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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Financial data and infrastructure platform Plaidannounced today that it received an undisclosed amount of new funding from J.P. Morgan Private Capital Growth Equity Partners and Amex Ventures, which first invested in the California-based company in 2016. The new round boosts Plaid’s total funding somewhere north of $724 million.
In a statement, the company said that today’s investment will help it “further accelerate efforts to meet rising consumer demand for digital finance; a shift powering the rapid growth of Plaid’s diverse customer ecosystem.”
The funds are an add-on to the company’s $425 million Series D round announced in April. While that investment valued Plaid at $13.4 billion, today’s new funds do not alter the valuation.
This may be J.P. Morgan’s first investment in Plaid, but the two have been data partners since 2018. There is also a storied history between Plaid and J.P. Morgan CEO Jamie Dimon. Earlier this year Dimon cited Plaid as an example of a company that improperly uses client data. However, Dimon did not cite any specific scenarios to back up his accusation.
Plaid was founded in 2013. The company builds APIs to connect consumers, financial institutions, and developers. Plaid also offers a suite of analytics products that provides further insights into transactions. As the rise of open finance in the U.S. has begun to impact firms both in and out of fintech, Plaid is on its way to becoming a household name.
“While we’re still in the early innings of the digital transformation in financial services,” said Plaid CEO Zach Perret, “we’re excited to work with the thousands of banks, fintechs and non-financial institutions in our network to create what’s next.”
In a round led by Sequoia Capital Global Equities, Chime Financial has raised $750 million in new funding. The investment gives the San Francisco, California-based company a valuation of $25 billion and likely anticipates the firm’s debut as a publicly listed company next year.
Also participating in the Series G round were SoftBank’s Vision Fund 2, along with existing investors Dragoneer Investment Group, General Atlantic, and Tiger Global Management. Chime CEO and co-founder Chris Britt said that the new funding would help support the company’s growth as well as the launch of new services. Chime also introduced a trio of independent directors to its board: Cynt Marshall, CEO of professional basketball team the Dallas Mavericks; Jimmy Dunne, Vice Chairman of investment bank Piper Sandler; and Sue Decker, founder and CEO of community building platform Raftr.
Founded in 2013 by Britt and current Chief Technology Officer Ryan King, Chime gives consumers a digital-first alternative to traditional banks. Chime offers an online checking account with no hidden fees or overdraft charges, and a spending account with a Visa debit card with no minimum balance or monthly fees. The company has an early payday service for customers who choose direct deposit, no fee money transfers, and a “credit builder” program with a secured, Visa-branded credit card to help customers improve their credit scores.
Chime’s banking services are provided courtesy of a partnership with The Bancorp Bank or Stride Bank (issuer of Chime’s Visa Credit Builder Card). With more than eight million account holders – and on track to reach more than 13 million account holders this year – Chime reached EBITDA profitability last year during the COVID-19 pandemic, according to CNBC.
“Our mission has remained steadfast to help financial institutions of any size succeed with impactful, intentional innovation,” Nymbus CEO and Chairman Jeffery Kendall said. “OFG Ventures’ investment is an added vote-of-confidence to the value our strategy brings to an industry widely in need of immediate and sustainable business growth opportunities.”
Most recently demonstrating its technology two years ago at FinovateFall, banking-as-a-service innovator Nymbus provides financial institutions with both the technical and operational tools necessary to digitally transform their businesses. The company’s solutions – ranging from its flagship SmartCore, SmartDigital, and SmartPayments offerings to its full-service, standalone digital banking alternative SmartLaunch – give banks, credit unions, and other financial services-based companies greater ability to streamline processes and offer new digital services – without requiring a major core conversion or significant additional human resources.
This week’s investment is only the latest infusion of capital the Miami Beach, Florida-based fintech has received this year. The company picked up $15 million in funding from private equity firm Financial Services Capital this spring and, in February, Nymbus announced a $53 million Series C round led by Insight Partners. The company’s total funding now stands at more than $121 million, according to Crunchbase.
