Early-stage fintech startups just got a new source of funding

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 our job to stay on top of it – and understand it – so you can stay up-to-date.

Hello! I am pleased to report the introduction of two new additions to this newsletter. First, the wonderful Christine Hall will be co-writing with me going forward. Christine and I have actually known each other for 19 years, having worked together at the Houston Business Journal. She has been covering fintech for the past few years and I am thrilled that she will be working on The Interchange with me going forward. Second, if you read to the end, you’ll see a logo created just for Interchange by TC’s incredible graphic designer, Bryce Durbin. I’m ridiculously excited about it. — Mary Ann

Many thanks to Mary Ann for that greeting! I’m excited to work with her to cover the wide world of fintech and look forward to contributing to what I biasly consider to be the most important newsletter for this industry. — Christine

Now on to the news.

Celebrating women-led businesses

I, as I’m sure many of you, continue to be disappointed by the lack of LP (limited partner) dollars flowing to women-led venture capital firms. So you can imagine my excitement when I got an email about a new venture firm called Vesey Ventures, which was founded by three female former CEOs of Amex Ventures who had recently closed a $78 million debut fund.

Vesey’s self-described mission is to support companies that are “transforming financial services” from seed to Series B stages. It plans to invest $1.5 to $3 million as initial checks, and larger amounts for follow-ups. Based in the US and Israel, the fund has so far backed five startups, including Coast, Cyrus, Grain, Equi and Proper.

The trio wouldn’t say whether Amex is an LP in the new fund, but suggested there were no hard feelings when they all decided to leave (at the exact same time in late 2021, mind you). Personally, besides the fact that this means more money out there for fintech startups, I love that Dana Eli-Lorch, Lindsay Fitzgerald and Julia Huang worked together for about a decade and got along so well as colleagues and friends that they decided, “Hey, let’s do this on our own.”

Clearly, their track record impressed enough LPs – including seven “prominent” unnamed financial institutions – that they were able to close the fund in a very challenging macro environment. During their time at Amex, they worked on investments in companies such as Plaid, Stripe, Melio and Trulioo. They also worked extensively on helping fintechs build partnerships with established financial institutions – experience they plan to use to offer portfolio companies tailored “Strategy Sheets” along with term sheets.

Vesey defines fintech in its broadest sense – meaning they invest outside traditional financial services categories such as consumer and B2B. It also looks at vertical software, embedded fintech, the future of commerce and the infrastructure layer – such as cyber security, risk and compliance.

That made my week the opportunity to cover this news, without lying. Here there is more money flowing to female investors and founders too!!

Speaking of which, I also covered the $15 million fundraising for Kindred, a home exchange network. While that company is more proptech than fintech, I mention it because it was also founded by women who previously worked together—in this case at Opendoor—and saw an opportunity to branch out on their own. – Mary Ann

Vesey Ventures founding partners Lindsay Fitzgerald, Dana Eli-Lorch and Julia Huang Image credit: Vesey Ventures

Fintech financing in the 1st quarter

This week we took a look at global fintech funding for the first quarter of 2023 and found some notable things.

First, funding for the quarter was $15 billion, which is up 55% from Q4, but clearly shows a market correction due to the staggering amounts fintech companies raised in both 2021 and 2022.

And it’s important to note that of that $15 billion, $6.5 billion was Stripe’s increase. Without that deal, CB Insights said funding would have totaled $8.5 billion, or a 12% drop in funding from the fourth quarter of 2022.

Meanwhile, 2022 lined up with fintech companies reaching unicorn status, with 72 unicorns minted that year, and 38 in the first quarter alone. It was probably helped by the abundance of available capital flowing into the sector; in the first quarter of 2023, only one fintech company was minted a unicorn: Egypt-based MNT-Halan, which in early February raised $260 million in equity funding at a $1 billion valuation. According to CB Insights’ latest State of Fintech report, this is the first time this has happened since late 2016.

