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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Small business financial services platform Hatch unveiled its funding total today. The California-based company has pulled in $20 million in two funding rounds since it was founded in 2018.
The first investment, a Seed round that closed in January 2019, totaled $5 million. The company’s Series A round closed in February of last year, totaling $14 million.
Hatch’s investors include Kleiner Perkins, Foundation Capital, and SVB.
Hatch offers small businesses a line of credit and a business checking account which it launched this January. The checking accounts come with a Mastercard debit card and allow Hatch’s 4,000 business users to send money through ACH, billpay, or via digital checks from the Hatch dashboard. Additional features include overdraft protection and cashback rewards.
Because Hatch uses machine learning to complete KYC, KYB, and OFAC compliance checks, businesses can get approved for a checking account in under five minutes. Accounts cost $10 per month and feature a transparent fee structure.
Founded by Thomson Nguyen, Hatch has a team of 48 people, 40 of which were brought on in the past year during the pandemic.
Mortgagetech innovator Better.com recently landed a $500 million investment from Japan-based Softbank, bringing the company’s total funding to over $900 million.
According to the Wall Street Journal, which broke the news, Softbank is buying shares from existing Better investors, a list which includes Goldman Sachs, Citigroup, and Kleiner Perkins.
With the new round, experts estimate Better’s valuation to be around $6 billion. This is a significant jump from the company’s most recent valuation, which sat at around $4 billion after Better closed a funding round in November of last year.
Better was founded with the goal of reengineering the mortgage process. The company streamlines mortgage originations by taking the entire process online. Better also offers Better Real Estate, which matches buyers with real estate agents; Better Settlement Services, which offers title insurance; and Better Cover, a home insurance marketplace.
The new investment comes at a time of significant growth for Better. Inspired by low interest rates, more consumers have been refinancing their properties. The Wall Street Journal reports that because of this increase in demand, Better lent out $25 billion in loans in 2020 and has extended $14 billion in loans the first quarter of this year.
Better saw $800 million in revenue last year and is expected to go public by the end of 2021. Founded in 2014, the company is headquartered in New York City. Vishal Garg is CEO.
Open banking platform TrueLayer recently landed $70 million in Series D funding.
The investment, which brings the London-based company’s total funding to $142 million, was led by Addition, with contributions from all major existing investors, as well as new investors including Visionaries Club, Surojit Chatterjee, Zack Kanter, Daniel Graf, and David Avgi.
TrueLayer’s mission is to open up finance with its open banking network that connects payments, data, and identity to help people spend, save, and transact more freely online.
The funding comes at a time of major growth in the open banking scene in the U.K. The nation has seen more than three million open banking users and if the growth curve continues, 60% of the U.K.’s population will be using open banking by the end of 2023.
Founded in 2016, TrueLayer now processes more than half of the open banking volume in the U.K., Ireland, and Spain. Much of this growth has come over the course of the past year during which time the company has grown by 600x and expanded across 12 markets.
As for what’s next, TrueLayer will launch new open banking capabilities this year. The company will also expand its network, which will in turn add more account connectivity for consumers.
“We believe that open banking is reaching maturity in several markets and the next phase is about solving bigger, more complex problems for our customers – layering value on top of the raw infrastructure,” said TrueLayer CEO and Co-Founder Francesco Simoneschi. “You’ll see us building more and more in this direction.”
TrueLayer’s clients number in the hundreds and include fintechs such as Revolut, Nutmeg, Trading 212, Stake, and Payoneer.
Here’s an idea: a corporate card that incentivizes spending less rather than rewarding you for spending more.
Ramp, a New York-based fintech launched by Eric Glyman, Gene Lee, and Karim Atiyeh, has raised $115 million in Series B funding to power this approach to business expense management. Taking Ramp’s total capital to $320 million, the investment gives the company a valuation of $1.6 billion.
“Co-founding a fintech unicorn was never my plan,” Ramp CEO Glyman wrote on the company’s blog in a funding announcement, “and almost feels crazy given my job 12 years ago was selling t-shirts and jeans.”