Nymbus has been one of the busier banking-as-a-service innovators of late, partnering with a variety of fintechs and financial institutions in the past year. These partnerships have included collaborations with fellow Finovate alums like Plaid and Segmint, credit unions and challenger banks like VyStar CU and PeoplesBank’s ZYNLO Bank, as well as with innovators in open finance and cryptocurrencies like Red Hat and NYDIG. The company also launched a new credit union service organization (CUSO) in March, Nymbus CUSO, to help credit unions take better advantage of fintech offerings that can enable them to create new revenue opportunities and boost engagement with their members.
“Our CUSO signifies a commitment to credit unions by providing strategic partnerships and flexible technology that will create sustainable growth and loyal members,” Kendall said when the new organization was introduced earlier this year. “For those wanting to innovate, Nymbus CUSO moves past traditional vendor thinking to create supportive structures for credit unions ready to grow and reach new niche markets.”
London-based financial services technology provider FintechOS secured $10 million in funding from the IFC, a member of the World Bank Group. The investment is part of the company’s $60 million Series B round, announced in April, and will support FintechOS’ goals of promoting financial inclusion by helping FIs expand access to financial services to un- and underbanked communities.
Many fintechs talk the financial inclusion talk. But even those companies committed to serving overlooked individuals and communities, often discover that actually “walking the walk” on financial inclusion can be more difficult than it seems at first. Speaking to this conundrum, FintechOS co-founder and CEO Teodor Blidarus said, “today financial technology is too often an inhibitor rather than an enabler of inclusion. Financial institutions both large and small simply don’t have the right tools at the right price point to meet market demands.” Blidarus highlighted enabling technologies like low-code, but lamented that these solutions remain under-utilized. “And this impacts those at the bottom of the (financial) pyramid most acutely,” he added.
For financial institutions eager to undergo digital transformation, FintechOS offers an alternative to what it calls “painful rip-and-replace” approaches to the transformation journey. Instead, FintechOS provides a low-code, plug and play strategy that enables banks and insurance firms to take advantage of digital end-to-end services, automated processes, and personalized, customer-centric solutions “in weeks, not months.”
FintechOS made its Finovate debut in 2018, demonstrating its platform at FinovateEurope in London. More recently, the company released its Configuration Management update, which boosts FintechOS’ scalability and helps pave the way for full Git integration. Git is a change-tracking software that helps developers collaborate during the source code writing process. The technology enables distributed teams to write code, test new functionalities, and securely deploy new versions.
“Configuration Management will make life easier for developers and streamline the wider operation of the FintechOS platform,” Blidarus explained. He added that full Git integration “will help our clients self-serve and customize their enterprise-grade solutions based on our technology.”
Recognized last month as the 2021 Microsoft Romania Partner of the Year, FintechOS includes Reliance Bank, Raiffeisen Bank, Societe General, and Vienna Insurance Group among its more than 40 partners around the world. This spring, the company’s founders, who hail from Romania, became the first Romanians to join Endeavor’s global community supporting “high-impact entrepreneurs.”
“For the Romanian entrepreneurial ecosystem, the selection of FintechOS in the Endeavor Network is a confirmation of the value and the huge development potential of Romanian companies in a truly global setting,” Endeavor Romania board chair Marius Stefan said. “We are eager to discover together other innovative companies and other entrepreneurs as focused and enthusiastic as (co-founders) Teodor and Sergiu (Negut) and enhance their development with the help of Endeavor.”
Now more small businesses can get in on the Buy Now Pay Later game just like retail consumers.
Courtesy of a new $100 million debt facility, small business financing company Behalf will be able to make its In-Purchase Financing offering available to a broader range of B2B merchants and their small business customers. In-Purchase Financing gives B2B merchants the same sort of Buy Now Pay Later benefits that retail consumers enjoy, and includes a range of features designed especially to meet the needs of B2B commerce. The facility was provided by funds managed by Ares Management Corporation.