Although MNT-Halan was the only company to earn a horn, the first quarter was ripe with “megarounds,” the term for deals valued at $100 million or more. There were 16 such deals, totaling $9.2 billion, up 179% from the fourth quarter of 2022 and accounting for 61% of total funding in the first quarter, CB Insights reported. After Stripe’s $6.5 billion deal came Rippling, which raised $500 million in mid-March when Silicon Valley Bank melted down. In particular, the number of deals was down, falling 24% quarter on quarter. – Christine

Image credit: CB insight

Apple is pushing further into fintech

Does every technology company want to become fintech? As reported by Romain Dillet: “Apple Card customers in the US can now open a savings account and earn interest through an Apple Savings Account. To learn more about Apple’s new offering, click here. When the company originally announced the new financial product in October, Apple said it couldn’t share what interest would be paid on those accounts because rates fluctuate so much these days. As of today, Apple will offer an APY of 4.15%.” You can read more about the move here.

Meanwhile, Moody’s Investors Service released a new report summarizing its view that the ability of consumers to realize higher returns on their cash through the tech giant’s new savings account (offered in partnership with Goldman Sachs) — if well integrated into Apple’s ecosystem — “is credit negative for incumbent banks and cash alternatives such as money market funds.”

As we know, the new savings account deepens Apple’s offering of financial services, which already includes a digital wallet, credit card and buy now, pay later credit offer, Apple Pay Later. As Moody’s points out, “the expansion is in line with a common strategy for technology companies to increase the scale, utility and appeal of their digital platforms.”

“If Apple markets the savings product aggressively, it could attract a significant amount of savings to Apple’s ecosystem and away from traditional banks. Through the partnership, Goldman Sachs can benefit from increased deposit funding through the broad reach of Apple’s digital ecosystem,” said Stephen Tu, a vice president of Moody’s Investors Service, in a written statement.

Moody’s further added: “While there are already many higher-yielding cash options available to most consumers, Apple’s higher-than-average interest rate on the account combined with its simple and user-friendly ecosystem may motivate consumers to move money to the Apple platform from incumbent financial institutions.” – Mary Ann

(Disclosure: My husband works for Apple, but not in any capacity related to this project.)

Other weekly news

Lili claims super app status with new accounting platform

Greenwood – a digital banking platform for black and Hispanic individuals and businesses – goes live for everyone, cancels waiting list (TechCrunch covered the company’s $40 million raise in 2021 here.)

UK-based Finastra partners with Plaid to give users access to fintech apps

Airbase adds guided procurement to its cost management platform

Online property firm Opendoor is cutting 22% of its workforce (TechCrunch covered the company’s previous round of layoffswhich affected 18% of employees at the time, last November.)

Bain Capital Ventures’ Matt Harris published a piece on how banks should work with startups: Lessons from ancient Rome: How banks can learn to love startups

Financing and M&A

See TechCrunch

Autotech Ventures’ new $230 million mobility fund adds fintech, circular economy to its investment strategy

Accounting automation startup Trullion has a $15 million investment

And other places

Wealthtech-proptech-fintech crossover Plotify raises $12.5 million in equity funding

Actor Ryan Reynolds buys position in Canadian Payments Tech Company Nuvei

Insurtech Capitola raises $15.6M Series A from Munich Re

Clerkie raises $33M Series A funding from top investors to fix broken debt system

French expense management firm Mooncard secures €37 million in Series C funding

YELO Funding, a college funding startup, announces $1.2 million in pre-funding

TiiCKER, a shareholder loyalty and engagement platform, raises $5 million in seed round

Housing technology company Habi receives a $100 million credit facility from Victory Park Capital

Waste management payments startup CurbWaste raises $4 million

Now, here’s that logo I promised! Isn’t that beautiful?!

Image credit: Bryce Durbin

That’s it for this week. It felt a little slow, but hey, sometimes that’s okay 🙂 Hope you all have wonderful and fun weekends! See you next time. xoxoxo, Mary Ann and Christine