Dwolla Lands $12 Million

In a short, three-sentence blog post, Dwolla CEO Ben Milne announced that the company closed a $12 million round of funding. The investment, which brings the Iowa-based company’s total to $51.4 million, was led by Foundry Group with participation from Union Square Ventures, Next Level Ventures, Ludlow Ventures, High Alpha, and Firebrand– all existing investors.

The funds will be used to support the financial platform’s growing capital requirements and to expand its team. Founded in 2008, Dwolla is growing. “We have more than 40 openings to fill this year,” Milne noted in his blog post announcing the funding. “As we build our team, we do so knowing that the best teams are built by the inclusion of diverse ideas, experiences, and people,” he added.

Dwolla offers a white-label payments API that allows firms to credit or debit any U.S. bank account the user has connected. The company integrates with Sift Science to offer real-time identity verification to help reduce fraud. And in May of 2017, Dwolla integrated with Plaid to instantly verify and authenticate customers’ bank accounts using tokenization.

Dwolla, which most recently demoed FiSync at FinovateSpring 2015, is headquartered in Des Moines, Iowa. Last summer, the company added a multi-user feature to its Access API dashboard. In January, Dwolla began powering identity verification for Yahoo!’s Tanda savings app.

Stash Raises $37.5 Million, Launches Custodial Accounts

Mobile-first financial platform Stash  closed $37.5 million in funding today to help Americans rethink how they invest and save. Union Square Ventures led the Series D round, with contributions also coming from existing investors Breyer Capital, Coatue Management, Entree Capital, Goodwater Capital, and Valar Ventures.

“Through customer focus and a data-driven mindset, Stash has been able to create a powerful consumer brand, with unprecedented growth, on its journey to fix the inequities plaguing financial opportunity across the U.S. We’re excited to join them on this mission to shake up the status quo,” said Rebecca Kaden, Partner at Union Square Ventures.

Stash’s Smart-Save

Today’s round brings Stash’s total funding received in its three-year history to $116.3 million. After last October’s $40 million round, Business Insider estimated the company’s value at $240 million. The New York-based company will use the funds to support the launch of its newest batch of products, including Custodial Accounts, which will be rolling out this week. Custodial Accounts will allow Stash clients to open new accounts for minors to give them a head start on their finances.

Additional new features include Smart-Save (pictured right) and Stash Coach. Smart-Save studies a user’s spending habits and uses an algorithm to determine where they have spare cash, then moves a portion of that amount into a savings account, from which clients can withdraw at any time for free. Stash Coach provides financial recommendations and challenges, while providing guidance and support for accomplishments.

“Stash’s goal since day one has been to help the masses of underserved Americans jump start their journey towards building a healthy and prosperous future,” said Brandon Krieg, co-founder and CEO of Stash. “Through intelligent products and an emphasis on education, we’ve been able to meaningfully improve the financial lives of nearly two million clients. We’re proud of what our customers have accomplished, but we’re even more excited for what’s ahead.”

Stash currently serves over 1.7 million clients on its investing platform, which allows users to choose from a selection of over 40 curated ETFs, and is showing strong growth– approximately 40,000 new clients join its investing platform weekly. The company counts 5 million subscribers to Stash Learn, a financial education content newsletter.

The company’s mobile investing platform doesn’t collect add-on commissions or trading fees, and charges $1 per month for accounts under $5,000. Users with portfolios over that threshold pay 0.25% per year. For all accounts, Stash has lowered the overdraft fee to $0.50 for returned deposits. This is significantly lower than the $35 average overdraft fee that traditional banks charge.

Krieg debuted Stash Retire at FinovateFall 2017. In November of last year, KPMG and H2 Ventures named the company on its 2017 Fintech 100 list. The month prior, Stash announced plans to expand its platform from investing to a more robust banking service. This is part of the rebundling of fintech trend that many analysts predicted would dominate 2018.

Finovate Alumni News

On Finovate.com

  • Dwolla Lands $12 Million.
  • Larky Deepens Partnership with Core Processing Solutions Provider Sharetec.
  • Stash Raises $37.5 Million, Launches Custodial Accounts.
  • NetGuardians Inks Agreement with FirstOntario Credit Union.