Behalf also announced $19 million in new venture financing led by MissionOG, Viola Growth, Viola Credit, and Vintage Investment Partners. Migdal Insurance and La Maison Partners also participated in the round. Behalf’s total funding now stands at more than $250 million.
Describing the B2B e-commerce market as more than ready for transformation, Behalf CEO Rob Rosenblatt said that in-purchase financing gives merchants the opportunity to source new revenues. The offering also gives small and medium-sized businesses access to an affordable financing alternative.
“Even as the U.S. economy is improving, SMBs continue to seek financial assistance to purchase critical supplies, inventory and equipment,” Rosenblatt explained. “Oftentimes they lack the requisite spend capacity on their personal or business credit cards. By offering In-Purchase Financing with flexible terms, B2B merchants can increase average order size by as much as 50-80 percent while reducing their risk, improving cash flow and driving operational efficiencies,” he said.
Among the features included in Behalf’s In-Purchase Financing solution are:
Seamless checkout to improve CX and customer loyalty
Easy integration with existing point-of-sale systems
Advanced underwriting and scoring models to handle the complexity and risk of SME lending
The solution scales to enable merchants to serve a range of business customers, from small to large, and supports financing for transactions of “significantly greater” average order value relative to consumer financing options.
“We think there is a great market opportunity for a B2B offering targeting the more complex, real-time financing needs of SMBs,” Ares Credit Group Partner Jeffrey Kramer said. “We are excited to provide a debt facility that will help support the company to achieve its growth objectives.”
Founded in 2011, Behalf made its Finovate debut at FinovateFall three years later. Since then, the company has enabled its B2B merchant partners to achieve an 83% increase in Average Order Value (AOV), an 80% gain in purchase frequency, and 44% growth in sales revenue.
In a round led by new investor NewView Capital, blockchain-based commercial payments innovator Paystand has raised $50 million in funding. The company leverages the cloud and the Ethereum blockchain to power its Paystand Bank Network, a no-fee, digital B2B payment system used by more than 250,000 companies to make payments.
“With this new funding, Paystand is uniquely positioned to bring the benefits of blockchain to commercial payments so businesses can be more agile and competitive in the post-pandemic landscape,” Paystand CEO Jeremy Almond said. “Our vision is to create an open financial infrastructure that delivers a self-driving money experience for businesses and provides radically better economics for the industry itself.”
The investment takes Paystand’s total capital to more than $78 million. Also participating in this week’s financing were SoftBank’s Opportunity Fund, King River Capital, Industrious Ventures, and Transform Capital. As part of the investment, NewView Capital’s Jazmin Medina will join Paystand’s board of directors.
Paystand’s innovation is to automate the entire cash lifecycle to enable businesses to enhance the overall customer experience with seamless, B2B payment options. The company’s technology helps businesses accelerate time-to-cash, lower DSO (daily sales outstanding) by 60% or more, as well as reduce fraud and chargebacks thanks to real-time fund verification. And instead of charging businesses a percentage on each transaction, Paystand’s business model relies on subscriptions which the company says allows businesses to scale their payments operations without having to worry about dramatically increased fee-per-transaction expenses.
An alum of our developers conference, FinDEVr, Paystand was among the many fintechs who was able to turn the crisis of the global pandemic into an opportunity to support businesses that suddenly found themselves sprinting toward digital transformation. In a blog post discussing the challenges facing businesses during this time, Almond noted that while many companies had already migrated to the cloud for their “systems of record” (i.e., CRM, ERP, etc.), the “critical component” and “last mile” of digital transformation – revenue – was left underaddressed.
“Finance teams found themselves forced to return to the office at the height of COVID-19 outbreaks just to pick up checks and deal with cash flow,” Almond wrote, “something that clearly exposed the backwards nature of the legacy payment system.”
In May, Paystand inked a partnership with cloud business management solution provider Sage to enable a “Venmo for Businesses” like service via Paystand’s B2B payment network. The following month, the Scotts Valley, California-based fintech launched its Smart Lockbox, a digital-first alternative to traditional lockbox services. Smart Lockbox enhances the ability of businesses to transition away from paper-based payments to faster, less expensive, digital options, and makes migration easy with a seamless, one-click process.
