Fintech startups are leading the layoff wave – TechCrunch

Welcome to The Interchange! If you received this in your inbox, thank you for registering and your declaration of trust. If you are reading this as a post on our site, sign up here so you can receive it directly in the future. Every week I want to take a look at the hottest fintech news from last week. This will include everything from funding rounds to trends to an analysis of a particular place to hot take on a particular company or phenomenon. There’s a lot of fintech news out there, and it’s my job to keep me on top – and understand it – so you can stay up to date. – Mary Ann

Layoffs up in H1 2022

In 2021, fintech startups were the best recipients of venture capital globally, accounting for approximately 21% of dollars raised with $ 131.5 billion spread across 4,969 agreements. So far in 2022, fintech startups have achieved another, less favorable award – and account for the third largest number of layoffs, in percentage, globally.

As of 1 July, there were around 3,709 employees – exclusive crypto companies – have been laid off across 41 “layoff events” in the second quarter of 2022, according to an analysis by Roger Lee of Layoffs.fyi. For context, 3,709 of 36,861 start-up employees were laid off during Q2, which means that fintech accounted for 10.1% of the total. Based on that categorization, the fintech area ranked third behind food and transportation, respectively. However, the site classified companies as Better.com in the “Real Estate” category. So if you include that company’s redundancies – which amounted to around 3,000 in the first quarter of 2022 – fintech numbers increase even higher, and fintech will be the category that received the most redundancies in percentage – 15.4% – in the first half of 2022.

Especially in everyone of 2020, 8,715 fintech employees were laid off. And there are probably far more fintechs around today than there were then. In 2020, fintech was behind the transport and travel categories when it came to redundancies as a percentage of the total, Lee TechCrunch said via e-mail.

Remarkably, NULL fintech employees were laid off throughout 2021according to Lee’s analysis.

In total, 4,189 fintech employees were released over 45 events in the first half of 2022; this number is of 46,740 start-up employees who were laid off in total, and make up 11.2% of the total. This compares with 8,375 in the first half of 2020 at the start of the COVID-19 pandemic.

Klarna’s layoffs of 700 employees, or 10% of employees, and Robinhood’s layoffs of 300 workers were among the largest layoffs in the second quarter.

Please note that it is important to keep in mind that there were certainly other redundancy events that were not recorded here, so the true numbers are probably even higher.

Layoffs are incredibly difficult for the affected employees, the survivors and for the companies themselves. But as we have seen over time, some companies do a better job of dealing with them than others. I thought this post by Latitude founder Brian Requarth summed it up well: “Setups are difficult and I do not want to reduce it, but most likely the talent will be redistributed quickly. If you lost your job, hang in there. If you have to let people go, the most important thing is to treat these people well. Not just because it’s the right thing to do, but because you’re sending a message to the people who live with you. “

Weekly news

Reinvention

Both Bolt and Better (how is it for alliteration) have been the subject of (many) negative headlines in recent months. To say that their reputation has been beaten is an understatement. Well, by chance this week, both companies shared some news in clear attempts to improve their tarnished reputation. In what many saw as a head-scratching incident, Bolt ended up with one click at the checkout with a retail giant ABG Group and turned it into a shareholder. After the latter made so many derogatory remarks about the former, one may ask why it wants to own a stake in the company. It does not seem to make sense, although Insider speculated this year that it was ABG’s goal with the trial to begin with. Still, I had a good conversation with Bolt’s CEO and former Amazon CEO Maju Kuruvilla, and the biggest takeaways were (1) the company is on a mission to grow more responsibly, after losing some jobs in Q2 and “really doubled down on things that are a core value proposition “; (2) Bolt says that it now has 3 years of operation on the runway, which, if true, is impressive; and (3) while revenues appeared to be far lower than one would expect for a $ 11 billion company, Bolt does not give up, and the settlement in this case can definitely be seen as a victory, albeit a little confusing.

As for Better.com, the controversial digital mortgage lender revealed a number of new executives who were frankly shocking. They include former executives from companies such as Zillow, Casper and LendingTree, among others. I did not speak to the Better boss Vishal Garg, but he made a clear statement that conveyed his enthusiasm for all the new people – who come on board after a lot of senior management departures and in the middle of a turbulent environment. It is fascinating that so many people are willing to bet on Better after everything that has happened since December 1st. Is the company really about to turn around? We’ll see.

