross profit, up 38% from $1.13 billion a year ago. That beat Wall Street expectations of $1.53 billion.

Block, formerly known as Square, said in a letter to shareholders that its company showed strong growth, even as other payment companies have warned about upcoming slowdowns due to macroeconomic effects.

Its Cash App business reported $774 million in gross profit, a 51% year-over-year rise, according to Block. The company said that there were over 18 million people actively using its Cash debit card in September, up 40% year-over-year.

Its point-of-sale business, Square, saw gross profit grow 29% on an annual basis to $783 million.

Analysts tend to focus on Block's gross profit instead of its top-line results because it has bitcoin and buy-now-pay-later businesses that have small margins. Block said it made $37 million from Bitcoin sales during the quarter on $1.76 billion in gross sales.

Block said it registered a bitcoin impairment loss of $2 million during the quarter related to Bitcoin it bought in late 2020 and early 2021. Block still holds $156 million worth of bitcoin, based on its price at the end of September.

cnbc.com

[Glenn Petersen] Another SPAC / fintech transaction: On August 4, 2022, InFinT Acquisition Corp....

Glenn Petersen — 9/19/2022 7:58:10 PM

Another SPAC / fintech transaction:

On August 4, 2022, InFinT Acquisition Corp. (stock symbol: IFIN), a SPAC that raised $200 million when it completed its IPO in November 2021, announced that it had agreed to merge with Seamless Group, a fintech company facilitating cross-border digital remittance and cashless solutions in South East Asia.

There is no investor presentation, but some disclosures about Seamless can be found here: sec.gov

IFIN closed at $10.14 today.

FinTech Seamless Group to Become Publicly Traded via SPAC, Expand Globally

By PYMNTS
Posted on August 4, 2022

Global FinTech platform Seamless Group will become publicly traded through a combination with special purpose acquisition company (SPAC) INFINT Acquisition Corp., the two companies announced in a Thursday (Aug. 4) press release.

The transaction values Seamless at an enterprise value of $400 million and aims to provide it with capital to expand the capabilities and reach of its platform, which provides cross-border digital remittances and cashless payment solutions.

Seamless’ umbrella of solutions includes Tranglo and WalletKu, and while the Seamless platform is currently prominent in South East Asia, Seamless CEO Ronnie Hui said the company plans to expand globally.

“Though we have experienced great success to date, we are excited about our further potential, and we believe that we have just begun to scratch the surface in realizing our mission of bringing instantaneous banking to the unbanked by enabling real-time, cost-efficient cross-border transfers,” Hui said.

Hui and other Seamless leadership will continue to lead the newly-combined company, and Sasha Edgarov, the chairman and CEO of INFINT, will also join the new company’s board of directors.

“We believe Seamless is uniquely positioned in the remittance market and our commitment to them will further help build upon what is already a growing business and enhance its value proposition over time,” Edgarov said in the release.

PYMNTS research has found that cross-border remittances are a lifeline for many developing economies, but high fees and long processing times can make timely payments difficult for those who may be the least able to afford delays.

For these consumers, long payment delays and high transaction fees may have a significant impact on their access to needed funds or on the ability of payers to send the total amounts they intended.

Seamless Group to Become Publicly Traded via SPAC | PYMNTS.com

[Glenn Petersen] Another SPAC / fintech deal: On August 4, 2002, Colonnade Acquisition Corp. II ...

Glenn Petersen — 9/18/2022 12:59:34 PM

Another SPAC / fintech deal:

On August 4, 2002, Colonnade Acquisition Corp. II (stock symbol: CCLA), a SPAC that raised $330 million when it completed its IPO in March 2021, has agreed to merge with Plastiq, "...a B2B payments platform that empowers the small- to medium-sized business (SMB) economy."

Investor presentation: sec.gov

CCLA closed at $9.90 on Friday.

Plastiq Plans SPAC Merger With Colonnade in Move to Go Public

By Cindy Capitani
PYMTS
on August 4, 2022

Plastiq, a B2B payments platform that empowers the small- to medium-sized business (SMB) economy, is planning to go public via a merger with Colonnade Acquisition Corp. II, a special purpose acquisition company (SPAC).

Once the deal closes, the combined company, as a publicly-listed entity, will have an implied estimated enterprise value of $480 million, according to a Thursday (Aug. 4) press release. Plastiq will use the proceeds from the transaction to grow its business and expand its product suite.

The combined company will operate under the name Plastiq, the release stated.

Plastiq Founder and CEO Eliot Buchanan will continue to lead Plastiq, which was launched in 2012. He called the SPAC merger with Colonnade an “important milestone” toward going public, according to the release.

“For too long, SMBs have been neglected from financial services,” he said, per the release. “As a public company, we plan to continue to invest in opportunities to scale the business with a growing product suite that enables us to provide SMB owners with access to sufficient, on-demand cash flow, which is a critical component to grow their businesses.”

Colonnade Acquisition Corp. II Chairman Joseph Sambuco said the SPAC thinks “Plastiq has a significant opportunity to penetrate its vast $9 trillion total addressable market of SMB payments,” considering the company’s “growth, highly scalable business model, expanding product suite and efficient go-to-market approach.”

Plastiq is at the crossroads between payer and supplier, and the company offers SMBs a choice in how to make payments. It also provides automation efficiency with payables and receivables and unlocks cash flow from business credit cards and instant short-term financing.

Many smaller firms think they are using a flexible solution when paying their vendors — namely through credit cards or bank accounts, Plastiq Chief Operating Officer Stoyan Kenderov told PYMNTS in an April interview. Many don’t realize they can accept payments across platforms regardless of how their buyers want to pay.

pymnts.com

[Glenn Petersen] JPMorgan Chase acquires payments fintech Renovite to help it battle Stripe and B...

Glenn Petersen — 9/12/2022 5:23:34 AM

JPMorgan Chase acquires payments fintech Renovite to help it battle Stripe and Block

Published Mon, Sep 12 202212:01 AM EDT
Hugh Son @hugh_son
CNBC.com

Key Points

JPMorgan Chase has agreed to acquire a payments startup called Renovite to fend off threats from fintech firms including Stripe and Block, CNBC has learned.
While JPMorgan is often content to partner with fintechs and take relatively small stakes in them, the bank felt that Renovite's product was too important not to own outright, according to a JPMorgan executive.
The acquisition, reported first by CNBC, is the latest in a string of recent fintech deals made under CEO Jamie Dimon. The bank has acquired at least five fintech startups since late 2020.

JPMorgan Chase has agreed to acquire a payments startup called Renovite to fend off threats from fintech firms including Stripe and Block , CNBC has learned.

The bank, a major player in the global payments arena, said that acquiring Fremont, California based Renovite will speed up its ability to roll out new offerings to merchants.

While JPMorgan is the world's biggest provider of merchant services by transaction volume, fast-growing upstarts including Stripe and Block have climbed the rankings in recent years, thanks to booming e-commerce sales and the proliferation of new payment methods. Merchant acquirers are crucial, behind-the-scenes providers that enable sellers to accept in-person and online payments, keeping a small cut of each transaction.

Despite operating a payments juggernaut that processes more than $9 trillion daily across several businesses, JPMorgan's merchant acquiring revenue stalled last year in part because it was behind in some e-commerce segments and offered fewer services than some fintech rivals, global payments chief Takis Georgakopoulos told investors in a May conference.

"Changing that picture is a big story behind our investments," Georgakopoulos vowed.

Shopping spree

The Renovite acquisition, reported first by CNBC, is the latest in a string of fintech deals made under CEO Jamie Dimon. Since late 2020, JPMorgan has acquired at least five startups, from an ESG investing platform to a UK-based roboadvisor, on top of making a series of smaller fintech investments.

Dimon has repeatedly raised the alarm about the threat fintech players pose to traditional banks, especially in the highly competitive payments game.

Fintech players have used payments processing for merchants as a wedge to help them build ecosystems that have garnered eye-watering valuations. They also have generally been more nimble in enabling new payment methods like offerings from Klarna and Affirm.

Dimon has been forced to defend his bank's rising expenses this year as it plows billions of dollars into technology amid a 25% stock slump driven by recession fears.

The Renovite deal, for terms that couldn't be determined, shows that the longtime CEO is undeterred by concerns that he's spending too much on tech.

From trials to takeover

JPMorgan ran trials with Renovite as a vendor last fall, but was impressed enough with the startup's products — especially a cloud-based switch that routes payments to various providers — that it decided to acquire the company outright, according to Mike Blandina, the bank's global head of payments technology.

The plug-and-play nature of the switch platform allows JPMorgan to add new payments options in a fraction of the time it used to take because it requires far less coding, he said in an interview.

"Our clients really value choice; they want to offer many different payment methods to their clients, whether it's Visa, MasterCard, but also Buy-now, pay-later, etc," said Max Neukirchen, the firm's global head of payments & commerce solutions.

"The ability to turn on these very country-specific payments methods also helps us in our geographic expansion, because we don't need to spend a lot of time building out local payment methods," he added.