“Smart Lockbox is the key tool that helps companies seamlessly bring their mission-critical revenue into the digital age,” Almond said when the solution was announced. “In a post-pandemic world, everything looks very different. COVID supercharged the push for digital transformation across the board for businesses, and there’s no question that this shift is here to stay. Now, with Smart Lockbox, finance teams can turn their biggest headaches into a newfound source of power.”
AuthenticID, an identity proofing solution provider for the enterprise, has raised $100 million in funding from Long Ridge Partners. The investment will help the company continue to bring innovative identity proofing solutions to its customers in financial services, telecommunications, government, and other sectors.
“Our platform is relied upon by a majority of the U.S. wireless carriers and various identity platform to securely establish identity,” AuthenticID CEO Jeff S. Jani said. “Our differentiator is the significant ROI we deliver to customers, from stopping more fraud to converting more sales than our digital identity competitors. Our mission is to improve the security for all of our collective identities.”
Union Square Advisors, a boutique technology-focused investment bank, served as AuthenticID’s financial advisor in the transaction.
AuthenticID gives businesses the ability to conduct document-centric identity verification with a high degree of accuracy and fast processing times. The 100% automated solution helps companies increase conversion rates and eliminate fraud at a time when businesses are seeing a surge in the volume of customers who need to be digitally onboarded in order to use their services. AuthenticID leverages machine learning algorithms, AI-powered neural networks, and state-of-the-art computer vision to determine when photos and faces do not match, whether identification documents are fraudulent, and if either the name or face being analyzed has been associated with suspicious activity in the past.
Founded in 2001 by Blair Cohen, AuthenticID made its Finovate debut two years later at FinovateSpring. In the years since, AuthenticID has brought its technology to ten companies in the Fortune 100, three of the top U.S. banks, two of the top three credit reporting agencies, and three of the top five telecommunications companies in the U.S., as well as several international banks and companies around the world. Earlier this month, the company announced that it had reached a new milestone with the launch of its new enterprise-grade SaaS system that can process nearly 35 million identity proofing transactions in a day and more than one billion in a single month.
“AuthenticID has built a market-leading computer vision system to meet the ever-growing requirements of this market,” AuthenticID Chief Technology Officer Richard Huber Jr. said when the milestone was announced. “Our system sets a new standard for reliably and accurately verifying anyone’s identity from anywhere in the world.”
In a venture round led by Foundry Group, modern payments platform Dwolla has raised $21 million in new funding. The capital takes the company’s total funding to more than $70 million according to Crunchbase, and will help fuel the Des Moines, Iowa-based fintech’s growth initiatives, enhance its partner relationships, and drive the company’s product roadmap.
Also participating in the funding were Park West Asset Management LLC, Union Square Ventures, Detroit Venture Partners, Firebrand Ventures, and Next Level Ventures. Individual investor Jeremy Andrus, CEO of Traeger, also participated in the round.
The investment in Dwolla comes in the wake of a surge in transaction volume over the past year – due largely to the economic fallout from the COVID-19 pandemic. With an increase of 80% in transaction volume since the beginning of the crisis, Dwolla sees itself on track for more than $30 billion in transaction volume this year. The company noted that this week that it has onboarded approximately three million end users on its payments platform in the first six months of 2021.
“We continue to be excited at the speed of innovation and demands from the marketplace,” Dwolla CEO Brady Harris said in a statement announcing the investment. “We continue to see significant client and payment volume growth due in part to our new products like Real-Time Payments, Push-to-Debit, and our low-code solutions. This funding will allow us to fully capitalize on the momentum we’re experiencing, as we continue to scale our tech stack with innovative solutions and invest in go-to-market capabilities with international expansion and technical integrations with exciting fintech partners.”
