Funding

More Than $400 Million Raised by 19 Alums in Q3 2018

By David Penn Posted on
Categories: Funding, Fundings

After racking up more than $1 billion in funding last summer, Finovate alums secured more than $400 million in funding over July, August, and September of 2018. This year marked the second time in the past four years that a billion-dollar third quarter was followed the next year by a significantly less bountiful Q3 in terms of equity financing.

Interestingly, eight of our 19 fundraising alums in the third quarter did not disclose the amounts of their investments. And while this does not provide any specific clues to the exact amounts of equity financing involved, it is noteworthy that undisclosed investments in AdviceRobo and Personetics both represented minority stakes taken by KPMG and United Overseas Bank, respectively.

Previous Quarterly Comparisons

  • Q3 2017: More than $1 billion raised by 31 alums
  • Q3 2016: More than $500 million raised by 30 alums
  • Q3 2015: More than $1 billion raised by 40 alums
  • Q3 2014: More than $194 million raised by 17 alums

If Q3 represented a small step in the funding growth for our alums overall, it was a giant leap for the quarter’s top fundraiser, Gusto. The $140 million in funding picked up by the payroll, benefits, and HR platform in July nearly doubled the firm’s total funding, and boosted the company’s valuation to almost $2 billion.

And you’ve got to hand it to Bambu. The three million raised by the Singapore-based robo advisor pales in comparison to the capital raised by its fellow top ten alums in Q3. But Bambu is the only company in the quarter’s top ten to have won not one, but two Best of Show awards, once at FinovateAsia 2017 and again last month at FinovateAfrica 2018.

Top Ten Equity Investments for Q3 2018

  • Gusto: $140 million
  • Flywire: $100 million
  • Zopa: $57 million
  • ThetaRay: $30 million
  • Deserve: $17 million
  • SynapseFI: $17 million
  • Wonga: $13 million
  • BlueVine: $12 million
  • Cortera: $10 million
  • Bambu: $3 million

Here is our detailed alum funding report for Q3 2018.

July 2018: More than $285 million raised by nine alums

August 2018: More than $87 million raised by six alums

September 2018: More than $28 million raised by four alums

If you are a Finovate alum that raised money in the third quarter of 2018, and do not see your company listed, please drop us a note at [email protected]. We would love to share the good news! Funding received prior to becoming an alum not included.

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Plaid Raises $250 Million Series C Round Led by Mary Meeker

Plaid Raises $250 Million Series C Round Led by Mary Meeker
By Julie Muhn (@julieschicktanz) Posted on
Categories: Funding, Plaid

Provider of APIs for financial infrastructure, Plaid, closed a $250 million Series C round. The company’s founders, Zach Perret and William Hockey, discussed the funds in a blog post today, along with Plaid’s plans to “reinvest in the fintech ecosystem,” an industry they say is “just getting started.”

The investment, which boosts Plaid’s total funding to $310 million, comes with celebrity endorsement from Mary Meeker. Meeker led the round and will join the company’s board of directors. Additional investors include Andreessen Horowitz, Index Ventures, Goldman Sachs, NEA, and Spark Capital.

“Plaid has built an important underpinning for financial services on the web and mobile. Plaid allows businesses to rapidly launch innovative products, drive growth and enhance consumer satisfaction. We are excited about the evolution and potential ahead,” Meeker said.

The San Francisco-based company will use the funds to onboard new employees and expand its operations. “We’re focused on shipping and scaling products that will both serve the growth and scale of these customers, and become the foundation for fintech for decades to come,” the founders said in the blog post. “Every company is becoming a fintech company…. Plaid’s role is to empower these innovators with a platform—and a data network—that delivers access to the financial system.”

TechCrunch, which pinned Plaid as a company to watch in 2019, reported that Plaid is now valued at $2.65 billion. This is up significantly from the company’s last valuation in 2016, which sat at $200 million after Plaid’s $44 million Series B round.

At FinDEVr San Fransisco 2014, Perret gave a presentation about leveraging the Plaid API for financial infrastructure. Since then, the company has grown to 175 employees and offers six products, including Auth, an account authentication tool; Balance, which pulls account balance information in real-time; Identity, which leverages bank data to verify consumer identity; Transactions, which pulls bank statement data across banks; Assets, a verification of assets tool; and Income, a tool that validates a consumer’s income and verifies direct deposit data.

This May, Plaid launched in Canada– its first international market. The startup also partnered with JPMorgan Chase to help the bank make a move toward open banking by enabling account holders to safely share their financial data with third party fintech applications.