While JPMorgan is often content to partner with fintechs and take relatively small stakes in them, the bank felt that Renovite's product was too important not to own, Neukirchen said.

The bank also coveted the firm's roughly 125 engineers, located in India and the U.K., to help JPMorgan on its product roadmap, he added.

cnbc.com

[Julius Wong] Why did Upstart stock soar today? Aug. 10, 2022 4:31 PM ET Upstart Holdings, In...

Julius Wong — 8/10/2022 9:04:55 PM

Why did Upstart stock soar today?

Aug. 10, 2022 4:31 PM ET Upstart Holdings, Inc. (UPST) LSPD, SQ, RKT, TREEBy: Max Gottlich, SA News Editor 11 Comments

cofotoisme

Upstart (NASDAQ: UPST) shares surged 17.6% on Wednesday as stock-market speculators appeared greatly cheered by July's softer-than-expected inflation data, which fueled traders to recede their Fed rate-hike wagers.

The bullish upswing in Upstart ( UPST) stock, though, comes a day after the artificial intelligence-powered consumer lending platform withdrew its full-year guidance, as "the macro uncertainty and the impact of economic stress on consumer delinquencies have led to a decrease in available funding for loans on our platform, which has become the operating constraint of the business," Sanjay Datta, the Upstart's CFO, said during the company's Q2 earnings call.

Upstart ( UPST) also caught a bid intraday as markets priced in a greater chance of less aggressive interest-rate increases at the Federal Reserve's upcoming gathering on September 21. That's a bullish catalyst for companies because their borrowing and funding costs would see some relief from current levels, especially if the central bank were to fully pivot from monetary tightening depending on whether inflation cools down more.

Fintechs, which generally fare well in a stimulative, lower-rate environment (lower loan losses), experienced a broad rally with some of the biggest percentage gainers including Lightspeed Commerce ( LSPD) +10.2%, Block ( SQ) +9.5%, Rocket Companies ( RKT) +7.8% and LendingTree ( TREE) +7%.

[Julius Wong] PayPal stock soars after Q2 beat and year guidance boost Aug. 02, 2022 4:39 PM ...

Julius Wong — 8/3/2022 8:04:21 AM

PayPal stock soars after Q2 beat and year guidance boost

Aug. 02, 2022 4:39 PM ET PayPal Holdings, Inc. (PYPL)By: Liz Kiesche, SA News Editor 40 Comments

Justin Sullivan

PayPal Holdings (NASDAQ: PYPL) shares are surging 13% in Tuesday after-hours trading after the fintech boosted its full-year guidance.

The fintech guides for Q3 adjusted EPS of $0.94-$0.96 vs. consensus of $0.95; sees net revenue of $6.80B vs. $7.02B consensus.

For full-year 2022, the company now expects adjusted EPS of $3.87-$3.97, topping the consensus of $3.85, and increased from its prior range of $3.81-$3.93. Revenue is expected to reach $27.85B vs. consensus of $28.18B.

PayPal ( PYPL) expects 10M net new actives in FY2022.

Q2 adjusted EPS of $0.93, topping consensus of $0.87, increased from $0.88 in Q1 and fell from $1.15 in Q2 2021.

Net new active accounts were 0.4M in the quarter vs. 2.4M in Q1. Total active accounts were 429M, up 6% Y/Y.

Q2 revenue of $6.81B, exceeding consensus of $6.78B, rose from $6.00B in the prior quarter and from $6.24B in the year-ago period; Q2 total payment volume ("TPV") of $339.8B grew from $323.0B in the prior quarter.

"Our second-quarter results were solid with currency-neutral revenue and non-GAAP earnings growth exceeding expectations," said President and CEO Dan Schulman. "We continue to gain share as we execute across our key strategic initiatives, even as we drive operational efficiency across our business."

Venmo processed $61.4B in TPV, up 6%% Y/Y, and up from $57.6B in Q1.

Cash flow from operations of $1.5B vs. $1.2B in Q1; free cash flow of $1.29B vs. $1.1B in the prior quarter.

Conference call at 5:00 PM ET.

Earlier, PayPal ( PYPL) non-GAAP EPS of $0.93 beats by $0.06, revenue of $6.8B beats by $20M, raises FY22 EPS guidance

[Glenn Petersen] Robinhood cutting about 23% of jobs, releases second-quarter earnings Publishe...

Glenn Petersen — 8/3/2022 6:45:01 AM

Robinhood cutting about 23% of jobs, releases second-quarter earnings

Published Tue, Aug 2 20224:09 PM EDT
Updated 2 Hours Ago
Ashley Capoot @ashleycapoot
CNBC.com

Key Points

Robinhood CEO Vlad Tenev said the company will reduce its headcount by about 23%.
The company also dropped its second-quarter earnings report, which showed a decline in monthly active users and assets under custody.

Robinhood CEO Vlad Tenev said Tuesday in a press release that the fintech company will reduce its headcount by approximately 23%.

The layoffs will be primarily in operations, marketing and program management. In the release, Tenev blamed "deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash."

Robinhood laid off 9% of its workforce in April.

"I want to acknowledge how unsettling these types of changes are," Tenev said.

In the release, Tenev said the company would flatten its organizational structure to give new general managers broad responsibility for its businesses. He also said that affected employees would receive an email and a Slack message letting them know if they were being let go or still had a job, immediately after an all-hands meeting to discuss the move on Thursday.

The company also released its earnings report for the second quarter, one day earlier than expected. Here's how it did.

Revenue: $318 million vs. $321 million estimated, according to Refinitiv
Loss: 34 cents per share vs. 37 cents estimated, according to Refinitiv

Robinhood's total net revenue of $318 million was up from $299 million in the first quarter, thanks to an increase in revenue from cryptocurrency activities and net interest. However, that revenue number was still well below the $565 million reported in the second quarter of 2021.

The report also showed a decline in monthly active users and assets under custody.

Robinhood has seen growth reverse as the pandemic boom in retail trading appeared to lose steam.

The company went public in July 2021 at $38 per share, and its stock jumped as high as $85 per share in its first month of trading.

However, the stock quickly declined. Shares of Robinhood are down 48% year to date and closed at $9.23 per share Tuesday.

Shares were down about 2% in after-hours trading.

— Jesse Pound contributed to this report.

cnbc.com

[Glenn Petersen] Half a trillion dollars wiped from once high-flying fintechs Digital companies ...

Glenn Petersen — 7/18/2022 3:28:59 PM

Half a trillion dollars wiped from once high-flying fintechs

Digital companies that boomed during lockdowns hit by fears they cannot withstand a recession

Nicholas Megaw and Imani Moise in New York

Almost half a trillion dollars has been wiped from the valuation of once high-flying financial technology companies that took advantage of the boom in initial public offerings earlier in the pandemic.

More than 30 fintechs have listed in the US since the start of 2020, according to CB Insights data, as investors flocked to companies they believed could benefit from a long-term shift toward digitisation accelerated by the pandemic.

However, concerns about rising interest rates, lack of profits and untested business models as the economy heads towards a potential recession have put them at the sharp end of this year’s sell-off.

Shares in recently listed fintechs have fallen an average of more than 50 per cent since the start of the year, according to a Financial Times analysis, compared with a 29 per cent drop in the Nasdaq Composite. Their cumulative market capitalisation has fallen $156bn in 2022. If each stock is measured from its all-time high, around $460bn has been lost.

A second-quarter update from online lender Upstart last week typified the challenges facing many fintechs. The company, which says it uses artificial intelligence to make consumer loan decisions, blamed the “tumultuous economy” for slowing down revenue growth and driving up losses.

This was exacerbated by comparison to an exceptionally strong result in the same quarter last year, when the contrast with economic lockdowns in 2020 led to annual revenue growth of more than 1,000 per cent.

The pressures have also hit more well-established companies like PayPal and Block — formerly known as Square — which have shed almost $300bn in market cap between them this year.

The decline in public market valuations has filtered through to private companies. Klarna slashed its price tag from $46bn to under $7bn in a private funding round earlier this month, and the Wall Street Journal reported this week that Stripe had cut its internal valuation by more than a quarter.

Dan Dolev, analyst at Mizuho, said fintechs — particularly digital payments firms — were “the first part of the tech sector to benefit greatly from Covid, because everyone was stuck at home and buying stuff online”.

“Now they are overcorrecting to the downside ahead of other sectors too.”

Dolev said he expected to see a rebound for many companies in the second half as year-on-year comparisons become more flattering.

Some companies also face additional pressure from regulators. The Securities and Exchange Commission is reviewing perceived conflicts of interest created by “payment for order flow”, the main source of revenue for online broker Robinhood, and SEC chair Gary Gensler has called for clearer oversight of cryptocurrency markets. The Consumer Financial Protection Bureau also launched an inquiry into “buy now, pay later” firms last December.

