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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Lighter Capital raised a $130 million credit facility.
The company will use the facility to continue funding early-stage companies.
Lighter Capital recently surpassed the milestone of distributing $350 million in growth capital via more than 1,000 rounds of financing.
Revenue-based financing fintech Lighter Capital has closed a $130 million credit facility this week. Today’s funds come from ATLAS SP Partners, i80, the Victorian Government, and iPartners.
The credit facility will be used to fund early-stage companies, something Lighter Capital has been doing since its launch in 2010. In fact, the company recently surpassed the milestone of having distributed $350 million in growth capital to more than 500 startups across the U.S., Canada, and Australia through more than 1,000 rounds of financing.
Lighter Capital’s revenue-based financing model helps startups that offer SaaS, technology services, subscription services, and digital media to access up to $4 million in growth capital without selling equity.
“Lighter Capital’s model is so innovative — a debt provider that’s essentially a VC partner,” said Qnary Founder and Chairman Bant Breen. “We get the financial rigor, network, and strategic guidance that a VC would give us, and that’s been incredibly helpful.”
Recently, the Seattle-based company has opened new offices in Australia, unveiled more non-dilutive funding options, and launched an online networking community for startup CEOs.
“After more than a decade in business, 2022 was our best year in the company’s history,” said company CEO Melissa Widner. “It’s a great privilege to help founders achieve their dreams on their terms by providing funding that doesn’t require selling equity or giving up control.”
Lighter Capital and other alternative financing startups are experiencing a moment in the fintech spotlight. That can be attributed to two factors. First, because VC funding is in decline, it is difficult to obtain equity financing. Additionally, banks have started to tighten their lending standards because of economic uncertainty and decreased collateral values.
An early Finovate alum, Lighter Capital’s most recent Finovate demo was at FinovateFall 2013, where then-CEO BJ Lackland demonstrated how the company’s small business lending platform leveraged CRM data to predict a borrower’s future performance.
Cybercrime analytics platform SpyCloud raised $110 million in Series D funding last week.
The funding will help the company accelerate innovation in key use cases, as well as grow its database of recaptured data.
Founded in 2016 and headquartered in Austin, Texas, SpyCloud won Best of Show in its Finovate debut in 2017.
Cybercrime analytics platform company SpyCloud has secured a $110 million growth round commitment of primary and secondary capital. The round, a Series D, was led by Riverwood Capital and featured participation from Silverton Partners. New valuation information was not provided. The investment takes the company’s total equity funding to more than $168 million, according to Crunchbase.
SpyCloud offers technology that enables the discovery and recapture of data from the Dark Web in order to better protect businesses from identity-based cyberattacks. Cybercriminals use these stolen employee credentials and consumer session data to attack businesses, individuals, and networks. SpyCloud’s approach to fighting cybercrime differs from traditional threat intelligence strategies by offering a credential monitoring and alert service that directly and proactively finds and recovers stolen assets from threat actors and other sources.
To date, SpyCloud has recaptured more than 450 billion assets, more than 31 billion passwords, and more than 33 billion email addresses. The company’s most recent platform enhancement, unveiled in January, provides what it calls “Post-Infection Remediation.” This protocol gives companies a framework to reset application credentials and invalidate session cookies in the wake of a cyberattack or breach.
In a statement, SpyCloud listed a number of ways the new capital will help fuel the company’s growth. The funding, for example, will enable SpyCloud to accelerate innovation across a number of use cases, including consumer risk and enterprise protection. The company will also be able to grow its database of recaptured malware assets, further develop its analytic capabilities, and add to its list of integrations. The platform is currently integrated with Active Director, Okta, and Tines.
“For the last seven years, we have proven that reacting quickly to identity and authentication exposures is the crucial factor in stopping the cycle of cybercrime,” SpyCloud CEO and co-founder Ted Ross said. “As authentication methods improve, businesses need to adjust their defenses to keep up with criminals’ new behavior. SpyCloud allows you to do just that – and we will continue to illuminate and resolve the most critical risks facing security teams today, stopping attacks they haven’t been able to see coming.”