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Pindrop Advances into Smart Devices with $90 Million in Funding

Pindrop Advances into Smart Devices with $90 Million in Funding
By Julie Muhn (@julieschicktanz) Posted on
Categories: Funding, Pindrop Security

Phone-based fraud prevention company Pindrop closed a Series D funding round today valued at $90 million, bringing the Atlanta-based company’s total funding to almost $213 million. Pindrop is not disclosing its valuation, but did say that it is “much higher” than the $600 million it was valued at after its $75 million funding round in 2016.

Vitruvian Partners led the round. Strategic investors Allegion Ventures, Cross Creek, Dimension Data, Singapore-based EDBI, and Goldman Sachs also participated, along with existing investors, including CapitalG, IVP, Andreessen Horowitz, GV and Citi Ventures.

According to Vijay Balasubramaniyan, co-founder, CEO, and CTO of Pindrop, the company will use the investment to advance in consumer IoT and voice technology while strengthening its existing solutions. Specifically, the company outlined plans to boost its presence in Europe and Asia, citing investments from U.K.-based Vitruvian Partners, Singapore-based EDBI, and Japan-based Dimension Data.

“One of our key goals is to help leading high-growth companies like Pindrop grow in Europe and internationally,” said David Nahama, senior partner at Vitruvian Partners. “We are confident that Pindrop is poised for massive expansion given the company’s depth of engineering expertise, pioneering efforts in machine learning technology and patent portfolio.”

Pindrop will also use the funds to support research and development efforts into providing security solutions for voice-controlled smart devices, including Google Home, smart locks, and connected cars. “Voice is fast emerging as the next generation human user interface with wide consumer and commercial applications, yet security remains a major concern,” said Chu Swee Yeok, chief executive and president of EDBI. “Pindrop’s world class AI voice security technology will be a significant enabler for wider voice UI adoption, beyond call centers.”

Founded in 2011, Pindrop debuted its Phoneprinting technology at FinovateFall 2012 in New York. The technology detects 80% of fraudulent calls into call centers and protects “hundreds of millions” of calls annually. Pindrop is working with eight of 10 of the largest banks as well as the five of the seven largest insurance companies in the U.S. Overall, the company protects more than 200 million consumer accounts and has stopped more than $350 million in voice-based fraud attacks this year.

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Switch Granted $2 Million in Funding

Switch Granted $2 Million in Funding
By Julie Muhn (@julieschicktanz) Posted on
Categories: Funding, SWITCH

Credit card information management platform SWITCH announced its largest round of funding to-date. The Seattle-based company just closed a $2 million investment, bringing its total funds to more than $2.3 million.

Founded in 2013, SWITCH enables cardholders to automatically update their card-on-file information across multiple accounts. This comes in handy for consumers replacing the 700 million U.S. credit and debit cards that are lost, stolen, or reissued each year.

SWITCH’s technology is embedded into its CardSavr API which it launched in February of this year. The CardSavr API allows card issuers to place new cards into circulation immediately after they are issued instead of waiting for a new one to arrive by mail. SWITCH enhanced the technology earlier this year by integrating voice technology, enabling customers to update card information and add a new card to their account simply by using voice commands.

SWITCH also offers TopWallet (pictured right), a card issuer-branded app that allows cardholders to manage all of their payments and passwords in one place. TopWallet is currently being offered in beta.

“Switch is a win-win-win for card issuers, cardholders and merchants/billers,” said Switch CEO Chris Hopen, who demoed SWITCH’s platform at FinovateSpring 2016. “Merchants and billers want… cards on file in order to operate and provide friction-free purchasing for customers. Top financial institutions gain valuable insight and higher transaction volume by helping their customers with the burden of managing payments online.”

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Modo Receives $13 Million Investment

Modo Receives $13 Million Investment
By Julie Muhn (@julieschicktanz) Posted on
Categories: Funding, Modo Payments

Payments technology company Modo has just boosted its total funding to $16 million. This comes after today’s successful completion of a $13 million Series A funding round.

Investors include Deutsche Bank– whose participation was announced in August– as well as new and existing strategic and angel investors. Modo will use the funding to grow its team and expand on its offerings.

Deutsche Bank will leverage Modo’s technology to boost its digital business-to-business and business-to-consumer payments and extend its payment capabilities into non-traditional channels such as the mobile wallets and peer-to-peer networks of Alipay, Paypal, M-Pesa, and WeChat.

Rick Striano, managing director of digital product development at Deutsche Bank said the bank is committed to bringing continued innovation to its customers. He anticipates that partnering with Modo and other fintechs will enable the bank to accomplish that goal faster. “We believe Modo has developed a compelling proposition to address the needs of an evolving payments landscape and increasingly digital economy. We are proud to add them to our list of partners,” said Striano.