Results from traditional financial services have been affected as well. Wells Fargo on Friday blamed a $576mn write down in its investment portfolio for missing analyst’s revenue expectations. Wells Fargo Strategic Capital was one of the largest investors in fintechs last year, according to CB Insights.

Despite the litany of challenges, many investors are still backing the sector. Cathie Wood’s ARK Fintech Innovation ETF, one of the most popular funds dedicated to the sector, has tumbled 62 per cent this year, but net outflows have been less than $90mn, dwarfed by the $2.7bn in inflows over the previous two years. After a sharp decline earlier in the year, investors added a net $31mn since the start of June.

Pedro Palandrani, director of research at Global X, which runs another fintech-focused ETF, said: “It’s likely that in the rest of 2022 we’re going to continue to see some of these companies face some pressures — rising rates are going to create challenges for companies on the lending side of things and [buy now pay later] in particular.”

However, he added that “despite the increased risks in the market, we’re only down about $40mn in net outflows year to date...it really shows that investors continue to believe a lot in this sector over the long term”.

ft.com

[Glenn Petersen] Stripe Cuts Internal Valuation by 28% Payments processor was last valued by pri...

Glenn Petersen — 7/16/2022 8:38:27 PM

Stripe Cuts Internal Valuation by 28%

Payments processor was last valued by private investors at $95 billion

By Berber Jin and Peter Rudegeair
Wall Street Journal
Updated July 14, 2022 3:58 pm ET

Payments giant Stripe last valued by private investors at $95 billion, cut the internal value of its shares by 28%, people familiar with the matter said.

Stripe told employees in an email Friday that the internal share price was about $29, compared with $40 in the most previous internal valuation, known as a 409A valuation, the people said. The move lowered the implied valuation of those shares to $74 billion, according to one of the people, which is calculated separately from the stock owned by major shareholders.

San Francisco-based Stripe said in the email that the board approved the lower share price effective June 30, the people said. The payments processor to startups and fast-growing internet companies didn’t explain the decision to lower its internal valuation, the people said.

A prolonged market sell-off, in which big technology stocks experienced their biggest rout in more than a decade , has slowed the pace of private fundraising and pushed startups to slash costs and cut jobs. That’s a stark contrast from the fundraising environment last year, when a buoyant market helped at one point make Stripe the most valuable startup in the U.S.

The shares of publicly-traded fintech companies have plummeted in the past few months, making Stripe look overvalued. Payments processor PayPal Holdings Inc., which investors often compare to Stripe, has seen its stock decline by over 60% since Jan. 1.

In March 2021, Stripe raised $600 million from a group of investors that included Ireland’s National Treasury Management Agency and Fidelity Investments. Stripe was valued at $95 billion in that round, more than 2 1/2 times its valuation in a 2019 fundraising round.

A 409A valuation is an independent estimate of a startup’s fair market value, often used to price stock options to employees.

Private companies often update their 409A valuation to more appropriately assess the best price to issue new stock options. The metric is separate from the valuations investors assign to startup shares, which are usually based on the price of the last financing round but can change based on changes in a company’s performance or external market shifts.

Stripe isn’t the first high-profile startup to lower its 409A valuation. Earlier this year, Instacart Inc. marked down its internal valuation to $24 billion from $39 billion, a decision the company said it made to help with retention and recruiting by giving employees more potential upside with their options.

Stripe took off during the pandemic, as businesses migrated online and began using its software to process payments on their platforms.

Founded in 2010 by Irish brothers Patrick and John Collison, Stripe raised more than $1 billion since the start of the pandemic from Silicon Valley investors, including Sequoia Capital and Andreessen Horowitz. Amid the height of the venture capital boom last year, some investors sought to buy shares of the company at prices well north of its last $95 billion valuation.

The company has yet to mount what would be one of the most highly-anticipated public listings in the startup world. As of April last year, Stripe was preparing to go public as early as late 2021, The Wall Street Journal previously reported. A spokeswoman for the company declined to comment on its current IPO plans, though the market for tech listings h as largely frozen up amid the market rout.

Stripe processes payments for fellow startups and tech companies including skincare provider Glossier Inc., enterprise service Twilio Inc., and ride-hailing service Lyft Inc. Revenue rose nearly 70% to about $7.4 billion in 2020, The Wall Street Journal previously reported, as online shopping took off at the start of the pandemic. Investors liked Stripe because of the wide reach of its services among Silicon Valley startups, allowing the company to act as an index of sorts for the broader growth of the startup industry.

Fintech firms have been hit hard by rising inflation and fears of an impending recession, which could threaten to further reduce online consumer spending. Many public investors have sold off shares in payments firms like Adyen, whose stock is down over 40% since the beginning of the year.

The harsher environment is already hurting some high-profile fintech startups. Earlier this year, Swedish payments firm Klarna Bank AB, which offers a buy-now, pay-later service, raised new cash at a $6.7 billion valuation, down from the $45.6 billion valuation it raised at in June 2021.

Write to Berber Jin at berber.jin@wsj.com and Peter Rudegeair at Peter.Rudegeair@wsj.com

Appeared in the July 15, 2022, print edition as 'Stripe Cuts Valuation 28%'.

Stripe Cuts Internal Valuation by 28% - WSJ

[Glenn Petersen] GameStop trading nearly destroyed Robinhood Quartz July 2, 2022 In the pre-daw...

Glenn Petersen — 7/2/2022 7:32:09 AM

GameStop trading nearly destroyed Robinhood

Quartz
July 2, 2022

In the pre-dawn hours of Jan. 28, 2021, the financial trading firm Robinhood faced a $3.7 billion margin call from the clearing house that settles its customers’ trades.

For every trade Robinhood facilitates, it needs to have sufficient reserves, posted as collateral, for the two days it takes for trades to settle. The problem was that Robinhood only had $700 million for collateral—it was short $3 billion and had just a few hours to get the rest of the money.

Retail traders were using the app to buy up tons of volatile meme stocks like GameStop and AMC Entertainment, boosting their prices in attempted short squeezes—which meant Robinhood had to post commensurate amounts of collateral to stay solvent until those trades settled.

In the hours between the clearing house’s notice—first sent at 5:11 am US eastern time—and the 10 am deadline for the margin call, Robinhood executives pressed the clearing house for leniency and simultaneously tried to raise money.

The lobbying and fundraising efforts worked. The company also abruptly halted trading on volatile stocks like GameStop for the day, which limited its own immediate risk, but prompted an uproar from its customers and a congressional hearing and investigation.

Last week, more than a year after the GameStop short squeeze was front-page news, the US House Financial Services Committee’s Democratic staff released the results of its investigation (pdf), showing exactly how Robinhood averted financial disaster on a day when it should have gone under.

How Robinhood makes money

If you have bought or sold a stock in recent years and weren’t charged by your broker to do so, you probably have Robinhood to thank. Robinhood pioneered no-commission securities trading through a business model called payment for order flow (PFOF). The company’s popularity with retail investors forced established brokers like Fidelity and Charles Schwab to eliminate trading commissions in 2019.

Robinhood doesn’t actually execute trades for its customers. Rather, it sells its customers’ orders to so-called market makers like Citadel Securities and Two Sigma Securities, who vie to complete those orders.

Still, Robinhood has to post collateral for its customers’ trades to the National Securities Clearing Corporation (NSCC), which is a division of the Depository Trust & Clearing Corporation (DTCC), the largest securities clearing house in the US. The DTCC is a private company that is heavily regulated by the US Securities and Exchange Commission.

A phone call and a fundraising round

At 7:15 am on the day of the margin call, Dan Gallagher, Robinhood’s chief legal officer, placed a phone call to an unnamed deputy general counsel at the DTCC, according to the House investigation. Gallagher is a former Republican commissioner of the SEC, the primary regulator of the DTCC. He and the DTCC official were “professionally acquainted,” the report says, noting the two previously worked together at a law firm. On the call, Gallagher asked to escalate the matter to senior DTCC officials “to discuss how to obtain relief, waiver, or an exemption.”

By 9:11 am, and after several more phone calls between Robinhood and DTCC officials, Robinhood’s collateral deposit requirements were reduced from $3.7 billion to $1.4 billion, still leaving the firm $700 million short.

The justification for granting billions of dollars in waivers wasn’t explained. According to the report, the DTCC’s market risk director “conveyed that Robinhood’s Excess Capital Premium charge was being reviewed for downward adjustment without commenting on why it was being reviewed or what would qualify Robinhood for a downward adjustment.”

While Gallagher was negotiating with the DTCC, Robinhood chief financial officer Jason Warnick was calling up investors. By the 10 am deadline, Warnick had secured $1 billion in new investment. It kept fundraising after the Jan. 28 deadline. By Jan. 30, the company had raised a total of $3.5 billion.

Without this dual-pronged approach, Robinhood would have defaulted to the DTCC like Lehman Brothers did during the 2008 financial crisis. When a default happens, the clearing house “assumes control of the defaulted member’s portfolio and liquidates it,” the report says, to reduce risk to the broader financial system.