SpyCloud won Best of Show in its Finovate debut at FinovateFall in 2017. Headquartered in Austin, Texas, the company was founded in 2016. More than 500 corporations – including half of the Fortune 10 – leverage SpyCloud’s technology to combat ransomware, account takeover, session hijacking, online fraud, and other cybercrimes.
Ramp landed $300 million in Series D funding today, bringing its total funding to $1.7 billion.
Today’s funds come from new investor Sands Capital, along with existing investors Thrive Capital, General Catalyst, and Founders Fund.
At $5.8 billion, the company’s current valuation is 28% lower than its 2022 valuation of $8.1 billion.
Late-stage VC funding has been down in 2023, but business finance automation platform Ramp is bucking that trend today. The New York-based company has announced the closure of a $300 million round of Series D funding.
The investment boosts the company’s total funding to $1.7 billion. With the increase in capital, however, comes a decrease in valuation. The company’s current valuation now sits at $5.8 billion, 28% lower than the company’s $8.1 billion valuation reported last year.
Today’s Series D round comes from new investor Sands Capital, along with existing investors Thrive Capital, General Catalyst, and Founders Fund. Ramp will use the funds to fuel product development and accelerate its expansion into adjacent categories.
“In the last year alone, we’ve expanded Ramp’s offerings to become the only platform in the market that’s designed to save businesses time and money,” said Ramp CEO Eric Glyman. “Our mission is to help our customers build healthier businesses and this funding will help us execute against our goal to continue expanding the Ramp platform to better serve customers. At Ramp, we succeed when our customers can run their business more efficiently.”
Ramp offers its 15,000 clients access to its suite of payment cards, expense management tools, accounts payable offerings, procurement solutions, working capital, and more. Among Ramp’s recent client wins are Anduril, Poshmark, and Virgin Voyages.
Next month, Ramp plans to debutRamp Plus, a new set of procurement tools to help finance teams with procurement-related tasks. To support this growth, the company also plans to boost its hiring efforts “significantly” and “across all functions.”
Micronotes announced a $2 million extension to its $5.5 million Series C funding round.
Today’s funds come from BankTech Ventures.
The extension brings Micronotes’ total funding to $23.3 million.
In an industry focused on the customer, engagement solutions providers are poised for growth. Perhaps that’s why digital engagement solutions provider Micronotes received a $2 million extension to its Series C round today.
Today’s funds come from BankTech Ventures and add to Micronotes’ $5.5 million investment led by Experian Ventures with participation from existing investors. Closing the Series C round brings The Massachusetts-based company’s total funding to $23.3 million.
“We’re thrilled to partner with BankTech Ventures,” said Micronotes Founder and CEO Devon Kinkead. “This strategic investment will help us accelerate our growth in the community banking sector and help more communities get a lot more out of their banking relationships.”
Micronotes was founded in 2008 and is privately held. The company leverages AI, big data, and machine learning technologies to help financial institutions use their data to better engage their customers, foster involvement, and ultimately build new revenue.
Agora Data has landed $160 million in privately placed term financing.
The investment marks Agora Data’s fourth privately placed term financing round.
While there is no word on total funding, today’s financing adds to the $100 million revolving credit line Agora Data received from Credit Suisse in September 2022.
Agora Data, a company that helps buy here pay here (BHPH) car dealers offer in-house financing, secured $160 million in privately placed term financing this month. The round represents the fourth privately placed term financing the company has received since it was founded in 2017.
“Fueling Agora’s mission to enable any car dealer to be a finance company, this $160 million private term financing provides additional funding capacity and reiterates our commitment to our customers’ future growth,” said company CEO Steve Burke.
While there is no data on the amounts of the company’s previous three privately placed term financing rounds, Agora Data said that each of them performed better than projected. Today’s financing adds to the $100 million revolving credit facility the company received from Credit Suisse last September.
