A conversation with Andreessen Horowitz’s fintech manager
Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your declaration of confidence. If you are reading this as a post on our site, please register here so that you can receive it directly in the future. Each week, I’ll take a look at the hottest fintech news from the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there, and it’s my job to stay on top of it—and make sense of it—so you can stay up to date. — Mary Ann
Last month, Andreessen Horowitz – one of venture capital’s biggest and most prominent players – announced that its “headquarters will be in the cloud” going forward.
Founded in 2009 in Menlo Park, California, the firm – also known as a16z – has for years been a symbol of Silicon Valley investment.
Its new philosophy in this post-COVID era of remote work is that there is no longer a need for a centralized headquarters. This philosophy extends to the fintech team. And let’s face it, fintech opens so many doors in general – making a lot more things possible when it comes to running a company or just operating in general, globally. A lot of people may underestimate how much the pandemic really pushed this acceleration in the financial services world, and people are now kind of commenting, “Oh, there’s this slowdown, and look at how much investment is down in fintech.” You have to put it in perspective – we’re still a long, long way from 2020 in terms of how much money is going into this space. And fintech still takes nearly a fifth of all venture capital dollars. I think this is because it affects everyone on a daily basis. If financial services are easier to access or if it is easier for a business to operate or make payments or accept payments, then it is all because of fintech.
I sat down (virtually, that is) with a16z general partners Angela Strange and Anish Acharya to learn more about why the pair believe we’re experiencing the “unbundling of Silicon Valley,” which sectors of fintech have the most potential, and how the new era with telecommuting has led to so many opportunities for financial technology startups.
Read more here.
Reporter’s note: The Angela and Anish interview took place weeks before publication, and I learned after publication that a recent analysis reportedly revealed that of the firm’s fintech portfolio of 42 companies, only four had female co-founders. I contacted the partners on the subject this weekend, but I had not heard back at the time this newsletter was published. Of course, it’s the weekend, so I didn’t expect an answer so quickly. If I hear back, I’ll update you next weekend!
Weekly news
My fintech partner in crime, the oh-so-talented Natasha Mascarenhas, ended the week with a scoop approx. Stripe laying off some of the employees who support TaxJar, a tax compliance startup they bought last year. According to Natasha: “The layoffs — carried out over the past month — are related to Stripe’s decision to wind down TaxJar-focused go-to-market efforts in late July. Sources estimate the number of employees affected by the workforce reduction to be between 45 to 55 people, at least some of whom were invited to spend 30 days applying for internal jobs at Stripe…According to LinkedIn, TaxJar’s co-founder Matt Anderson left Stripe in July, followed by people in the sales, marketing and partnerships teams.” Read more here.
The world of expense management just got (even more) competitive. Business expenses and cash handling company Rho announced that it is adding expense management to its offerings with “custom controls designed to make spending less painful.”
Via email, the company told me it believes that “providing the full suite” is essential in today’s fintech world. Specifically, a spokesperson said: “Looking at the landscape, there are ten different vendors for each process: spend management (ex. Brex), expense (ex. Expensify) and banking (ex. Mercury). Assembling different platforms for these separate functions creates friction for finance users. Rho believes in the power of integrating cost management and business banking. Every corporate finance process – AP, commercial banking, spend management/cards, treasury management – works better when they work together in a single, connected view.”
The startup in December raised a $75 million Series B funding round led by Dragoneer Investment Group.
Speaking of cost management, Air base announced the appointment of Philip Lacor as Chief Revenue Officer. Lacor most recently served as CRO for no-code platform company Unqork, where he managed all go-to-market efforts, including sales, pre-sales consulting, customer success, revenue operations and channel partners. He also led the company’s expansion into APAC. Before that he was CRO at Envoy.
Mexican fintech Covalto, which serves Mexican SMEs and was formerly known as Credijusto, has agreed to go public on a US stock exchange via a SPAC at an estimated pro forma value of $547 million. The transaction is believed to be the first time a Mexican fintech has agreed to go public on a US exchange. In a press release, the company said it merged with LIV Capital Acquisition Corp. II, a special buyout company launched by Mexico City-based fund LIV Capital. Upon completion of the transaction, LIVB will be renamed Covalto and remain listed on Nasdaq under the new ticker symbol “CVTO”. The company said its origins grew at a 152% CAGR from 2015 to 2021. More here.