Robinhood’s unlikely survival

That Robinhood was able to get out of this debacle was nothing short of a miracle, says Tyler Gellasch, executive director of the Healthy Markets Association, an investor trade group, and a former Senate and SEC lawyer.

“It is the equivalent of a four-engine plane losing all four engines at 30,000 feet and landing safely,” Gellasch says.

Gellasch is critical of the risk management shortcomings that contributed to Robinhood’s troubles. He chalks up the firm’s survival to its political savvy. “This shows the power of having an extraordinarily politically connected executive on your team,” he said.

Robinhood’s failure could have had serious consequences for the broader financial system, too.

“There isn’t really a precedent for a firm like Robinhood to fail,” Gellasch says. “The sudden collapse of a broker-dealer with millions of accounts could very easily have been the spark that ignited a broader market disruption.”

James Tierney, a securities law professor at University of Nebraska College of Law and a former SEC lawyer, says that while defaulting is a big threat to small brokers, Robinhood appeared confident that it was, in a sense, too big to fail.

“It reminds me of the old saying, ‘If you owe the bank a million bucks, that’s your problem, but if you owe the bank a billion bucks, that’s their problem,’” he says.

In one internal message obtained by the Congressional committee, Robinhood president and COO David Dusseault told a colleague that the company would be able to navigate the clearing house’s requirements. “We are to [sic] big for them to actually shut us down,” he wrote.

In an email to Quartz through a spokesperson, Robinhood deputy general counsel Lucas Moskowitz says the House committee investigation report is “nothing new, once again confirming that January 2021 was an extraordinary, once in a generation event that stressed every stakeholder in the market.”

Six months later, in July 2021, Robinhood went public, raising another nearly $2 billion for its coffers.

The post GameStop trading nearly destroyed Robinhood appeared first on Quartz.

GameStop trading nearly destroyed Robinhood – DNyuz

[Sun Tzu] Wow! I guess these are the times that we separate the wheat from the chaff.

Sun Tzu — 7/1/2022 8:46:33 PM

[Glenn Petersen] Klarna to Raise Fresh Cash at Slashed $6.5 Billion Valuation The deal would be...

Glenn Petersen — 7/1/2022 1:14:37 PM

Klarna to Raise Fresh Cash at Slashed $6.5 Billion Valuation

The deal would be a huge comedown for the company, which investors valued at $45.6 billion in 2021

By Corrie Driebusch, Ben Dummett\ and Julie Steinberg
Wall Street Journal
Updated July 1, 2022 12:59 pm ET

Klarna Bank AB is nearing a deal to raise new money at a valuation of around $6.5 billion, according to people familiar with the matter, a humbling comedown and a testament to the punishing environment facing startup companies.

The Sweden-based specialty lending and online payments provider is negotiating to raise about $650 million mostly from existing investors led by Sequoia Capital, the people said. Michael Moritz, who is the chairman of the well-known venture-capital firm, serves in the same role at Klarna.

The deal has yet to be completed and could still hit last minute snags, the people said. But if completed, it would represent a huge discount on the company’s valuation when investors led by an arm of SoftBank Group Corp. 9984 -1.99%? valued Klarna at $45.6 billion in June 2021.

Klarna’s core offering, known as buy-now-pay-later, is embedded in online checkout pages for popular retailers such as Macy’s and Bed Bath & Beyond. Consumers use Klarna to break up payments over time for things they order online.

Klarna competes directly with credit card companies, and some investors viewed the company as possibly the next PayPal Holdings Inc. or Block Inc., companies that have grown by stealing business traditionally dominated by banks.

Buy-now-pay-later is a new spin on an old idea: installment plans. But instead of just being used for big-ticket items such as sofas and televisions, buy-now-pay-later can be used for just about anything. Instead of charging consumers interest, Klarna takes a fee from the retailers.

The company’s services boomed during the pandemic as consumers flocked to online shopping. So did its valuation, which soared through several funding rounds from $5.5 billion to $31 billion and eventually $45.6 billion.

The valuation surge made Klarna one of the world’s most valuable fintech companies and turned its CEO and co-founder, Sebastian Siemiatkowski, into a paper billionaire.

But in recent months investor appetite for loss-making companies has dried up. Klarna expanded rapidly in the U.S. and has burned through money it previously raised.

Klarna is licensed as a bank in Sweden, and the fundraising was also necessary to keep up with more stringent Swedish bank capital requirements, The Wall Street Journal reported last month, citing people familiar with the company.

Klarna’s fundraising is being closely watched in the Silicon Valley as a signal of the amount of pain investors will have to take in the broader tech swoon. Venture-capital firms often base the value of their investments on a company’s most recent funding round.

Klarna’s success brought in competition. Traditional credit card lenders such as Barclays PLC have jumped into the buy-now-pay-later space. Last month, Apple Inc. said it would add a buy-now-pay-later feature to Apple Pay. Klarna and its competitors also face increased scrutiny from regulators about buy-now-pay-later products in the U.S. and the U.K.

Justifying Klarna’s previous valuation was especially difficult given the steep drop in tech stocks in recent months. Shares in two of Klarna’s competitors, Affirm Holdings Inc. and Zip Co., are down more than 80% this year.

In talks with investors, Klarna initially tried to negotiate a $50 billion valuation. That was whittled down to around $30 billion, and then to $15 billion, before investors and the company opted for the even lower valuation.

In the talks, the company didn’t give in to investor demand to issue preferred securities instead of common equity, the people familiar with the matter said. Preferred securities offer holders preferential treatment over other shareholders to guard against potential future dilution or losses.

Write to Corrie Driebusch at corrie.driebusch@wsj.com, Ben Dummett at ben.dummett@wsj.com and Julie Steinberg at julie.steinberg@wsj.com

Klarna to Raise Fresh Cash at Slashed $6.5 Billion Valuation - WSJ

[Glenn Petersen] Yes. The SPACs generally have 18 to 24 months to complete an acquisition. Otherw...

Glenn Petersen — 7/1/2022 9:35:25 AM

Yes. The SPACs generally have 18 to 24 months to complete an acquisition. Otherwise, they are forced to liquidate, although they can generally extend their life span if their shareholders approve the extension. When the vote is taken, the shareholders have the option to redeem their shares. I have seen one instance where a SPAC extended its life six or seven times. By the time they actually completed a transaction they were down to approximately 10% of their original funding. If a SPAC is trading at a premium when their shareholder vote is scheduled, that is usually a good indication that the deal will get approved and that the redemptions will be limited.

[Sun Tzu] What happens when a SPAC trades below liquidation value? Is that basically free ...

Sun Tzu — 7/1/2022 9:21:59 AM

What happens when a SPAC trades below liquidation value? Is that basically free money if you buy it and bail out?

[Glenn Petersen] I have no argument with that approach. . BTW, eToro would never have gotten th...

Glenn Petersen — 7/1/2022 9:17:46 AM

I have no argument with that approach. .

BTW, eToro would never have gotten the full $400 million. A lot of the SPAC shareholders would have exercised their redemption rights. The SPAC was trading at a discount to its liquidation value. Not a positive indicator. That was probably one of the factors that killed the transaction.

[Sun Tzu] The valuation was dropped to $8.8 billion, based on SEC filings. As part of the...

Sun Tzu — 7/1/2022 7:37:29 AM

The valuation was dropped to $8.8 billion, based on SEC filings.

As part of the FinTech Acquisition Corp. V deal, the combined company was expected to get over $400 million in private investment in public equity funding, according to the SEC. The merger was going to inject $250 million into eToro from the SPAC, and another $650 million from PIPE funding.

This news follows a broader trend of other tech companies abandoning plans for a SPAC merger due to stock market instability. Media company Forbes canceled plans in early June, and SeatGeek, a ticketing app did the same in May.

This part is making my point. And btw, not just fintechs, any IPO over the next 12 months is more likely to be good than bad. You just need to be sure that they raise enough money to last another 3 years.

[Glenn Petersen] I would be hesitant to invest in any fintech IPOs thus year. Stripe would be the...

Glenn Petersen — 7/1/2022 7:06:52 AM

I would be hesitant to invest in any fintech IPOs thus year. Stripe would be the one possible exception, depending on the valuation. I would be more inclined to put money into PayPal or Block (formerly Square).

eToro abandons SPAC deal: The Information

by Anushree Dave
The Block
June 30, 2022

Quick Take

eToro, an online brokerage offering crypto trading, has halted plans for a SPAC merger, according to sources who spoke to The Information.
The company said it would be “sharing an update in the coming days.”

eToro, an Israel-based online brokerage offering cryptocurrency and stock trading, is not moving forward with its plans for a SPAC merger, according to sources who spoke to The Information.

The deal was set to take place on Thursday, merging with a SPAC called FinTech Acquisition Corp. V, backed by banking entrepreneur Betsy Cohen.

A spokesperson for the firm told The Information that it would be "sharing an update in the coming days."