Founded in 2017, Agora Data’s Agora Capital helps car dealerships lend to non-prime customers. Lending to unattractive borrowers ultimately helps dealers sell more cars. To provide a competitive interest rate on these sub-prime loans, the company leverages AI to analyze over $350 billion in loan data. Agora Data also offers Agora Trade, a product that allows investors to buy a portfolio of seasoned auto loans at a lower rate of default.
Texas-based Agora Data targets the underbanked community and its strategy will likely fair well as the cost of living crisis, combined with a high interest rate environment, continues. Competitors in the auto financing space include CreditIQ, Creditas, Caribou (formerly known as MotoRefi), and others.
Splitit is set to receive $50 million from Motive Partners.
The funding will be issued in two $25 million installments.
Motive Partners stipulates that Splitit must delist from the Australian Stock Exchange and meet certain performance milestones in order to receive the funds.
There is something poetic about a BNPL company receiving private equity funding in installments. One of the first BNPL players in the market, Splitit, has landed a $50 million investment from private equity firm Motive Partners. The funds, which will boost Splitit’s total funding to $325 million, will be paid out in two tranches.
For Splitit, which is a publicly traded company listed on the Australian Stock Exchange (ASX) under the ticker SPT and also trades on the US OTCQX under tickers SPTTY and STTTF, today’s investment isn’t a straightforward transaction.
Splitit will receive the funds in two $25 million installments in exchange for the issuance of new preference shares. According to the release, Splitit will receive the first installment after two conditions have been met– first, when shareholders approve the company delisting from the ASX and second, after the company moves its incorporation site from Israel to the Cayman Islands. Splitit will receive the second $25 million after achieving certain performance milestones.
Splitit’s board opted to agree to Motive Partners’ transaction terms for five reasons:
The funds offer growth capital in the midst of a difficult fundraising environment.
The partnership with Motive Partners was especially attractive, given the firm’s resources, network, and talent.
The ASX undervalues Splitit’s business and doesn’t appreciate the company’s “differentiated value proposition and prospects.”
The move to become a private, Cayman Islands-based company will offer Splitit more flexibility and less administrative costs.
The move from the ASX will offer existing shareholders the option to choose to retain ownership in Splitit as a private company or to decrease their ownership in the run-up to the delisting.
“Attracting a strategic investor of this calibre is a testament to the quality of our team and our unique, innovative offering– especially given difficult market conditions for raising capital,” said Splitit Managing Director and CEO Nandan Sheth. “This level of investment significantly strengthens our balance sheet, allowing the team to focus on our white-label product strategy, innovation, and our Tier One global distribution partners.”
Splitit was founded in 2012 under the name PayItSimple. The company’s Installments-as-a-Service offering allows merchants to add a white-labeled BNPL option embedded into their checkout flow. Splitit also offers a BNPL tool that works at the physical point-of-sale by pre-qualifying consumers with available credit on their credit card for the value of that available credit.
Earlier this year, Splitit partnered with Atlantic-Pacific Processing Systems to offer BNPL services to their merchants. The company also partnered with Visa to embed a BNPL solution within merchants’ existing credit card processes. Splitit also holds partnerships with Stripe, Shopify, and Alipay to act as an Installments-as-a-Service option for their merchant clients.
Currency risk management company Finofo launched today.
The Calgary-based startup announced that the first phase of its launch is the release of its cross-border payments tools.
Finofo raised $1.25 million ($1.6 million CAD) in pre-seed funding in January.
Canadian currency risk management startup Finofolaunched publicly today. The company, headquartered in Calgary, Alberta, calls its platform an “all-in-one” solution for businesses’ financial needs and has unveiled tools for cross-border payments as its first offering.
In an extended blog post Finofo co-founder Prateek Sodhi announced the company’s launch and its mission to help businesses manage currency risk. Sodhi underscored the challenge of managing currency risk, calling it a “multifaceted task that requires specialized talent in finance.” He noted that larger companies can often afford to hire the specialized talent required to effectively manage currency risk. However, Sodhi said, “most regular businesses are left grappling with these complexities with a team consisting mainly of trained accountants and corporate finance specialists.”