The round was led by D1 Capital Partners and Stripe. Joining them were Founders Fund, Coatue Management, Thrive Capital, Redpoint, and Box Group. Ramp also announced that it had received a $150 million line of debt financing from Goldman Sachs. “During our next phase of growth,” Glyman added, “we plan to expand our efforts to bring the value of Ramp to more businesses in more places and to transform the way more companies do business.”
Ramp offers a corporate card with unlimited 1.5% cash back on every transaction, 10x to 20x higher limits and no fees, and both smart virtual and physical cards with built-in spend management controls. An integration with Slack makes it easy for managers to get alerts, approve expenses in real-time, and respond to issues from within the business communication platform.
Ramp says that it has identified more than $10,000,000 in annualized savings for 1,000+ customers, with the average Ramp customer saving in excess of $100,000. Companies using Ramp’s spend management platform range from startups to corporations, and include technology innovators in their own right such as Clubhouse and Finovate alum Marqeta. The technology is integrated with popular accounting platforms such as Netsuite, Sage Intacct, Xero, QuickBooks, and more than 100 others.
Onboarding its first company in 2019 and launching publicly one year later, Ramp has experienced 4x growth over the past six months. Glyman said the company is approaching annualized transaction volume of more than $1 billion.
Today brings news that Plaid has secured a massive $425 million investment in a round led by Altimeter Capital. The Series D round also features participation from Silver Lake, Ribbit Capital, and other current investors, and gives the firm a total capital amount of more than $734 million. Now sporting a valuation of $13.4 billion, Plaid said it will use the additional capital to “grow its platform, invest in infrastructure, payments capabilities and global expansion,” according to the company’s U.K. head, Keith Grose.
In a blog post titled “Digital finance is everywhere, but it’s just getting started,” Plaid CEO and co-founder Zach Perret described how, in some ways, the dream that led to the founding of Plaid “nearly a decade ago” is beginning to come true. “We dreamt of a financial system that was built to empower consumers and unlock financial freedom for everyone,” Perret said. “We are humbled to watch as fintech continues to expand and improve the financial lives of billions of people worldwide.”
More specifically, Perret’s post makes it clear that “scale” is the next big objective for the San Francisco, California-based fintech. In order to meet increasing global demand, as well as deliver on the growing expectations of ever-more-digitally-savvy consumers, Plaid will continue to invest in API technology as well as “tools and services to support enhanced privacy, personalization, decisioning, and automation.”
Founded in 2012, Plaid made its Finovate debut two years later at our developers conference, FinDEVr. The company has grown from an API-building technology infrastructure startup to now also offer key insights into the data access it provides via a suite of analytics solutions. Plaid’s technology enables users to access detailed transaction histories, setup direct debits and payouts, verify borrower assets, user identities, and real-time account balances; and make instant, in-app bank payments.
Since inception, Plaid has analyzed more than 10 billion transactions. Use cases for the company’s technology range from personal finance, lending, and wealth management, to consumer payments, banking, and business finance.
When it comes to the competition for investment dollars, Finovate alums are off to their best start to date. Having raised more than $3.3 billion in funding in the first three months of 2021, companies that have demoed their innovations on the Finovate stage are attracting VC capital at the fastest rate in years.
In fact, Finovate alums in Q1 of 2021 raised more money than in the previous four first quarters combined.
This year’s powerful first quarter came courtesy of nearly a dozen, nine-plus figure investments. Global breadth was wide. Among the countries represented by the quarter’s top ten equity investments are Sweden, Brazil, Germany, and the U.K. And within the U.S., innovators from familiar locations in Silicon Valley share our top ten list with fintechs from Boston, New York, and Lehi, Utah.
Top Equity Investments
Klarna: $1 billion
Nubank: $400 million
Blend: $300 million
MX: $300 million
Feedzai: $200 million
Jumio: $150 million
OutSystems: $150 million
Mambu: $135 million
Stash: $125 million
Blockchain.com: $120 million
The top ten equity investments of the quarter represented $2.88 billion or 87% of the quarterly total. As large as these investments were, they represented a smaller share of the quarter’s overall total than we’ve seen in the past few years. In 2020, the top ten investments made up more than 99% of the Q1 total. In 2019, the top ten represented more than 91% of the total raised by Finovate alums for the first quarter.