This spring, Dwolla added real-time payment options to its platform. Powered by Cross River Bank, the Real-Time Payments solution uses the RTP Network to send money directly to bank accounts in seconds. The partnership enabled new businesses integrate Dwolla’s payment API to connect with RTP-enabled FIs and send money, while Dwolla’s current customers were able to begin using the technology simply by changing a single line of code.
“Today is game-changing,” Harris said when the new offering was announced in April. “Not just for adding real-time payments to Dwolla’s payments technology. But because of how we collaborated with a forward-thinking financial institution to make real-time payments easily accessible to businesses of all sizes. The immediacy of real-time payments will fundamentally change how businesses operate.”
Days after Bloomberg News reported that Apple will add Buy Now Pay Later (BNPL) functionality to Apple Pay, we learn that Buy Now Pay Later “OG” Sezzle has received an investment of $30 million from Discover. And not only will Discover make a financial commitment to the company, which most recently demonstrated its technology on the Finovate stage at FinovateFall in 2018, Discover also entered into an agreement that will enable the card company launch a Buy Now Pay Later service on its own Discover Global Network.
“We are excited about our relationship with Discover, as we believe our mission, vision, and values align,” Sezzle CEO and Executive Chairman Charlie Youakim said. “Discover’s capabilities via their network and financial products will enhance our own offerings and provide more paths to financially empower our consumers.”
Today’s announcement is also the fruit of an agreement inked back in February that enabled Sezzle to work with selected merchants on the Discover Global Network. Discover SVP of Global Business Development and Acceptance Jason Hanson underscored the benefit that BNPL provides to its merchant partners, and also noted that the partnership would boost Sezzle’s ability to “grow its business and provide new payment opportunities.” To this end, as part of the collaboration, Sezzle also will join a dedicated referral program that will introduce Discover’s credit and debit card products to its customers.
Founded in 2016 and headquartered in Minneapolis, Minnesota, Sezzle enables consumers to make purchases at more than 34,000 participating retailers, and pay for those purchases in four, interest-free installments over six weeks. Approval decisions are available instantly, and using Sezzle has no impact on the consumer’s credit.
The explosion in interest in Buy Now Pay Later payment schemes has been a boon for companies like Sezzle that were helping consumers shop today and pay tomorrow before it was cool. Last month, Sezzle announced partnerships with Target and Barstool Sports, and the company continues to affirm its plans for an initial public offering in the U.S. – having launched publicly on the Australian Stock Exchange (ASX) in 2019.
M1 Finance, which offers a financial super app featuring automated investing, lending, and banking services, has secured $150 million in Series E funding. The round was led by SoftBank’s Vision Fund 2 and takes the company’s total capital to more than $300 million. The Chicago, Illinois-based fintech now has a valuation of $1.6 billion, giving the firm “unicorn” status.
In its funding announcement, M1 Finance noted that the investment will help the company develop and deliver new products and features, continue to innovate on its platform, and expand its workforce. The Series E, which featured the participation of existing investors, as well, comes after a year in which the M1 Finance launched a trio of new solutions – Send Check, Custodial Accounts, and Smart Transfers – and reached more than $4.5 billion in total assets under management.
“Each funding round is proof and motivation that people believe in our mission of empowering financial well-being,” M1 Finance founder and CEO Brian Barnes said. “Financial well-being isn’t a luxury, it’s a necessity. Our platform helps people have more control, more freedom, and more power over their money. We experienced massive growth in the past year, and it’s extremely gratifying to see investors and clients believe in our vision and make it a reality.”
A Finovate alum since its debut at FinovateFall in 2016, M1 Finance combines the ability to build and maintain a personalized, automated investment portfolio – including access to fractional share investing – with a flexible line of credit and a digital banking service integrated into the user’s investment portfolio. M1 Finance offers both a free Basic program as well as a Plus program for $125/year (with the first year free) that has a lower borrowing rate, 1% cash back on spending, and access to Smart Transfers, Custodial Accounts, and Send Check functionality.
“M1 Finance simplifies the complex, time-consuming money management process for individuals,” SoftBank Investment Advisers Managing Partner Munish Varma said. “We believe the company is well-positioned to consolidate users’ financial lives on a one-stop super-app with its Invest, Spend, and Borrow products.”