To this end, Finofo has built a digital platform that leverages advanced algorithms to examine the intricacies of currency fluctuations for individual businesses. If currency fluctuations become an issue, the platform quantifies the value of the risk. This enables the platform to develop tools and strategies, specific to individual businesses and their financial condition, to manage this risk.
The launch of Finofo, according to Sodhi, will take place in three stages. The first stage, announced today, includes the platform’s cross-border payments tools. These tools enable businesses to send or receive money in more than 40 currencies across 180 countries. Businesses will also be able to use Finofo to convert money into different currencies and automate accounts payable.
The second stage of the launch will involve development of the company’s smart hedge engine. This solution will help streamline currency hedging trade execution to reduce the price risk of currencies during the trading process. Future initiatives include financial planning and analysis solutions to help businesses conduct real-time foreign-exchange risk analytics.
“We’re not interested in merely selling financial instruments,” Sodhi wrote this week. “Instead, we leverage our unique technology to help businesses understand if, when, and how much they need them.”
In addition to its launch announcement, Finofo also disclosed that it raised $1.25 million ($1.6 million CAD) in pre-seed funding back in January. The round was led by Motivate Venture Capital. SaaS Venture Capital, Desjardins Financial Holding, and Sweet Spot Capital also participated.
Knot has raised $10 million for its tool that updates consumers’ card-on-file at the company’s network of merchants.
The round was led by Nava Ventures and brings Knot’s total funding to $13 million.
Knot also offers a subscription cancelling solution and is currently working on a password updating tool.
With a mission to build an interconnected future online, Knot API has a long road ahead. Nevertheless, the New York-based company received a boost to help it make strides toward that goal with a new $10 million funding round today.
The Series A investment was led by Nava Ventures, with participation from Amex Ventures, Plaid, and more than 20 CEOs and founders. When added to the $3 million Seed round Knot received in 2021, today’s round brings the company’s total funding to $13 million.
Knot was founded in 2019 with an API to enable card issuers to update card-on-file information at Knot’s network of merchants– including Walmart, Netflix, Amazon, Starbucks, and Uber– with just a few lines of code. The company’s technology makes for an easier onboarding experience for consumers while helping the bank retain its customers.
Knot will use the $10 million to scale its services and expand its merchant support. The company’s goal is to “ultimately encompass virtually all online merchants.”
In addition to its card-on-file switching solution, Knot also offers a subscription cancelling tool that helps customers view and cancel their recurring subscriptions. The company is also working on an account creation tool that allows organizations to initiate accounts at third parties on their customers’ behalf, and a password updater that instantly updates customers’ passwords across the web.
“Securing this Series A funding signifies the immense trust our investors have in Knot’s potential to revolutionize the way card issuers manage their customers’ payment methods,” said Knot CEO Rory O’Reilly. “We’re grateful for the chance to further our mission of building a financially interconnected future, and we’re excited about the new opportunities this funding opens up for our team and our customers.”
Tradeshift is partnering with HSBC to develop embedded finance solutions.
As part of the partnership, HSBC is contributing $35 million to Tradeshift’s $70 million funding round announced today.
There is limited information about the details of the new joint venture between the two parties, but the announcement said more information will be unveiled ahead of the planned launch slated for early 2024.
Supply chain procurements and payments company Tradeshift is teaming up with HSBC to launch a new business. The jointly-owned business endeavor will focus on developing embedded finance solutions and financial services applications.
As part of the partnership, HSBC is investing $35 million in Tradeshift as part of a round that is expected to close at around $70 million. Existing investors AYTK Limited, LUN Partners Group, Fuel Venture Capital, Doha Venture Capital LLC, Notion Capital, IDC Ventures and The Private Shares Fund contributed to the round.
The round will add to the more than $1.1 billion in funding Tradeshift has amassed since it was founded in 2009.
Details about the new joint venture between Tradeshift and HSBC are sparse. The announcement states that the two will “deploy a range of digital solutions across Tradeshift and other platforms” that will include embedded finance tools for trade, e-commerce, and marketplaces. The new business will enable Tradeshift to globally scale its business commerce network that currently sits at one million users.