While we’re on the topic of public markets, something interesting is happening fintech stocksfollowing F-Prime’s Fintech Index. The index is up 41%, compared with EMCloud’s 19.5%, Nasdaq’s 15.6% and S&P’s 12.2% gains. In particular, it said that Affirm leads the pack and is up 67%. Insurance stocks are up 46% overall, led by Lemonade and Oscar Health. Payments shares are up 44% driven by Wise and Mercado Libre. Wealth and asset management stocks are also up 32%, driven by Coinbase and Bakkt Holdings. Meanwhile, banking and lending stocks are up 24%.
Speaking of Confirm. The buy now, pay later giant announced an extended, multi-year partnership with BigCommerce which “makes Affirm the preferred and recommended pay-over-time partner for BigCommerce’s tens of thousands of merchants,” according to the two companies. As a result of this partnership, BigCommerce’s sellers can enable Verify as a payment option at checkout directly in the BigCommerce seller dashboard.
On the 12th of August PayPal announced that “all eligible PayPal account holders in the United States can now transfer, send and receive cryptocurrency with PayPal.” TechCrunch had reported that the move would take place in early June.
Robin Hood launched a couple of new features last week. First, it launched Advanced Charts, with the goal of “providing all customers with customizable, fast, simple, and in-depth analytics right in the app.” The company said advanced charts were “the most requested feature” from its active customers. The company also launched Cash Card Offers, a new benefit that allows all Cash Card customers to earn cash back “automatically” when they use retailers such as Chevron, Nike, Five Guys, Macy’s and others.
From PitchBook on payments: “The accelerated digitization of financial services, as well as the transition to online services, has benefited fintech startups in recent years. The COVID-19 pandemic helped accelerate these trends as consumers turned to digital financial services instead of face-to-face interactions… Digital payments, one of the earliest financial segments to go digital, have continued to experience rapid disturbances during this period. Checkout platforms have benefited from demand for online and contactless transactions, telecommuting has driven a need for payroll software providers, and corporate credit card providers like Ramp and Brex have reportedly seen an increase in revenue.”
Hi Alice, which says it “helps over 1,000,000 small businesses grow,” has announced a new Small Business Mastercard. Launched on August 16 in partnership with Mastercard and First National Bank of Omaha, the card offers small business owners features such as a rewards program with the ability to earn points by completing “business promotion activities” on the Hello Alice platform. The company says it recently completed a study of small business capital access and found that 78% of owners claim access to capital limits their ability to manage their day-to-day operations, with Black (84%) and multiracial (82%) owners over-indexing on this claim . In its words, Hello Alice designed the card “to meet the needs of small business owners where they are, breaking long-standing barriers for those who have traditionally been denied access.”
Financing and M&A
See TechCrunch
Pomelo exits stealth mode with $20M seed to rethink international money transfer
Tiger Global doubles down on Indian savings and investment app Jar
Pastel, a Nigerian bookkeeping and digital platform for merchants, raises $5.5 million led by TLcom
Highbeam inks $7M to shine light on e-commerce-specific banking needs
Funding Circle co-founder unveils new Super Payments fintech venture with $27M investment
Rocketplace Raises $9M in Seed Funding to Build “Fidelity for Crypto”
Social investment platform eToro buys fintech startup Gatsby for $50 million
YC-backed Arc, a digital bank for ‘high-growth’ SaaS startups, lands $20M Series A
Set elsewhere
Payments company AtoB raises $155 million in Series B to ‘modernize the trucking industry’
Ecuadorian ‘unicorn’ Kushki buys financial services startup in Mexican expansion. TechCrunch covered the company’s $100 million raise to a $1.5 billion valuation in June.
Agora Raises $20 Million in Series A Led by Insight Partners ‘To Accelerate the Growth of Real Estate Firms with Digital Transformation’
Closinglock Announces $4M in Funding Led by LiveOak Venture Partners
ICYMI: Digital credit fintech Kapital raises $30 million in debt and equity to grow in Mexico and Colombia
Another busy fintech week in the books. Thanks, as always, for your support in reading and sharing this newsletter of mine! Have a wonderful week ahead. xoxo, Mary Ann