Around the web

  • InComm subsidiary On-Line Strategies launches partnership with National Bankcard Services to enable prepaid at the gas pump.
  • Neustar expands its DDoS mitigation defense network in EMEA.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

DAVO’s New Sales Apps Bring Savings Technology to Small Businesses

Small business tools company DAVO launched two new apps to help small-to-medium-sized businesses (SMBs) with their cash management needs. DAVO Sweep & Save and DAVO Savings Club are the two new apps available to SMBs today.

Both apps are automated savings tools that use fractional daily funding technology, which connects to a merchant’s Point of Sale (POS) platform or accounting software to set aside cash to save for a future use. This automated savings technology is a similar concept to the consumer-facing apps Dyme and Digit, which move money from a user’s checking account into a separate savings account. Check out our overview of those platforms from last year.

DAVO Sweep & Save returns the saved amount to the merchant on a monthly basis to go toward expenses such as rent, business loans, or equipment leases, while DAVO Savings Club sets aside the cash on an annual basis. DAVO notes that the annual funds are intended for “an ongoing cookie jar or Christmas Club like savings.” With both Sweep & Save and Savings Club, merchants opt to either set aside a fixed dollar amount or percentage of daily sales to go toward the savings. “For example,” DAVO co-founder David Joseph explained, “using DAVO Savings Club a merchant can put aside $20 a day and at the end of a year have over $7,000 to use as they see fit. They won’t feel the $20/day but they will love having $7000.”

In a press release, Joseph said, “SMBs are passionate about their businesses and are very good at generating revenue but very often they are far less skilled at cash management. DAVO was originally started to solve the challenges of sales tax for SMBs, but has evolved into a powerful cash management tool.”

Founded in 2011, DAVO demoed its flagship product at FinovateFall 2015. During the demo, the company’s CEO Owen Brown showed how DAVO Sales Tax automatically and passively collects, files, and pays sales tax on a merchant’s behalf. Similar to the two savings apps launched today, the Sales Tax app integrates with a merchant’s POS and backend accounting platforms to set aside the sales tax collected each day. Last October, DAVO made the Sales Tax app available in the Square Marketplace. The company has raised $4 million. And with 1,800 clients, DAVO has grown its customer base by more than 12X since 2015.

Cardlytics Becomes the First Fintech to Go Public in 2018

Cardlytics, which originally filed plans to go public on January 12, has made its IPO official today. On the NASDAQ this morning, the data-driven marketing company issued 5.4 million shares under the ticker symbol CDLX. The offering is expected to close on February 13, 2018, subject to closing conditions.

To celebrate this momentous event in the company’s 10-year history, Cardlytics CEO and Co-Founder Scott Grimes and COO and Co-Founder Lynne Laube, rang the opening bell on NASDAQ this morning. Grimes said, “We believe becoming a publicly-listed company on the NASDAQ will help Cardlytics continue to strengthen our partnerships with banks, drive meaningful consumer engagement, and help brands make their marketing more relevant and measurable through our Purchase Intelligence platform.”

In an analysis on Seeking Alpha, Gary Alexander noted that the market cap of $273 million places Cardlytics “on the small extreme of the IPO spectrum.” However, he added that because Cardlytics is the first fintech– and even the first technology company– to go public this year, “it’s bound to get attention for signaling appetite in the IPO markets.”

Atlanta-based Cardlytics, which launched in the heart of the Great Recession, has raised a total of $203 million and counts ITC Holding Co., Kinetic Ventures, Canaan Partners, Polaris Venture Partners, and TTV Capital among its investors. In the nine months ending in September 2017, the company logged losses of $16 million on sales of $91 million.

Cardlytics leverages algorithms and machine learning to normalize raw purchase data and make it useful for marketers. The company offers solutions for both marketers and banks, including:

  • Insights: helps marketers make better business decisions across marketing, store operations, and real estate planning by viewing into customers’ actual purchase behavior.
  • Measure: leverages sales data to help marketers measure and optimize their marketing strategies
  • Purchase Intelligence: allows marketers to advertise within a native banking environment to capture new clients with the use of loyalty and rewards

At FinovateFall 2013, Cardlytics demoed its geolocation application, a solution that sends bank customers ads and offers based on their location. Last month, the company appointed Sathish Gaddipati as Chief Technology Officer. Most recently, Cardlytics earned a spot on the Tech Tribune’s list of the 10 Best Tech Startups in Atlanta.