Tradeshift expects that the HSBC brand will “bring instant credibility and broad appeal” to the new financial solutions. HSBC currently facilitates more than $800 billion in trade each year.
“The world’s biggest trade bank and the world’s largest trade network are joining forces,” said Tradeshift CEO and Co-founder Christian Lanng. “Our deepening partnership with HSBC delivers a strong foundation from which to scale and accelerate our vision of a trade network that creates economic opportunity for businesses everywhere.”
The two will announce more details about the joint venture ahead of its launch, which is expected in early 2024.
“We are very excited to partner with Tradeshift to help businesses and their suppliers trade more smoothly using world-class technology and solutions that the joint venture will deliver,” said HSBC CEO of Global Commercial Banking Barry O’Byrne.
SuperFi received $1 million in pre-seed funding for its debt management and repayment platform.
The round saw contributions from Ascension, Fair By Design, Force Over Mass, and includes a grant from the Greater London Authority.
SuperFi’s debt management app will be publicly available in late 2023.
Personalized debt support platform SuperFi has landed $1 million in pre-seed funding for its platform that helps users understand, manage, and pay off their debt. The round brings the company’s total funding to $1.2 million.
The investment was led by Ascension and its impact fund, Fair By Design, and saw contributions from Force Over Mass and others. Also included in the investment amount is a grant from the Greater London Authority. SuperFi received the grant funds as part of the Mayor of London’s Challenge LDN scheme to combat poverty.
U.K.-based SuperFi was founded in 2021 with a goal to support the 18 million British adults struggling to pay their monthly bills during the cost of living crisis. To accomplish this, the company shows users an overview of their debts, analyzes their financial and personal circumstances, and offers them access to debt prevention tools and services.
“We believe that debt management should be proactive, not reactive. Our goal is to help millions of people struggling to pay their bills and credit commitments better manage their debt before it becomes a crisis,” said SuperFi Cofounder Tom Barltrop. “In doing so, we believe we can help British people during the cost of living crisis – saving businesses and society billions associated with problem debt.”
Today’s funding will help SuperFi test its platform with Councils and Housing Associations across London before the company rolls the product out to a wider U.K. audience. The investment will also be used to form partnerships with London boroughs.
SuperFi plans to make its app publicly available in late 2023.
Dutch neobank bunq raised an additional $49.3 million (€44.5 million) in growth capital.
The investment takes the firm’s total capital raised this year to $111 million (€100 million). bunq’s valuation stands at $1.8 billion (€1.65 billion).
Founded in 2012, bunq has nine million customers and $5 billion (€4.5 billion) in customer deposits
“It’s been a truly magical year for bunq; we’re rapidly expanding and have seen massive deposit growth,” Niknam said. “With more and more people entrusting their money to us, we’re convinced that we should double down on our momentum and cement the way forward for future growth.”
bunq was founded in 2012, and offers banking, savings, payments, cards, and other financial services. The neobank specializes in serving “digital nomads”: individuals who live and work in more than one country. This strategy has helped bunq reach nine million customers and $5 billion (€4.5 billion) in customer deposits. Compare this with 5.4 million customers and €1 billion in customer deposits just two years ago. bunq primarily serves banking customers in Europe. Nevertheless, the company has begun the process of securing a banking license in the U.S.
In 2021, bunq received an investment of $213 million (€193 million). At the time, the fundraising was the largest Series A round raised by a European fintech. In the final quarter of 2022, bunq announced its first net profit. The company expects to achieve a full year of profitability this year.
“I’m incredibly proud that, just a decade since our inception, bunq’s service-oriented business model has proven to be profitable,” Niknam said in February. “Truly aligning our user-centered philosophy with financial success, we were able to build a business that’s only successful as long as our users are happy.”
bunq also announced a set of new enhancements this month. The company now gives customers up to 2% back on card spending on public transportation. Cardholders can also take advantage of 1% cashback for purchases at restaurants and bars. Bunq now enables users to save in multiple currencies, with interest paid out weekly. And with climate change top of mind for many of its customers, bunq has added carbon footprint tracking.