The eToro deal was originally struck in March 2021 to merge at a valuation of $10.4 billion. In December, the plan was delayed to June 2022 after failing to get SEC approval. The valuation was dropped to $8.8 billion, based on SEC filings.

As part of the FinTech Acquisition Corp. V deal, the combined company was expected to get over $400 million in private investment in public equity funding, according to the SEC. The merger was going to inject $250 million into eToro from the SPAC, and another $650 million from PIPE funding.

This news follows a broader trend of other tech companies abandoning plans for a SPAC merger due to stock market instability. Media company Forbes canceled plans in early June, and SeatGeek, a ticketing app did the same in May.

theblock.co

[Sun Tzu] Because typically the economy starts booming (not just recovering) within 30 mon...

Sun Tzu — 6/27/2022 3:56:55 PM

Because typically the economy starts booming (not just recovering) within 30 months of a bear market and money becomes plentiful. So if a risky company is going public during current conditions, then first of all their valuation is unlikely to be unreasonable. And secondly, if they have managed to raise enough money to last for the next 3 years, then even if they don't achieve all that they want and things go bad, within 3 years they will have access to new funds and will be ahead of where they are today.

I have been debating with myself if I should buy HOOD. I really came close to pulling the trigger near their recent lows. They certainly show value at these prices. But I just can't be sure they will last for the next 3 years, especially with the proposed SEC changes.

[Glenn Petersen] Why three years? Sam Bankman-Fried’s FTX Is Seeking a Path to Buy Robinhood @a...

Glenn Petersen — 6/27/2022 3:37:23 PM

Why three years?

Sam Bankman-Fried’s FTX Is Seeking a Path to Buy Robinhood

@antoniabmassa
@MattMonks123
Bloomberg
June 27, 2022

Sam Bankman-Fried’s FTX crypto exchange is exploring whether it might be able to acquire Robinhood Markets Inc., according to people with knowledge of the matter, Bloomberg News reports.

FTX is deliberating internally how to buy the app-based brokerage, one of the people said, asking not to be identified because the matter isn’t public. Robinhood hasn’t received a formal takeover approach from FTX, another person said. No final decision has been made and FTX could opt against pursuing a deal, the people said.

More information is available on the Bloomberg Terminal.

Sam Bankman-Fried’s FTX Seeking to Buy Robinhood (HOOD) - Bloomberg

[Sun Tzu] I will consider any Fintech IPO that comes out this year, so long as I am sure t...

Sun Tzu — 6/9/2022 9:54:58 PM

I will consider any Fintech IPO that comes out this year, so long as I am sure they will not go belly up over the next 3 years.

[Glenn Petersen] ‘The mood is very grim’: Once-hot fintech sector faces IPO delays and consolidat...

Glenn Petersen — 6/9/2022 3:27:20 PM

‘The mood is very grim’: Once-hot fintech sector faces IPO delays and consolidation

PUBLISHED THU, JUN 9 20222:55 AM EDT UPDATED 4 HOURS AGO
Ryan Browne @RYAN_BROWNE_
CNBC.com

KEY POINTS

-- Bosses of major fintech players sounded the alarm about deteriorating macroeconomic conditions at the Money 20/20 Europe trade show.

-- John Collison, co-founder of online payments firm Stripe, said he was unsure if the company could still justify its $95 billion valuation given the current economic climate.

-- Zopa, a digital bank based in Britain, suggested it was less likely to meet its target of going public by the end of 2022.

AMSTERDAM — Financial technology companies are putting IPO plans on hold and cutting expenses as fears of an impending recession cause a shift in how investors view the market.
At the Money 20/20 conference in Amsterdam, bosses of major fintech players sounded the alarm about the impact of a deteriorating macroeconomic climate on fundraising and valuations.

John Collison, co-founder and president of Stripe, said he was unsure if the company could justify its $95 billion valuation given the current economic environment.

“The honest answer is, I don’t know,” Collison said on stage Tuesday. Stripe raised venture capital funding last year and is not currently looking to raise again, he added.

It comes as buy now, pay later firm Klarna is reportedly looking to raise fresh funds at a 30% discount to its $46 billion valuation, while rival group Affirm has lost roughly two thirds of its stock market value since the start of 2022.

IPO delays

Zopa, a digital bank based in Britain, had hoped to go public by the end of 2022. But this is looking less likely as inflation shocks exacerbated by the war in Ukraine have led to a slump in both public and private markets.

“The markets have to be there” for Zopa to go public, CEO Jaidev Jardana told CNBC. “The markets are not there — not for fin, not for tech.”

“We will just have to wait for when the markets are in the right place,” he added. “You only want to do an IPO once, so we want to make sure that we pick the right moment.”

The tech sector has borne the brunt of a market sell-off since the start of the year, as investors digested the likelihood of a steep rate hiking cycle — which makes growth stocks’ future earnings less attractive.

Several executives and investors said rising inflation and interest rate hikes were making it harder for fintech firms to raise money.

“Within the investment community, the mood is very grim,” Iana Dimitrova, CEO of payment software firm OpenPayd, told CNBC.

OpenPayd is in the process of raising funds, but it’s unclear when the company will be able to finalize the round, Dimitrova said.

“People are now definitely moving much slower than they did a year ago,” she said. “They’re being more cautious.”

Funding squeeze

Prajit Nanu, co-founder and CEO of San Francisco-based payments company Nium, said he’s expecting “massive consolidation” in fintech.

“Companies which are not going to raise are going to either get consolidated or shut down,” he said.
The big fear is that fintech growth will slow along with the economy at large as soaring prices force consumers to tighten their purse string. Economists at the World Bank on Tuesday cut their forecast for global economic growth, warning of prolonged “stagflation” — a situation where inflation remains high but growth stalls.

Investment in the fintech sector boomed last year, reaching a record $132 billion globally — thanks in large part to the effects of Covid lockdowns on people’s shopping habits. But — as worries around rising inflation and higher interest rates hit home — funding dropped 18% in the first quarter from the previous three months to $28.8 billion, according to data from CB Insights.

“There’s going to be more of a focus on unit economics versus just crazy growth,” Ricardo Schaefer, partner at Target Global and an early investor in financial services app Revolut, told CNBC.

Stripe’s Collison had a simple piece of advice for fintech founders at the conference: tear up the 2021 investor pitch.

“They definitely can’t do the 2021 pitch,” he said. “It needs to be a new pitch, a 2022 pitch.”
Ken Serdons, chief commercial officer of Dutch payments firm Mollie, agreed. Fintechs seeking fresh funds now will need to present a “clear path to profitability,” he said.

[Glenn Petersen] HOOD is currently trading at $9.80, down from its 52-week high of $85.00. Robin...

Glenn Petersen — 4/30/2022 5:22:13 AM

HOOD is currently trading at $9.80, down from its 52-week high of $85.00.

Robinhood’s Way Out of the Woods

In the absence of a new investor surge, stock lending and higher rates may boost peruser revenue

By Telis Demos
Wall Street Journal
Heard on the Street
April 29, 2022 11:23 am ET

Short selling hasn’t been much help to Robinhood HOOD -2.82% Markets’ beleaguered share price. But it could be one key for the company to find some much-needed revenue growth.

Even as the stock languishes, down more than 40% so far in 2022, Robinhood is busy launching new products. So far this year it has introduced a new debit card and extended its trading hours. It has also completed the rollout of its cryptocurrency wallet and listed the popular Shiba Inu coin while jump-starting its overseas expansion by announcing the acquisition of a U.K. crypto app.

These are the kinds of moves investors have hoped can power a fresh wave of interest as the trading mania of last year continues to fade.

But while Robinhood may be building, droves of new accounts have yet to come. Net cumulative funded accounts grew just incrementally to 22.8 million from 22.7 million over the first quarter. Monthly active users declined. Total net revenues fell about 18% from the fourth quarter to the first, and were down more than 40% from a year ago.

Many of these products are in their infancy, so it is too soon to make a judgment on them. But one measuring stick may be the most critical for now: Average revenue per user, or ARPU. That dropped to just $53 in the first quarter. Robinhood on Thursday told analysts that as part of a push toward positive adjusted earnings before interest, taxes, depreciation, and amortization by year-end, it needs to get ARPU to the mid-$80s range. The company is reducing costs too, most notably via an announced trimming of about 9% of full-time staff.

So where does that roughly $30 in additional ARPU come from? Barring an activity or account surge, it may not be crypto enhancements for now. Chief Executive Vlad Tenev told analysts that “at this point, on a stand-alone basis, we actually don’t view wallets as a revenue driver.”

Instead, Robinhood could see a meaningful peruser revenue bump from a passive activity: securities lending. So-called fully-paid securities lending enables customers to loan out their holdings, sometimes to institutions that want to use them for short selling, to generate some additional income. The more demand there is for shares to borrow, the more Robinhood and its customers can earn.

Robinhood says this offering, which it recently began rolling out to a small set of customers, has the potential to eventually add about one to two times as much as the revenue of its current margin securities lending business. That alone could add several dollars to ARPU, even if users didn’t trade or invest any more than they do today.