We have some big ideas for the future of the payments industry, and having these world class investors in our corner puts us that much closer to our goal of reducing friction in payments for everyone,” said Modo CEO Bruce Parker, who founded Modo in 2010. “Completing our Series A is a great way to confirm that we’ve built something great, and this is just the beginning of our growth phase,” he added.

Instead of integrating its solutions, Modo focuses on interoperability. The company exchanges payment data across platforms on behalf of banks, payment networks, and providers, enabling them to store, share, and track payment event data. Modo presented at FinovateFall 2016, where it showcased its Modo Digital Payments Hub. In the past year, the company’s transaction volume has grown 7x. In August, Modo partnered with Etihad to create a loyalty solution as a part of the FinTech Abu Dhabi Innovation Challenge.

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Sezzle’s $100 Million Line of Credit to Fuel Delayed Payment Tool

Sezzle’s $100 Million Line of Credit to Fuel Delayed Payment Tool
By Julie Muhn (@julieschicktanz) Posted on
Categories: Funding, Sezzle

Alternative ecommerce payment system Sezzle announced last week it pulled in a $100 million line of credit. The new round multiplies the Minnesota-based company’s existing funding by almost 10x, bringing its total raised to just shy of $111 million.

The funding, which comes from Connecticut-based investment firm Bastion, is being used to fuel Sezzle’s new pay-in-2019 initiative with online retailer Tobi. The promotion, which will be available throughout the holidays, gives Tobi.com shoppers interest-free purchase financing. After paying 25% of the purchase price at checkout, shoppers can wait to pay the remaining three-quarters of the purchase, interest-free, until after January 2, 2019, at which point they pay in three equal installments.

Tobi’s target market is focused on young females– a demographic which typically either has no credit or thin credit files. “Because these young consumers are credit-starved, they tend to abandon their online shopping cart instead of clicking through to purchase,” Sezzle CEO Charlie Youakim said. “With our option, those shoppers are more likely to convert to a sale. We even see them spending more and shopping more frequently.”

The pay-in-2019 payment model is a departure from Sezzle’s existing buy now, pay later offering, which typically allows users to spread the repayment of the purchase price across 6 weeks of financing. If the trial with Tobi yields increased sales results, Sezzle plans to move forward with the new financing model with other retailers, as well.

Founded in 2016, Sezzle demoed its alternative payment platform at FinovateFall earlier this year. Last month, the company teamed up with Priority Payment Systems which will offer Sezzle as an option to its merchant clients.

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Revolut Readies for $500 Million Series D

Revolut Readies for $500 Million Series D
By David Penn Posted on
Categories: Funding, Revolut

Revolut, the multi-functional cross-border card and app, is planning a $500 million Series D investment round, potentially enlisting tech giants like Softbank to its roster of investors, reports Henry Vilar of Fintech Futures (Finovate’s sister publication).

According to City AM, the fintech has aggressive plans for expansions, with plans to launch in the U.S. after the investment round. Revolut has seen major regulatory shortcoming preventing it from starting operations there.

Australia and Japan are also on Revolut’s radar.

The round, set to take place early next year, would give the fintech the necessary boost to enter the U.S. market, a particularly difficult geography to crack.

This comes after the firm’s last funding, which had the shocking figure of $250 million.

The unicorn, which has already surpassed the $1.7 billion valuation, has grown fivefold in the past year, despite reporting annual losses.

It is not known whether Revolut’s previous backers, which include Index Ventures, Draper Esprit and DST Global, will sign on to its next round.

Earlier this year, Softbank said it planned to invest around $200 million into fintech, from its $100 billion Vision Fund.

Founded in 2013, London-based Revolut demonstrated its multi-currency card at FinovateEurope 2015. Nikolay Storonsky is founder and CEO.

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MoneyHub Secures Investment from Nationwide

MoneyHub Secures Investment from Nationwide
By Julie Muhn (@julieschicktanz) Posted on
Categories: Funding, Moneyhub

Financial tools company MoneyHub announced today it received an undisclosed amount of funding from the venture arm of financial services giant Nationwide, which used a portion of its $64.5 million fund to take a minority stake in the U.K.-based fintech.

Tony Prestedge, deputy chief executive at Nationwide Building Society, said, “It’s important that the Society invests for the future to ensure we remain at the forefront of innovation. Investing in start-ups like Moneyhub helps us identify, learn about, and explore new capabilities and technologies that will help deliver our technology strategy both now and in the future.”