Check out our conversation with bunq Chief of Staff to the CEO Bianca Zwart from earlier this year at FinovateEurope. Zwart explained the company’s origins and its unique business model. She also discussed bunq’s goal of becoming the “global neobank for digital nomads and international people and businesses.”
Stocks might be soaring over the summer. But the headlines of late have been filled with dour reflections over fintech investment in the first half of 2023. The first half of the year – and the second quarter in particular – have been tough on fintechs seeking funding. But here are five reasons why fintech funding in the second half of 2023 – and beyond – is likely to be better than the first half.
The first half was pretty bad
One of the reasons why the second half of the year might see higher levels of fundraising in fintech is because the first half has set a fairly low bar. In its analysis of H1 fintech investment this year, S&P Global Market Intelligence noted that Q2 2023 was the “slowest quarter on record over the past two and a half years” in terms of deal count. In the U.S., H1 funding was down 28% from the previous year. Declines in the U.K. were even more severe, with H1 2023 trailing H1 2022 by a whopping 83%.
S&P Global Market Intelligence was careful to add that while the slowdown in investment impacted the first half significantly, the declines began late last year rather than at the beginning of this year. And while the report writers expressed anxiety over the continued low deal count, the report did note approvingly overall deal value growth, the potential for a stabilization in interest rates, and the underlying robustness of digital trends in financial services as factors that support a recovery in the second half of 2023.
About that recession
Despite layoffs in the tech sector and high-profile tremors in the banking industry like the collapse of Silicon Valley Bank, the widely anticipated recession – and its accompanying 5%+ unemployment rates – has yet to occur in the U.S. or Europe. As economic confidence grows, and the date for a potential economic slowdown gets pushed further into the future by economists, investors are likely to feel more comfortable putting capital at risk.
In addition to the potential for moderation on the interest rate front mentioned above, S&P Global Market Intelligence also highlighted the fact that many venture capitalists remain “flush with cash.” According to Pitchbook, the money available for investment by venture capital is at an all-time high of more than $279 billion for U.S.-based funds alone. That capital will only remain on the sidelines for so long.
Curbed enthusiasm
The popular embrace of emergent GenerativeAI solutions helped give the technology industry writ large a boost at a time when the focus was on shrinking workforces and a sense of stagnation in terms of post-smartphone innovation. At the same time, the strong but relatively muted response to Apple’s metaverse-manifesting VisionPro suggests that market for innovation is still strong, but it may be a little more sober than it’s been in awhile.
This could be a particular benefit for fintech companies where the solutions and services are geared toward clear human challenges in a way that some other areas of technology are not (more on this later). As investors return to the market in search of promising startups, those companies in industries with proven ways of using enabling technologies like automation and machine learning could see early interest.
More tech layoffs, More tech companies
It can be a delicate point. But in the same way that companies like Facebook and YouTube emerged from the wreckage of the dot.com bust, and Airbnb and Uber (and Finovate!) were born out of the ashes of the Great Financial Crisis, one door closing in the economy often signifies the opening of another. The talent that is leaving some of the biggest and most successful technology companies in history is likely to go on to launch and staff the next round of big, successful technology companies. Savvy investors know this, and will be watching to see who ends up where, and what they are up to.
Work the problem, people
One thing that I appreciate about Finovate conferences – and all similar events, to be honest – is that they are a live, in-person reminder that there are people – many of them younger than you and me – who are enthusiastically pursuing solutions to problems in their lives, the lives of their friends and loved ones, as well as the communities they belong to and care about. They tend to not have a lot of time for fear, doubt, or lamentations about what can’t be done. Instead they are more likely to embrace the old motto: lead, follow, or get out of the way.
As long as there individuals who need help sending money to relatives overseas, families struggling to save for the future, businesses looking for ways to make their services both more profitable and available to more customers, there will be fintech innovators building solutions for them. And few people know that better than the investors whose vision and commitment has help make and will continue to help make those solutions possible.