Another ARPU driver the company cited is continuing enhancement that will benefit advanced users. Notably, option trading, including by more-sophisticated traders, has been Robinhood’s steadiest transaction revenue generator—so anything to better monetize or engage options traders might deliver a relatively predictable boost. Options-driven transaction revenue of $127 million in the first quarter was still two-thirds of the peak level seen in the first quarter of 2021. By contrast, equities and crypto revenues were at about one-fourth of their respective quarterly high-water marks.

Then there are rising interest rates and the benefits of good old cash. Higher rates may be bad news for crypto prices and highflying stocks, but they can be great for brokers in many ways. Higher rates can boost Robinhood’s ability to generate interest revenue from cash balances, and drive higher pricing on margin loans. Robinhood can also attract more of a customer’s assets with high yields on uninvested cash, or earn by monetizing instant withdrawals if customers are in a hurry to move cash around.

Securities lending and cash strategies may not have been what a lot of people had in mind when Robinhood went public in the midst of a retail trading bonanza. But for the time being, these seemingly boring things may be some of the company’s most exciting opportunities to turn around its beleaguered stock.

Write to Telis Demos at telis.demos@wsj.com

Robinhood’s Way Out of the Woods - WSJ

[jenniferdehner] Thanks for this information. I used to be far from finance and investing. It use...

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[Sr K] Super Bowl 56 comes to you live from SoFi Stadium in Inglewood, California on Su...

Sr K — 1/30/2022 11:51:58 PM

Super Bowl 56 comes to you live from SoFi Stadium in Inglewood, California on Sunday, February 13th with kickoff scheduled for 6:30 p.m.

[Sr K] Walmart-Backed Fintech Startup Is Acquiring Two Firms and a New Name The startu...

Sr K — 1/26/2022 9:44:40 AM

Walmart-Backed Fintech Startup Is Acquiring Two Firms and a New Name

The startup, to be called ONE, is helmed by former Goldman executives and aims to build a ‘financial services super app’

The Walmart-backed fintech startup will use the ONE brand after acquiring Even Responsible Finance and ONE Finance.PHOTO: JEFFREY GREENBERG/UNIVERSAL IMAGES GROUP/GETTY IMAGES

By
Sarah Nassauer Follow

Jan. 26, 2022 7:20 am ET

The financial-technology startup backed by Walmart Inc. said it plans to purchase two small firms and launch under a new brand.

The firm, helmed by two former Goldman Sachs Group Inc. executives, will buy Even Responsible Finance Inc., which is used by employers to offer workers their paychecks early and counts Walmart as a large customer. It will also buy ONE Finance Inc., a financial-services mobile app known as a neobank that allows users to manage money and apply for a debit card or other services that come with lower fees than traditional banks typically charge.

Walmart is the majority owner of the firm under a joint venture with Ribbit Capital, known for investing in Robinhood Markets Inc. and other digital financial businesses. After the acquisitions, the startup will use the ONE brand, the firm said in a statement. Even and ONE had a combined valuation of around $400 million during their last fundraising rounds, according to people familiar with the situation.

ONE aims to become a one-stop shop for a range of mobile-based financial services that appeal to customers from a variety of socioeconomic groups, said Omer Ismail, chief executive of the firm and former head of Goldman’s consumer-banking unit called Marcus. Mr. Ismail said the partnership with Walmart offers a huge potential customer base, with around 1.6 million U.S. employees and over 100 million U.S. shoppers a week, he said. The startup’s position outside the corporate structure of the retail behemoth will allow it to grow quickly, he said.

“The strategy is to build a financial services super app, a single place for consumers to manage their money,” he said. The acquisitions are expected to close in the first half of this year, the company said in a statement. The firm will have about $250 million of cash on hand after the acquisitions, according to the statement.

Big banks have been monitoring Walmart’s entry into financial services, wary of its giant reach and opportunity to build from scratch. The departure of Mr. Ismail from Goldman, where he was a fast-rising partner, to run the fintech firm added to the intrigue across Wall Street.

The venture is part of Walmart’s wider effort to build new sources of profitable revenue beyond selling goods, mirroring Amazon. com Inc.’s model of making money selling cloud-computing services and advertising.

Excerpt

[Glenn Petersen] SoFi’s bank is launching soon, and Wall Street is stoked Banking buzz Protocol...

Glenn Petersen — 1/21/2022 12:50:15 PM

SoFi’s bank is launching soon, and Wall Street is stoked

Banking buzz

Protocol
January 21, 2022

SoFi shares rallied this week on news that the OCC has given a conditional OK to its plan to launch its own bank.

The company still has a bit of work to do, including closing its acquisition of Golden Pacific Bank, the vehicle for its banking ambitions. But there’s a reason why Wall Street’s getting excited.

Getting a charter — either by submitting to a regulatory process or buying an existing bank — is too big of a hassle for most fintech companies. Now SoFi looks to be getting to the other side of that moat. And Wall Street likes moats.

Dealing with regulators can be a pain. That’s the reason most fintechs typically work with partner banks.

-- It can be beneficial to both sides. The banks gain access to new tools and technologies, not to mention a revenue stream, while doing the hard work of compliance.

-- But fintechs can hit a point where they outgrow the arrangement, seeking more control over their products and profits. That led LendingClub to buy Radius Bank for $185 million in 2020. Last year, Square, whose parent recently renamed itself Block, got its own charter to launch Square Financial Services.

-- SoFi initially followed Square’s lead by applying for a charter, but then switched gears last year and bought Golden Pacific Bancorp for $22.3 million. CEO Anthony Noto said the move was a faster way to get to its goal.

-- The trend will “definitely accelerate,” Alex Johnson, fintech research director of Cornerstone Advisors, told Protocol. There’s so much money pouring into fintech right now — and buying a bank or acquiring a charter is “likely a good use of that capital.”

LendingClub showed why becoming a bank pays off. The fintech pioneer stunned Wall Street in 2020 when it said it was buying a bank. It surprised investors again last July by reporting the most profitable quarter in its history — largely because it has become a full-fledged bank.

-- Becoming a bank helped LendingClub cut costs while bringing additional revenue, CEO Scott Sanborn told Protocol last year. The fact that it is now subject to greater regulatory scrutiny actually inspired more confidence in customers, he said.

-- Hopes are high that SoFi will reap similar benefits with the expected launch of SoFi Bank. “It gives them easier access to capital,” which means they’d be able to offer customers better rates, IDC analyst Raymond Pucci told Protocol.

-- The downside is that regulators could slow SoFi down in expanding into other areas. In granting its conditional approval, the OCC cautioned SoFi about crypto. The agency noted that SoFi Bank “will not engage in any crypto-asset activities or services.

-- ”That’s not going to be a problem, a SoFi rep told Protocol. SoFi’s crypto business operates under SoFi Invest; SoFi Bank will be a separate entity. It’s typical for financial firms to cordon off their crypto activities in this way.

Not all fintechs should try this. Becoming a bank takes a lot of work and can be very expensive. It makes sense for big, established fintechs like SoFi and LendingClub, which have some experience dealing with regulators. “It’s a scale thing,” Pucci said. “You’re adding to your toolbox so you can do more things.” Now investors expect SoFi to put that toolbox to work.

– Benjamin Pimentel ( email | twitter)

SoFi Bank is becoming a reality - Protocol — The people, power and politics of tech

[Sun Tzu] Seems like a lost company that does not have a business plan and tries to hustle...

Sun Tzu — 1/2/2022 11:54:48 AM

Seems like a lost company that does not have a business plan and tries to hustle whatever they can.

[felixg00] Just heard that IQSTEL is working on the Global Launch of their MAXMO FinTech Ec...

felixg00 — 12/23/2021 12:57:57 PM

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IQST Iqstel Inc — Stock Price and Discussion | Stocktwits

[felixg00] IQstel's PPS began going up as it starts the installation of 2500 units of iQSTE...

felixg00 — 12/17/2021 1:13:36 PM

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[Finlay Smith] $IQST - IQstel continues in the execution of key steps to up-list onto a nationa...

Finlay Smith — 12/16/2021 12:34:19 PM

$IQST - IQstel continues in the execution of key steps to up-list onto a national exchange. It is specifically targeting NASDAQ. As the stock is way more Undervalued, it's time to buy as the PPS will go up as soon as it gets up-listed!

globenewswire.com

[Glenn Petersen] Robinhood’s Stock Fizzles After Splashy Public Offering Shares of the brokerage...

Glenn Petersen — 12/10/2021 5:39:42 AM

Robinhood’s Stock Fizzles After Splashy Public Offering

Shares of the brokerage that created a frenzy for individual investors are struggling to advance

By Caitlin McCabe Follow
Wall Street Journal
Updated Dec. 9, 2021 5:59 pm ET

It has been a rough few weeks for Robinhood Markets Inc.’s HOOD -7.63% stock.