The tech-first alums of our FinDEVr developers conferences are often as savvy fundraisers as they are sharp technologists. This week in our Q2 Alum Funding Report, we noted that two of the quarter’s biggest fundraisings were from companies that made their Finovate debuts at FinDEVr events: Brazilian neobank NuBank, which secured $750 million in funding in June, and financial data network Plaid, which raised $425 million in funding in April.
This week, we add another FinDEVr alum to this list. LoanPro, a Farmington, Utah-based fintech that made its FinDEVr debut earlier this year, has raised $100 million in Series A funding. The growth equity investment comes courtesy of FTV Capital, and will help LoanPro add to its SaaS-based loan management, servicing, and collections platform, as well as enter new lending verticals and make investments in other “client-centric growth initiatives.”
“As founders who started out as lenders, we understand the pain points that lenders experience,” LoanPro co-founder and CEO Rhett Roberts explained. “LoanPro was built by lenders for lenders – we use a modern tech stack to simplify the user experience of managing loans – we do the hard work on the back end to make the front end clean and simple to use.”
With more than $15 billion of loans under management and 600+ clients in the U.S. and Canada, LoanPro offers a diverse range of loans types and lending programs. The company’s product suite include prime, sub-prime, and personal loan products, as well as consumer, auto, and business financing solutions. LoanPro also offers point-of-sale financing and the retail financing rage of the day – buy now pay later payment options – as well. LoanPro’s platform gives lenders an automated, configurable workflow, real-time access to data and insights, frictionless payment collections, and a flexible lending program.
In addition to the financial support, FTV Capital will use its market knowledge and strategic network to help grow LoanPro’s platform. The firm’s Robert Anderson, who led the investment, will join LoanPro’s board of directors.
“FTV Capital is excited to partner with LoanPro’s strong, passionate leadership team who have built an industry leading SaaS platform based on a deep understanding of their market and the needs of their customers,” Anderson said.
Finovate alums enjoyed their biggest Q2 fundraising to date. A total of 14 alums from both our Finovate and FinDEVr conferences raised in excess of $2.8 billion in equity funding over the course of April, May, and June of this year.
For those who wondered if the second quarter of 2021 would represent a continuation of the strong performance Finovate alums recorded in Q1 of 2021, the answer is an unqualified “yes.” In fact, Q2 2021 funding not only exceeded all previous second quarter tallies; the sum also rivaled all previous first quarter alumni funding totals, as well.
Previous quarterly comparisons
Q2 2020: More than $975 million raised by 15 alums
Q2 2019: More than $1.8 billion raised by 29 alums
Q2 2018: More than $1.5 billion raised by 25 alums
Q2 2017: More than $726 million raised by 25 alums
Q2 2016: More than $510 million raised by 23 alums
Most of the funding in the second quarter came in the month of June, both in terms of the amounts raised and the number of alums involved. Modest second quarters are no surprise, and this year’s slow April – with only a pair of alums announcing funding – is reminiscent of last year’s slow May in which only three alums announced funding.
Top Equity Investments for Q2 2021
NuBank: $750 million
Plaid: $425 million
Trulioo: $394 million
Klarna: $369 million
Scalable Capital: $180 million
Paysend: $125 million
SmartAsset: $110 million
TipRanks: $77 million
Arkose Labs: $70 million
Credit Sesame: $51 million
Four big fundraisings dominated the second quarter for Finovate alums. NuBank’s $750 million was the clear standout, but impressive sums were raised by three other alums – Klarna, Plaid, and Trulioo – in Q2 also. Altogether, the top ten equity investments for Finovate alums in the second quarter represented $2.55 billion or more than 91% of the total raised by alums in Q2 2021.
Here is our detailed alum funding report for Q2 2021.
If you are a Finovate alum that raised money in the second quarter of 2021 and do not see your company listed, please drop us a note at research@finovate.com. We would love to share the good news! Funding received prior to becoming an alum not included.