TSYS Tech Backs J.P. Morgan’s Commercial Virtual Card Issuance

Global payments provider TSYS announced this week that J.P. Morgan will leverage the fintech’s Virtual Payment Precept (VPP) to broaden its virtual card solution.

TSYS’ VPP is a commercial card solution that enables issuers to generate secure, virtual, single-use account information in real-time, offering a more flexible and faster card issuance program that gives more control over account and transaction parameters. J.P. Morgan will use VPP to issue cards on both Visa and Mastercard networks.

“Virtual cards are a vital component of our clients’ payments strategy and business operations and this will continue to power our clients’ and suppliers’ growth,” said Naney Pandit, Head of Commercial Card Product at J.P. Morgan.

VPP technology allows businesses to set limits on what each account can be used for. And virtual cards replace static account numbers on physical cards that are vulnerable of being compromised. These two factors help reduce risk and improve operational efficiency.

TSYS demoed its Spend Controls feature at FinovateEurope 2013 in London. Last December, the company extended its agreement with Capital One to continue providing processing services for the bank’s North American clients. That same month, TSYS closed its acquisition of payment technology company Cayan for $1.05 billion.

TSYS was founded in 1983 and has 11,500 employees across offices in 13 countries. In 2016, the company processed 25.5 billion transactions, generating $4.2 billion in revenue. TSYS is a publicly traded company (NYSE: TSS).

Who’s Up for Analyst All Stars?

Finovate was built on the foundation of live fintech demos. And there’s plenty to love about the live demo-only, fintech-speed-dating model, but I’ve become increasingly fond of Finovate’s incorporation of the analyst speed-dating session that takes place in the days following the demos.

Demo companies and the analysts both face a 7-minute time limit, but there are two major differences between the two sessions. First, while the companies demo specific fintech innovations, the analysts present on fintech themes and opportunities for the future. Second, the companies face a demo-only, no slides rule, but the analysts are allowed to use as many slides as they’d like in their 7-minute time slot.

Here’s a look at who will be facing the heat of the spotlight during our Analyst All Star session at FinovateEurope next month.

Ron van Wezel

Van Wezel is a senior analyst for Aite Group’s Retail Banking and Payments practice. His research covers market and regulatory trends in the payments space, with a focus on Europe. Aite Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry. Headquartered in Boston, Aite Group works with its clients as a partner, advisor, and catalyst, challenging their basic assumptions and ensuring they remain at the forefront of industry trends.

Kieran Hines

Hines is Head of Industries at Ovum, and leads a team of analysts that support clients across a range of verticals including financial services, retail, government, education, healthcare, and utilities. Hines’ personal research focus is payments, and he regularly produces research and advises customers on issues such as real-time payments, open banking, fraud/security, and vendor selection.

Michelle Evans

Evans is the Head of Digital Consumer Research at Euromonitor International. In her role, she oversees the firm’s research on the digital consumer, providing actionable insights and in-depth analyses into how technological advances are reshaping the way consumers browse and buy goods and services globally.  Recognized as a thought leader in digital commerce, she was named a Power Woman in Fintech by Innotribe in 2015, a Woman on Top in Tech by Asian Entrepreneur in 2016, and a Woman to Watch by Remodista in 2018. Leveraging her master’s degree in journalism from Northwestern University, she has a reoccurring column in Forbes and is regularly quoted in publications globally.

Oliwia Berdak

Berdak joined Forrester Research in 2013 and leads Forrester’s coverage of digital disruption and digital innovation in financial services. She advises executive teams on their digital strategies and the impact of emerging technologies on their business. Prior to joining Forrester, Dr. Berdak held a number of research positions in business and academia, working with a variety of methodologies to deliver insight.

Zilvinas Bareisis

Bareisis researches and advises clients on consumer payments. He has a keen interest in payments innovation, and how the “perfect storm” of competitive, regulatory, and technology developments shapes consumer payments today and tomorrow. Bareisis has over 20 years of experience advising senior executives at the leading financial institutions and their technology and service providers. He joined Celent in April 2010 from Oliver Wyman.