Shares of the retail-trading platform have tumbled lately and reached an all-time intraday low this week. Robinhood’s stock has been trading for more than four weeks below its initial public offering price of $38 a share. It closed Thursday at $21.91, a 42% decline from its IPO price and a 74% drop from its intraday high of $85 reached earlier this year.

This year has been a banner one for IPOs, and Robinhood’s public debut on the Nasdaq in July was one of the most anticipated. The online brokerage has played a central role in the retail-trading frenzy of the past two years and at last count boasted more than 22 million customers with funded accounts.

Launched less than a decade ago by co-founders Vlad Tenev and Baiju Bhatt, the company was able to grow quickly by using a slick user interface to attract droves of younger investors, an age group that larger entities such as Fidelity Investments and Vanguard Group historically had trouble capturing. Now that Robinhood has locked down that demographic, it is having a hard time sustaining the pace of growth. Robinhood is mostly reliant on users’ trading activity for revenue. And its third-quarter results missed analysts’ estimates, weighing down the stock.

“This was never going to be a stock that was going to move on a linear path,” said Devin Ryan, who covers the company as director of financial technology research at JMP Securities. “There’s a lot of volatility in the business model, and growth doesn’t move on a smooth line.”

The competition within the brokerage world is fierce, with customers increasingly unwilling to pay fees. Large asset managers have been able to keep fees low while using their scale to boost revenue. They have also had success developing custom and specialized products with higher fees, such as funds tied to the environment.

Robinhood plans to expand with other products and services in the future, including a much-anticipated wide-scale rollout of cryptocurrency wallets. But even as it grows, it has been dogged by bumps along the way. Recently, for example, the company disclosed a hack that allowed an intruder to make away with the personal information of millions of users.

Robinhood shares have been extremely volatile since their debut, when banks grappled with an atypical wrinkle in the IPO process: opening up the offering to customers on the same terms as institutional investors. In an unusual move, as much as 25% of the IPO shares went to Robinhood’s individual-investor customers.

On seven different trading days in Robinhood’s life as a public company, the stock has moved more than 10%. On back-to-back days in August, shares rose 50% and then slid 28%.

Many companies that made their debuts on stock exchanges this year have seen their share prices struggle and on average are trading 8.8% below their IPO prices. That is according to a Dealogic analysis through Dec. 6 of the more than 380 companies that have launched IPOs in the U.S. this year. In total, nearly two-thirds of those companies are trading below their offer prices.

Robinhood’s worse-than-average performance since its IPO is a surprising turn of events for a company that just a few months ago seemed destined to join the ranks of highflying stocks. In early August, Robinhood surged to an intraday high of $85 during a frenzied day of trading, boosted by enthusiasm from individual investors and a surge of options bets.

In the months since that trading surge, Robinhood’s stock has fallen, reaching an all-time intraday low of $20.58 on Monday. And even after recovering earlier in the week, Robinhood remains down 16% in December. The Nasdaq Composite, by contrast, is flat, down 0.1% after shaking off recent weakness that the technology sector suffered during a broader selloff across the stock market.

Robinhood declined to comment.

Much of the recent weakness in Robinhood’s stock followed its October third-quarter earnings report, when the company reported a 35% quarter-over-quarter drop in revenue. A slowdown in cryptocurrency trading, particularly in the meme cryptocurrency dogecoin, weighed heavily on results. The company said it expected revenue in October through December to be smaller than the amount recorded in the third quarter.

The weeks that followed brought a data breach. Email addresses for about five million Robinhood users were exposed, as well as full names for a different group of about two million people, Robinhood said.

The stock price has faced recent pressure on a technical basis. Hundreds of millions of shares owned by early investors and employees have become fully tradable in recent weeks after lockup restrictions tied to the IPO expired, opening up the potential for such groups to sell their holdings.

“You had a lot of potential selling pressure after a weaker quarter for the company,” said Mr. Ryan, who currently has a $58 price target on the stock. He said he remains optimistic on the company’s plans, including its goal to expand into retirement accounts.

And while regulatory threats, including the possibility of cryptocurrency regulation and changes in payment-for-order flow—from which Robinhood derives the bulk of its revenue—continue to haunt the company, Mr. Ryan said there are other reasons to be encouraged. His estimates show an increase in Robinhood app downloads this quarter compared with the previous one as stock volatility and cryptocurrency trading have increased.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the December 10, 2021, print edition as 'Robinhood Fizzles After Hot Start.'

Robinhood’s Stock Fizzles After Splashy Public Offering - WSJ

[Glenn Petersen] Nubank trades under the symbol NU. Nubank’s IPO is about more than just raising...

Glenn Petersen — 12/10/2021 5:00:45 AM

Nubank trades under the symbol NU.

Nubank’s IPO is about more than just raising cash

The Brazilian neobank’s IPO could be one of the largest offerings of the year. But co-founder Cristina Junqueira says it could have a more profound meaning for her customers.

Tomio Geron
Protocol
December 9, 2021

Nubank co-founder Cristina Junqueira says she’s proud of what her neobank has accomplished. | Photo: Nubank
------------------------------------

Nubank, which began trading on the NYSE today, isn’t just going public to raise money: It’s also looking to use the event of its IPO to spread stock investing to retail investors in its home market of Brazil.

That’s a point of pride for Cristina Junqueira, co-founder of Nubank and CEO of its Brazilian unit — and it demonstrates how companies, particularly in the financial sector, can think about listing shares as more than just a financing event.

Through a dual listing in Brazil and the U.S., about 800,000 people, or one out of four Nubank customers with investment accounts, bought Nubank shares. In addition, the company plans to distribute free shares to about 7.5 million customers through its financial education program NuSocios, which could effectively triple the number of equity investors in Brazil, she said. (People who participate in NuSocios get one-sixth of a Class A share, which can be traded after one year.)

“We’re very excited about the impact this is going to have on the country,” she said. “Equities are a big source of wealth creation for a lot of families. It was something that was completely inaccessible for Brazilians.”

The move is the latest example of the company branching out beyond its roots to become an all-in-one financial app for consumers. Nubank, founded in 2013, started with no-fee credit cards but now offers a variety of other financial services, such as bank accounts, debit cards, personal loans, small business accounts and “buy now, pay later” in Brazil, Mexico and Colombia.

Financial super apps have been popular in China, India and Southeast Asia, and it’s a strategy that American companies like PayPal, SoFi and Block have been pursuing.

Nubank executives and employees celebrate at the New York Stock Exchange Photo: NYSE
--------------------

The promise that consumer fintech companies that start out in one niche can spread to others, diversifying their revenue and broadening their customer base, has drawn considerable interest from private and public investors. U.S. neobank Chime is also expected to list its shares in 2022.

Nubank is able to leverage data to help cross-sell and improve its products, Junqueira said — for example, when it moved from credit cards to personal loans.

Nubank, which began trading on the NYSE today, raised $2.6 billion, at the top of its IPO range, Wednesday night. Its shares started trading at $11.63, and though they fell to close at $10.33, it’s still worth a bit over $50 billion. The IPO made Nubank the most valuable financial firm in Latin America, according to Bloomberg.

Nubank’s journey to building a financial super app did not happen overnight. Founded in 2013, it began offering credit cards in 2014, which are data-rich and not capital intensive, Junqueira said, allowing Nubank to build a brand. But it wasn’t until years later that it felt ready to roll out other products.

“We always knew that we're going to go beyond that because we define our mission as finding complexity for people but what we wanted was to earn the right to do the next thing,” she said. “So for four years, almost five years, the only thing that we did was credit cards.”

Next came savings accounts, debit cards and personal loans. It now has a marketplace where it features financial products like shopping, remittances, home equity loans and auto loans. It also offers insurance.

She credits the pandemic with accelerating its growth, and giving Nubank a chance to differentiate itself further. Junqueira points to Nubank’s quick adoption of Brazil’s Pix mobile real-time payments system. (Brazil has done more digital real-time payments by volume than the U.S. this year as of October 2021, per ACI Worldwide.)

Nubank is known for reaching customers that are unbanked, and that is a focus for the company. But it is also now competing directly with banks, Junqueira said.

“[Banks] were always our competitors, right?” she said. “Because the vast majority of our customers were in some shape or form with them. There's some people that we're bringing in [who are] completely new and unbanked.”

Others were “just underbanked” — and “unsatisfied,” she added.

Update, Dec. 9, 2021: This story has been updated to include Nubank's closing price.

Nubank IPO spreads stock investing in Brazil - Protocol — The people, power and politics of tech

[Sr K] This Banker Is Minting Money in the Fintech Boom Steve McLaughlin is perhaps th...

Sr K — 12/5/2021 5:04:13 PM

This Banker Is Minting Money in the Fintech Boom

Steve McLaughlin is perhaps the best known, and best paid, banker in financial technology

Steve McLaughlin’s firm, Financial Technology Partners, is said to be on track for some $600 million in revenue this year.
GABBY JONES FOR THE WALL STREET JOURNAL

By
Peter Rudegeair
and
Liz Hoffman

Dec. 5, 2021 9:00 am ET

Silicon Valley has minted plenty of billionaire entrepreneurs. Here’s one who has never written a line of code.