A couple of years ago, I took a deep dive into Atlanta’s startup scene and was surprised to see how robust it was. Last week, Protocol’s Veronica Irwin examined the southern city with a fintech lens, writing: “San Francisco has Square, Stripe and Plaid. But Atlanta has CoreCard, Kabbage and CheckFree. It also claims groundbreaking payment cards, electronic payments and ATMs. Many of the everyday innovations in fintech we have come to trust have the Atlanta metropolitan area to thank. “

Other news

Preliminary figures confirm what we all already know: Investment in the fintech world has slowed. Steve McLaughlin, CEO of Financial Technology Partners (also known as FT Partners) wrote on LinkedIn that “financing activity declined significantly compared to Q1 and the period a year ago, but activity remained fairly robust compared to all periods other than 2021; activity appeared to be to decline as the quarter progressed. ” For example, in the second quarter, the total dollar volume raised by private fintech companies globally reached $ 27.5 billion, down 27% compared to Q1 and down 31% compared to the same period last year. before 2021.

These days, it is rare that a week goes by without any layoffs hitting the sector. Last week, the Brazilian proptech start-up Loft announced that it was laying off 380 employees, or 12% of the workforce. Earlier this year, it had laid off 159 people. In an email, Loft described the move as “a reorganization of operations.” It is clear that LatAm is not immune to the downturn in the housing market in the face of, among other things, rising interest rates.

Two big names in fintech merged last week. The London-based Revolut said they are working with Stripe (which started in Ireland) to support payments in the UK and Europe and “accelerate expansion into new markets.” Specifically, Revolut will facilitate payments through Stripe’s existing infrastructure.

Photo credit: patpitchaya / Getty Images

Financing and M&A

This week’s deal

El Salvador-based fintech n1co (read: nee-koh) has raised $ 12 million for a cash valuation of $ 64.8 million, in what it describes as a historic pre-seed round for the region. The Fintech company was started by the same founders as Hugo – a super app that was recently sold to Delivery Hero for $ 150 million – Alejandro Argumedo, Ricardo Cuellar and Juan Maceda.

Alejandro McCormack tells TechCrunch that he was invited to join the trio as a co-founder and works as COO / interim CEO due to his previous experience from N26 and Raisin. He said that the original trio of founders “once again focused on a region that is usually forgotten in the technological landscape”. Focused on the payment area, n1co says that they have already registered over 1000 sellers who now accept credit and debit card payments using n1co’s technology, especially QR codes, payment links and online store front processing. With nearly $ 1 million monthly transaction volume in five countries (El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic), McCormack shared via email that n1co will use the fresh capital to accelerate growth (currently 30% MoM), develop their POS devices and pressure the soon-to-launch checking account and Visa debit card.

With the rollout of the n1co card, the company believes it will be positioned as the first neo-bank focusing on Central America and the Dominican Republic – a region of approximately 55 million people. “This represents a larger addressable market than Colombia, with lower bank penetration and an average of around 1.5 smartphones per adult,” McCormack added.

Interestingly, the start-up decided to abandon the typical VC route during the increase, instead of focusing on regional groups that it believes will add value to the business model, including the largest petrol station operators in the region, one of the largest supermarket chains and other large regional retail groups. “In total, they have about $ 1.4 billion in card transaction volume per year – volume that they have committed to dealing with n1co,” McCormack said.

Photo credit: n1co

Watch TechCrunch

Peakflo’s bid to build business payments for Southeast Asia attracts capital, customers

UK-based YuLife raises $ 120 million worth $ 800 million as it expands its gamified, wellness-focused approach to life insurance

a16z leads $ 6.5 million seed round for Adaptive, a construction software and fintech game. In particular, founders and executives from Airbase, Brex and Ramp are also putting money into the round.

DEUNA enters Latin America’s crowded payment sector with one click with $ 37 million

And elsewhere

Finalis, ‘a platform for contractors’, raises $ 10.7 million for global expansion

Fello secures $ 25 million in debt and equity to expand the agent-led iBuying solution

Unreal Estate lands $ 6 million from Cleveland Avenue, KAL Investment Group, Rice Park Capital

I’m done for this week. Same time, same place next week. Once again, thank you for reading and taking good care of! xoxo Mary Ann