Interestingly, this isn’t MoneyHub’s first tie-up with the insurance industry. The company was acquired by South African insurance company MMI Holdings in 2014.

Founded in 2009, MoneyHub offers direct-to-consumer, direct-to-advisor, and enterprise versions of its personal financial management technology. The company aggregates consumers’ financial data onto a single platform to offer a holistic view of their overall financial health. In August, MoneyHub received authorization as a payment initiation services provider from the U.K.’s Financial Conduct Authority. This certification enables the firm to allow users to initiate payments across accounts from within its platform.

In April, MoneyHub solidified its commitment to open banking by partnering with challenger banks Monzo and Starling in an integration that enables the banks’ clients to use the Moneyhub app to link their checking and savings accounts, credit cards, pensions, loans, mortgages, SIPPs, ISAs, and investments. “While we have years of experience in innovating and unlocking the benefits of new technology, we aren’t complacent. We know that by working together with start-ups we can learn from each other and ensure we are best placed to help our members get the most out of new technology in the future,” said Prestedge.

MoneyHub most recently presented at FinovateEurope 2017, where it debuted the SmartAssist tool for the enterprise version of its software. SmartAssist is an intelligent messaging feature that leverages AI to help consumers manage their finances and plan for the future.

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Anorak Raises $6.5 Million in Series A

Anorak Raises $6.5 Million in Series A
By David Penn Posted on
Categories: Anorak, Funding

In a round led by Kamet Ventures – an insurtech startup studio backed by AXA – life insurance recommendation engine Anorak Technologies has raised $6.5 million (£5 million) in new funding. The investment, which takes the U.K.-based company’s total equity financing to more than $11.6 million (£9 million), will be used to fuel further development of and applications for its technology. In a press release, Anorak specifically highlighted plans to use its life insurance recommendation engine as the basis for an advisor platform.

“The life insurance sector is on the verge of transformation and Anorak is leading the way,” Anorak co-founder and CEO David Vanek said. “Kamet’s investment enables us to deliver on our vision. We are committed to using cutting-edge technology to bring (the) life insurance sector into the digital age and make protection advice accessible to the millions unprotected in the U.K.”

Anorak leverages AI, and advanced data science, and actuarial science to build a fully automated advice platform for life insurance consumers. Designed to serve the nine million families in the U.K. that Anorak estimates are underserved, Anorak’s technology and APIs enable distribution partners to offer life insurance recommendations alongside other financial, investment, and e-commerce services.

Guillaume Borie, Chief Innovation for AXA, praised Anorak’s technology as “transformational” and underscored how the recommendation engine could be deployed in a variety of contexts. “(The technology) enables carriers to create a new breed of distribution partnerships from banking to gig economy platforms, whilst also reinventing the experience of existing intermediaries networks,” Borie said.

Anorak Technologies made its Finovate debut at the beginning of the year, demonstrating its platform at FinovateEurope. In September, the company announced that it would provide life insurance advice for users of money management app, Yolt. Also that month, Anorak teamed up with Starling Bank to provide insurance advice for customers of the U.K. mobile-only bank. The company was founded in 2016 and is headquartered in London.

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Zopa Seals Series G Investment En Route to Bank Launch

Zopa Seals Series G Investment En Route to Bank Launch
By David Penn Posted on
Categories: Funding, Zopa

U.K.-based P2P lender Zopa added another $20.7 million (£16 million) to its latest Series G investment round this week. The company has built upon its $57 million (£ 44 million) August fundraising and now has more than $77 million (£60 million) in new capital to pursue its current objective: building a bank.

“This new funding takes us a step closer to realising our vision of being the best place for money in the U.K.,” Zopa CEO Jaidev Janardana said. “Having served half a million customers to date, Zopa is set to redefine the finance industry once again through our next generation bank to meet a broader set of U.K. customers’ financial needs.”

Participating in the Series G were Bessemer Venture Partners, Northzone, Augmentum Capital, and Wadhawan Global Capital. Zopa’s total funding is $190.2 million (£152.9 million).

The round was the largest yet for the innovative peer-to-peer lender, which applied for a banking license in 2016. The company noted at the time that the application process can take between 15 months and two years – making this week’s investment and the company’s return to profitability for the first time since 2012 timely news for Zopa.

“2017 was a landmark for us,” Janardana said in a statement this summer, reporting the company’s good financial fortunes. In addition to revenue gains of 40% and a 43% increase in funds loaned, Zopa earned full FCA authorization last year – the first major P2P lender to do so. This enabled the company to launch its Innovative Finance ISA, bringing the tax efficiency of ISAs to P2P investments.