In 2002 Steve McLaughlin left his job at Goldman Sachs Group Inc. GS -1.24% to start an investment bank from his San Francisco apartment. His specialty was financial-technology startups, then a backwater. Today the fintech sector, where coders seek to reinvent the humdrum world of banking as something slicker and even fun, is booming, and the 52-year-old Mr. McLaughlin is its unlikely mogul.

Compensation of deal makers is as hazy as it is large—millions here, millions there. But Mr. McLaughlin’s peers and competitors agree that, as best as anyone can reckon, he is comfortably the highest-paid investment banker in America.

His firm, Financial Technology Partners LP, is on track for some $600 million in revenue this year, according to people familiar with the matter. Valuations of similar listed firms would peg its worth at $2 billion or more. Mr. McLaughlin owns it all, having doled out none of the firm’s equity to its 225 or so employees.

Its playbook combines the advice-giving of traditional investment banks and the motivated profit-seeking of private equity, with fees that often ratchet up as a percentage of the sale prices it fetches for clients. And Mr. McLaughlin has also invested personally in companies he advises, with stakes in just two of them, AvidXchange Holdings Inc. and Marqeta Inc., worth more than a combined $350 million, according to securities filings and people familiar with the matter.

His success has brought the usual trappings of Wall Street—he owns a Gulfstream G650 jet that ferries him from his home in Miami to clients on both coasts—and some offbeat ones, such as booking Snoop Dogg and Eddie Vedder to perform at firm parties in Las Vegas. It has also raised eyebrows across the industry, where his outsize fees engender envy and his marriage of personal investments and corporate advice has stoked concern about conflicts of interest. Mr. McLaughlin said that personally investing in his clients aligns his incentives with theirs.

FT Partners has worked on fundraising for Revolut, a European banking startup.PHOTO: MICHAL FLUDRA/NURPHOTO/ZUMA PRESS
Not content to stay in the advisory business, Mr. McLaughlin raised $500 million for his own blank-check company earlier this year, with plans to buy a fintech company. He recently hired a pair of stock analysts from Goldman and AllianceBernstein to produce original research.

“Historically, bankers are not entrepreneurial,” said Nigel Morris, co-founder of Capital One Financial Corp. and now a venture capitalist who sits on the board of AvidXchange, in which Mr. McLaughlin has a roughly 5% stake. “His scrappiness and tenacity is something to behold.”

FT Partners’ fees are brazen even for Wall Street in their size and structure. In 2019, the firm earned a roughly $250 million fee on the sale of a client, people familiar with the matter said. That is larger than the biggest advisory fee on record, according to Dealogic.

Its invoice for advising CardConnect on its $750 million sale to First Data Corp. in 2017 struck First Data executives as so egregious that they asked CardConnect to get it reduced, according to a securities filing.

Mr. McLaughlin often secures guarantees that clients will hire his firm for any deal they might do in the future—in at least two cases covering half a century, people familiar with the matter said.

One such arrangement has sparked a messy feud. FT Partners advised Circle Internet Financial Ltd. on its pending sale to a blank-check company, a deal that would take the cryptocurrency startup public. FT Partners says the engagement letter the parties signed entitles it to about 9% of the transaction value, according to a regulatory filing by Circle. Circle disputes the fee, which would amount to more than $400 million. Both sides declined to comment.

Mr. McLaughlin said his firm is justly compensated for its ability to dig into complicated, money-burning startups and sell investors on their potential. “We are Christie’s, and other banks are eBay, ” Mr. McLaughlin said.

One thing is clear: FT Partners gets monster valuations for its clients. Revolut, a European banking startup, was valued at $5.5 billion in a 2020 fundraising round organized by JPMorgan Chase & Co. A year later, FT Partners helped raise another round of funding that valued Revolut at $33 billion. The same sort of catapult can be found in fundraising rounds for other FT Partners clients, well beyond the enthusiasm that has seized the sector as a whole.

Mr. McLaughlin acknowledges there is some serendipity at work. He hustled for scraps in the fallow early 2000s, after the dot-com bust. Now fintech is on fire. A record $95 billion in startup fundraising this year through September flowed into the sector, according to research firm CB Insights. Some of the year’s biggest mergers, such as Square Inc.’s planned $29 billion takeover of Afterpay Ltd. , and initial public offerings, including Robinhood Markets Inc.’s debut, happened in fintech.

“It’s like what they say about good hockey players—they don’t skate where the puck is, but where it’s going,” said Mark Loehr, a repeat fintech founder who met Mr. McLaughlin in the late 1990s. “Steve was there long before it was fashionable.”

FT Partners helped raise $25 million this year for Mr. Loehr’s latest venture, and Mr. McLaughlin invested personally. Mr. Loehr said he didn’t see a conflict: “He’s buying what he’s selling.”

The New York office of Financial Technology Partners, whose fees are brazen even for Wall Street in their size and structure.PHOTO: GABBY JONES FOR THE WALL STREET JOURNAL

Mr. McLaughlin grew up in suburban Philadelphia, manning the popcorn machine at the local movie theater for $3.35 an hour and commuting to Villanova University. After getting an M.B.A. from Wharton, he landed a plum assignment on Goldman’s financial-institutions group. He focused on small technology companies that were digitizing securities trading and capital markets, an area so unloved he had it to himself.

“The [financial-institutions] bankers didn’t like it because it was small,” he said in an interview. “The tech bankers didn’t like it because the deals were weird.”

He helped organize Goldman’s winter conference, a raucous affair in those pre-2008 days. One year he emceed in full KISS makeup for a spoof of “Rock and Roll All Nite” that bemoaned the bank’s punishing workload. “I ran the merger plans all niiiiight / and had to work the next day” went the new lyrics. (Another sendup, “We Pulled the IPO,” was set to the tune of Joan Jett’s “I Love Rock ’n Roll,” after Goldman’s failed attempt to go public in 1998.)

FT Partners launched in 2002 from Mr. McLaughlin’s Pacific Heights apartment with the help of unpaid interns recruited from the University of California, Berkeley. Buying enough card tables and printers at a local Staples Inc. store resulted in a free coffee machine, said Tim Wolfe, an early hire.

An early deal that put the firm on the map was for Lynk Systems Inc., a credit-card processor. According to Mr. McLaughlin, the company had previously hired Merrill Lynch to find a buyer and fetched an offer of around $150 million. He promised to beat it. In return, Lynk offered him 5% of any deal price over $300 million. Mr. McLaughlin all but moved into a hotel near Lynk’s headquarters in Atlanta. In 2004, the company was sold to Royal Bank of Scotland for $525 million.

That became Mr. McLaughlin’s blueprint: Find companies that are opaquely valued or misunderstood. Negotiate unusual fee structures. And only represent sellers, never investors or potential acquirers. It is a lesson Mr. McLaughlin said he learned from his mom, a Realtor. “Always get the listing,” he said.

Clients admire Mr. McLaughlin’s hustle and chutzpah.

After the Lynk Systems sale, FT Partners commissioned and framed a cartoon commemorating the deal with plans to present it at a celebratory dinner in New York. Mr. McLaughlin thought it wasn’t big enough. As the sun set, he hit the streets of Manhattan, offered the proprietor of a printing shop $1,000 to stay open and showed up with a poster-sized version. “It was a big hit,” Mr. Wolfe said.

Some of FT Partners’ biggest wins took more than a decade. When AvidXchange approached Mr. McLaughlin in 2009 for help raising $5 million, he said it wasn’t worth the time. He changed his mind when the company agreed to sign an engagement letter that guaranteed FT Partners a role on any deal the company did for the next 50 years. He also joined AvidXchange’s board of directors.

AvidXchange went from a few million dollars in annual revenue in 2009 to $186 million in 2020. An October IPO valued the commercial-payments company at about $5 billion. On top of the stake Mr. McLaughlin owns in the company, FT Partners collected a roughly 6% fee on the $1 billion it helped AvidXchange raise over nearly a dozen years.

Mike Praeger, AvidXchange’s chief executive, said Mr. McLaughlin did plenty of work for the company outside of fundraisings, including late-night phone calls and weekend flights to North Carolina to map out strategy. He also said Mr. McLaughlin talked him out of selling the company at prices well below its current market value.

“Worth every penny,” Mr. Praeger said.

[benbuffett] EBAY does not compete with PYPL to my knowledge. EBAY uses the Dutch payment pla...

benbuffett — 11/4/2021 2:43:37 PM

EBAY does not compete with PYPL to my knowledge. EBAY uses the Dutch payment platform Adyen (ADYEY).

I don't have one but would you add ebay to that list now that it is competing with paypal again?

FB / MVRS is considering it too...

[benbuffett] Whats your favorite fintech? PYPL, SQ, SOFI, AFRM, UPST just to name a few.

benbuffett — 11/4/2021 1:14:03 PM