Here is our detailed alum funding report for Q1 2021.
January: More than $1.3 billion raised by 10 alums
If you are a Finovate alum that raised money in the first 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.
Digital banking services company Spiral picked up a $14 million investment this week. The New York-based company will use the capital to fund its new app that makes it easy for users to donate to the charity of their choice.
“The future belongs to socially-conscious brands that care as much about giving back to society as they do about generating profits and growth,” Spiral CEO and co-founder Shawn Melamed said. He explained that the company’s goal is to create a new solution to serve an ecosystem of millions of charitable givers and more than one million non-profit businesses.
“People are increasingly supporting brands that align with their values,” Spiral President and co-founder Dan Blumenfeld added. “And they expect a simple and effortless user experience. Spiral will offer customers both a personalized banking experience and a deeper connection to the charities they support.”
Currently in beta, Spiral boasts that it offers account holders 15x more than the national average in savings and cash bonuses. No minimum balance is required and no fees are charged for active accounts or for transferring money by ACH. Spiral provides donation matching of up to $150 per year to more than one million charities and nonprofits ranging from the David Ortiz Children’s Foundation to the Cerebral Palsy Research Alliance Foundation. Automatic donation reports for tax returns are provided, and the company’s deposit accounts are issued by nbkc Bank of Overland, Kansas, and are FDIC-insured up to $250,000.
The funding round was led by Team8 and featured participation from Communitas Capital, Phoenix, Nidoco AB, and MTVO. Melamed and Blumenfeld founded Spiral after Melamed served as Managing Director of Morgan Stanley’s Technology Business Development and Innovation Offices and Blumenfeld served as Head of Product and Growth at Skype.
Avanti Financial Group has put the final touches on a deal that will bring the firm that much closer to its goal of launching a digital asset bank.
Late last week, Avanti announced that it had closed a Series A round, raising $37 million from a wide swathe of institutional investors, cryptocurrency companies, family offices, and angel investors.
The investment takes Avanti’s total capital to $44 million. Launched last year, Avanti secured $5 million in angel funding last June in a round led by the University of Wyoming Foundation and featuring participation from Morgan Creek Digital, Blockchain Capital, and Digital Currency Group. The new financing will fund the necessary regulatory capital for Avanti’s digital asset bank, as well as support engineering and operating expenses.
“Our roadmap includes offering API-based U.S. dollar payment services for wires, ACH, and SWIFT; issuance of our tokenized, programmable U.S. dollar called Avit; and custody and on-/off-ramp services for bitcoin and other digital assets,” Avanti founder and CEO Caitlin Long said. Long highlighted the number of customer inquiries (2,500+) that Avanti had received since it secured a bank charter back in the fall of 2020 and said that those looking to become a part of the firm’s digital asset bank should expect a launch “soon.”
Headquartered in Cheyenne, Wyoming, Avanti sees itself as a bridge between traditional banking and a world in which digital assets are bought, sold, and trusted as thoroughly as fiat currencies. A software platform with a bank charter, Avanti gives customers a strong regulatory environment compared to other digital asset companies, including a full-reserve requirement for dollar deposits and resources like its tokenized dollar, Avit, to help solve painpoints in the payments process.
Trace Meyer, who formed the consortium that led Avanti’s Series A, praised Avanti’s “potent, institutional-quality human capital.” A Bitcoin investor and early adopter, Meyer emphasized that both smart regulation and “experienced, competent operators” are critical to the institutionalization of digital assets, and said that Avanti was “well-positioned to competently answer questions that most in the industry have not even thought about.”
On the heels of its FinovateEurope demo this week, digital banking player Meniga has raised $11.8 million (€10 million). The investment brings the company’s total funding to $55.7 million.