Entrust Datacard Teams with Gemalto

Identity authentication and secure card issuance company Entrust Datacard has formed a major partnership this week. The Minnesota-based company teamed with payment card supplier Gemalto to offer a SaaS-based instant issuance solution for U.S. banks.

The new offering pairs Entrust Datacard’s instant issuance technology with Gemalto’s SaaS platform, lowering the barrier to entry to create an easy-to-deploy instant issuance solution for any size financial institution. The technology gives banks complete control over the card issuance delivery process and, when they issue cards in the branch, they benefit from cost reductions not only in the form of savings on postage, but also from lowered overhead.

Here’s how it works: once a bank branch installs Entrust Datacard’s instant issuance printers they can personalize and print EMV cards on-demand. The issuance software is hosted and managed by Gemalto’s secure, cloud-based SaaS infrastructure.

In the press release, Karen Kaukol, Vice President of Instant Issuance at Entrust Datacard said, “With a SaaS-based instant issuance solution, we are able to not only provide financial institutions with the ability to instantly meet their customer’s needs, but do it in a manner that drives retention, and increases activation and usage rates, all while reducing the overhead expenses to the bank.”

Entrust Datacard was founded in 1969 and presented at FinDEVr Silicon Valley 2016. Jason Soroko, Security Technologies Manager, and Matt Rose, Technical Sales Consultant, spoke to the audience of developers on Safeguarding Your Banking Applications. With more than $600 million in annual revenue, Entrust Datacard has 2,000 colleagues working around the globe to serve customers in 150 countries. Last month, the company partnered with the government of Ghana to help it issue national identity cards to its citizens in real time.

Onfido to Power KYC for Arro Money

Identity verification company Onfido announced today it will power real time identity verification and KYC checks for Arro Money, a financial services company that provides personal and business accounts.

Leveraging Onfido’s technology, Arro Money will provide financial services access to underbanked businesses. Onfido’s eKYC data and real-time verification for passports, ID cards, and drivers licenses from 160 countries offers fast due diligence checks that will offer Arro Money’s new clients access to its services in three minutes.

Director at Arro Money, Muhammad Asim said that through its partnership with Onfido the company can improve its customer service and eliminate excessive credit checks. “Ultimately,” Asim continued, “we are helping to improve accessibility and financial inclusion… by having this strong alliance with Onfido, our customers’ identification is verified securely, simply and, above all, quickly.” Arro Money has already onboarded 10,000 customers with advanced KYC checks and aims to acquire 50,000 more business accounts over the next 12 months.

Founded in 2012, Onfido leverages machine learning technology to validate a user’s identity document and compare it with their facial biometrics. To insure the validity of the documents, the company cross-references identities from 192 countries against international credit and watchlist databases.

Onfido has raised more than $60 million in funding from investors including Microsoft Ventures, Salesforce Ventures, and Crunchfund. The company’s clients include ZipCar, Couchsurfing, Revolut, and Square. Onfido will demo its newest tech on stage, alongside dozens of other companies, at FinovateEurope next month. Register today to be a part of the audience.

Finovate Alumni News

On Finovate.com

  • Onfido to Power KYC for Arro Money.
  • IdentityMind Global Introduces Anti-Fraud Solution for ICOs.
  • Entrust Datacard Teams with Gemalto.

Around the web

  • Fiserv sells 55% of Lending Solutions business to Warburg Pincus.
  • Lendio announces new Lendio franchise in New Hampshire’s Seacoast Region.
  • Financeit appoints Dante Tamburro as general counsel and Chief Compliance Officer.
  • Ripple to power instant payments to China courtesy of new partnership with LianLian International.
  • The Future Laboratory leverages technology from Quid to build its Trends of the Trends 2018 report.
  • Mint2Save reviews universal mobile wallet app, Soundpays.
  • Gartner recognizes NICE as a leader in Workforce Engagement Management for a second year in a row.
  • PYMNTS interviews Jumio Director of Product Management, Reinhard Hochrieser on the challenges of abandonment in online banking.
  • Expensify unveils website enhancements to improve credit card import, simplify billing currency section.
  • Lend Street Financial and Marqeta earn spots in The Tech Tribune’s list of the 10 Best Tech Startups in Oakland.
  • National Australia Bank (NAB) to allow business customers to make payments directly via Xero’s accounting platform rather than its own online banking site.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.