Zopa’s digital bank, which the company says it expects to launch “soon,” will initially offer FSCS-backed savings accounts and P2P investments such as ISAs, as well as credit cards, personal loans, and auto financing. Janardana told the Independent in October that he hoped to reduce the stress for people trying to manage their finances and “extend the ethos of peer-to-peer into retail banking.”

One of Finovate’s earliest alums, Zopa demonstrated its technology at FinovateSpring 2008. Janardana, along with the company’s board chairwoman, Christine Farnish, was named to the Peer2Peer Finance News Power 50’s Top 10 earlier this month. Zopa has lent more than £3.78 billion to customers in the U.K., with more than 60,000 active individual investors and more than 311,000 borrowers approved via the company’s platform.

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Thought Machine Announces Strategic Partnership with Lloyds Banking Group

Thought Machine Announces Strategic Partnership with Lloyds Banking Group
By David Penn Posted on
Categories: Funding, Thought Machine

Lloyds Banking Group has taken a 10% stake in core banking technology provider Thought Machine. The investment of $14.4 million (£11 million) represents the lion’s share of the company’s $23.6 million Series A round (£18 million) and is part of a strategic partnership that will help Lloyds reach its digital transformation goals.

Lloyds will leverage Thought Machine’s Vault solution, a cloud-based, next generation core banking platform to provide its customers with more personalized solutions, as well as accelerating the development cycles for additional digital banking additions. Lloyds noted in a press release that not only has it “completed extensive testing and proofs of concept” with Thought Machine, but also that the firm plans to continue helping develop Vault’s capabilities.

Thought Machine CEO and founder Paul Taylor and Chief of Sales & Marketing Travers Clarke-Walker demonstrating Vault at FinovateEurope 2018.

“A key part of our recently launched three-year strategic plan is applying technology innovation to meet our customers’ evolving needs,” Lloyds Group Director for Transformation Zak Mian explained. “I’m really excited to work with the Thought Machine team to explore ways to simplify and enhance our IT architecture and (help) on our journey to make banking easy and simple for customers.”

Founded in 2014 and headquartered in London, U.K., Thought Machine demonstrated Vault at FinovateEurope earlier this year. The flexible, end-to-end, cloud-based platform comes with a full suite of banking solutions including current accounts, loans, savings, mortgages, and credit cards – all delivered via Vault’s system of smart contracts. Driven by what Thought Machine founder and CEO Paul Taylor called a reaction to “the horror of the legacy IT systems” used by banks, Thought Machine and its team of 60 are dedicated to helping banks provide their customers with the “quality and richness of service they deserve.”

“We are delighted to announce this partnership with Lloyds,” Taylor said. “Lloyds has shown a deep commitment to embrace the opportunities that new technologies can bring in improving customers’ banking experience and it is a pleasure to take this partnership forward.”

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Meniga Lands $3.4 Million from Íslandsbanki

Meniga Lands $3.4 Million from Íslandsbanki
By Julie Muhn (@julieschicktanz) Posted on
Categories: Funding, Meniga

In its third round of funding this year, digital banking and marketing startup Meniga has taken in $3.4 million (€3 million) from Íslandsbanki. The financial backing, which follows Swedbank’s $3.7 million investment in April and UniCredit’s $3.6 million strategic funding in June, brings Meniga’s total funding to just over $34 million.

Íslandsbanki is Meniga’s first and longest-standing client. The two have been collaborating since 2009 when they launched a PFM solution in Europe. Furthering their ties, Íslandsbanki and Meniga teamed up to deploy a new card-linked offer platform in June of last year.

Meniga will use the funds to enhance research and development efforts to further build out its products. Íslandsbanki CEO Birna Einarsdóttir noted that the investment not only deepens the bank’s relationship with Meniga, but that it is also aimed at, “investing in the future development of innovation in digital banking and personal financial management solutions.”

“The banking landscape is evolving faster than ever and is driven by new competitors, regulatory changes and rising customer expectations,” said Georg Ludviksson, CEO and co-founder of Meniga. “Therefore, it is vital for banks and fintech companies to work even closer together to thrive in the new digital ecosystem.”

Headquartered in London and with offices also in Reykjavik, Stockholm, and Warsaw, Meniga offers white-label digital banking solutions for 65 million digital banking users in 30 countries for banks such as Santander, Intesa, ING Direct, Commerzbank and mBank. The company has taken home five Finovate Best of Show awards, most recently for its demo at FinovateFall 2018, where Meniga showed off its if this, then that spending challenges that allow users to tie their savings to random external events, such as the weather, sports team wins, and exercise and music listening habits.

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