Velocity Capital and Frumtak Ventures led the round, followed by Industrifonden and Meniga customers UniCredit, Swedbank, Groupe BPCE, and Íslandsbanki.
“Meniga has established itself as a trusted strategic partner to top-tier banks around the world for Personal Finance Management and Business Finance Management tools, which are built on top of its market-leading data consolidation and enrichment technologies,” said Willem Willemstein, General Partner & Founder at Velocity Capital Fintech Ventures. “We’re extremely excited about the growing demand for the personalised banking experiences that Meniga delivers, such as its new product, Carbon Insights, which uses transaction data to measure a bank customer’s carbon footprint.”
Meniga will use the funds to increase its R&D efforts and further build its sales and service teams. The company also said it will use the funds to bolster its green banking products.
The latter point is notable because Meniga has been making a name for itself in the green banking arena since the launch of its Carbon Insights tool. While multiple digital banking providers, such as Aspiration and Treecard, have launched in an effort to promote ESG banking for individual consumers, there have not been many players helping incumbent banks to compete by offering their own green banking products.
Launched last year, Carbon Insights enables banks to inform customers about their carbon footprint based on their spending habits and offers them the ability to reduce or offset it. Earlier this month Iceland’s Íslandsbanki became Meniga’s first client for Carbon Insights.
During the company’s FinovateEurope demo, Meniga CEO and Co-founder Georg Ludviksson noted that the company is currently implementing Carbon Insights with banks in four separate countries. “The demand is growing fast,” he added. “Carbon-concious consumers are here to stay.”
Founded in 2009, Meniga powers banking apps used by more than 100 million people in more than 30 countries. The company is headquartered in the U.K. with offices in Reykjavik, Stockholm, Warsaw, Singapore, and Barcelona.
Financial crime fighter Feedzai has secured a growth investment of $200 million. Product development, partner strategy, and global expansion are three Feedzai priorities that will be accelerated by the new investment.
The Series D round was led by KKR, and featured participation from existing investors Sapphire Ventures and Citi Ventures. The company’s total capital now stands north of $277 million, having most recently raised $50 million in a 2017 Series C round.
“This new investment delivers on our mission to keep commerce safe by further developing our single machine learning cloud platform for all four stages of the customer risk journey: prevention, detection, remediation, and compliance,” Feedzai CEO Nuno Sebastiao wrote on the company blog this week. “Focusing on the entirety of the risk lifecycle,” he added, “allows us to partner with financial services in a radically new way at every step of the journey.”
The funding also gives the risk management platform a valuation “well over $1 billion” the company noted in its funding announcement.
Partnered with some of the largest financial institutions in the world – including four of the five largest banks in North America, Feedzai leverages its risk management platform to monitor activity at companies with more than 800 million customers in 190 countries. The firm’s platform leverages machine learning and AI to help companies defend themselves from financial crimes including money laundering, detecting fraud in less than three milliseconds.
A Finovate alum since 2014, Feedzai unveiled its Feedzai Fairband solution earlier this month. Feedzai Fairband is an AutoML algorithm-based technology that automatically discovers less biased machine learning models while increasing model fairness by as much as 93% on average. Dubbed “the world’s most advanced AI fairness framework,” Feedzai Fairband enables financial institutions to accommodate their customers fairly and without the bias that even the most carefully-designed AI models may still hold.
“Feedzai Fairband is one of the biggest milestones in the financial services industry as it presents a low-cost, no-friction framework to address one of the biggest problems of our era – AI bias,” Feedzai Chief Scientist Dr. Pedro Bizrro said. “By creating the most advanced framework for AI fairness, Feedzai is allowing financial institutions to incorporate a critical piece of technology that addresses a problem under close public scrutiny with proven damaging effects across the globe. Building accurate and fairer models will be less challenging from now on.”
Named to Techround’s roster of the top 50 fintech companies in the U.K. in February, Feedzai highlighted the “skyrocketing” rise in fraud attacks in 2020 in its Financial Crime Report Q1, 2021, released earlier this month.
“2020 was a year of rapid growth in financial crime. Fraudsters tried to take advantage of the convergence between a fast-paced digital environment and a new wave of inexperienced consumers to perpetrate a multitude of attacks that created a significant uptick in fraud,” Jaime Ferreira, Senior Director of Global Data Science at Feedzai said in the report. “Financial institutions need to further invest in technologies to protect their customers while developing educational approaches. Robust technology and informed consumers are a powerful combination when fighting financial crime.”
Feedzai began the year with an announcement that Latin America’s largest investment bank, BTG Pactual, will implement Feedzai’s financial crime management technology.
In the biggest fundraising for an identity verification company to date, Jumio has locked in an investment of $150 million. The funding comes courtesy of Great Hill Partners, a private equity firm that specializes in investments in “high-growth, disruptive companies.” The investment takes Jumio’s total funding to more than $255 million, according to Crunchbase.
“Jumio’s innovations helped establish the identity verification market, and the need to establish someone’s digital identity remotely has never been greater,” Jumio CEO Robert Prigge said. The company plans to use the new capital to automate its identity verification solutions, expand the breadth of its Jumio KYX Platform, and further build out the platform’s suite of AML compliance solutions.
As part of the investment, Great Hill Partners’ Nick Cayer and Matt Vettel will join Jumio’s Board of Directors. Cayer, who has been with Great Hill since 2006, praised the company as “the de factor global leader in online identity verification, fraud detection, and compliance.” He added that given the mandate many institutions have to digitize processes such as onboarding and KYC monitoring, firms like Jumio can play a key role in helping them keep pace with the growing volume of digital and mobile-based transactions.
Making its Finovate debut in 2013 and being acquired by Centana Growth Partners in 2016, Jumio has verified more than 300 million identities issued by 200+ countries and territories since inception in 2010. With customers and partners in a wide range of verticals – from financial services and the sharing economy to retail, travel, and online gaming – Jumio leverages AI, biometrics, machine learning, and certified liveness detection to help ensure that customers are who they claim to be. Jumio’s KYX Platform, launched last fall, provides organizations with an end-to-end identity verification and eKYC solution that enables them to onboard new accounts safely and accurately, keep existing accounts secure, and meet their compliance obligations with regards to KYC, AML, and GDPR.
“Digital transformation is more than a buzzword. It’s today’s business imperative,” Prigge said. “To succeed, organizations must transform quickly and do it in ways that build trust, security, and satisfaction. Businesses can tailor the Jumio KYX Platform to fit their unique needs and risks and tap into services that accelerate digital transformation without sacrificing security and convenience.”
Learn more about how Jumio fights deep fakes and bots in our interview from last summer featuring company VP of Marketing, Dean Nicolls.
Peer-to-peer lending platform and digital bank Zopa landed some extra funds this week, now that its new banking platform is starting to take off.
The U.K.-based company pulled in $28 million (£20 million) from existing investors, bringing its total raised to $465 million.
Investors in today’s round include IAG Silverstripe, which led the round, as well as Augmentum, Alternative Credit Investments, Venture Founders, and others. The company will use the funds to support the growth of its digital bank.
Zopa secured its banking license last June and has since transitioned its platform from a peer-to-peer lending operation to a digital bank with a peer-to-peer lending option. Since that time, Zopa began offering savings accounts, which have reached $346 million (£250 million) in customer deposits, and a credit card product that has made Zopa a top 10 credit card issuer in the U.K. based on new customers.
The new funding comes at a time when competition among digital banks is at an all-time high. Zopa is poised to do well in the battle for new clients and deposits, however. The company has built a well-established client base, resources, and relationships since it was founded in 2004 as a peer-to-peer lending platform.
Zopa CEO Jaidev Janardana echoes this. “Less than a year since launching our bank, we have exceeded our plan for growth, both in terms of customers and balance sheet,” he said. “This capital injection will enable us to continue on this accelerated path. Our strong entry to the U.K. savings and credit card markets shows the organic appeal of our products and we are happy to have investors who share our excitement at the opportunity to serve more customers across more product categories.”
