Welcome to the Junction! If you received this in your inbox, thanks for signing up and your vote of confidence. If you are reading this as a post on our website, please register here so you can get it directly in the future. Every week I will review the hottest fintech news from the previous week. This will include everything from funding rounds to trends, analysis of a specific area, and a hot look at a particular company or phenomenon. There’s a lot of fintech news out there, and it’s my job to keep up to date – and make sense of it – so you can stay up to date. — Mary Ann
Layoffs increased in the first half of 2022
In 2021, fintech startups were the largest recipients of venture capital in the world. accounts for about 21% of the dollars raised worth $131.5 billion across 4,969 transactions. So far, fintech startups are getting another, less favorable distinction in 2022 – they account for the third-highest percentage of layoffs in the world.
As of July 1, about 3,709 employees – excluding crypto companies were fired due to 41 “layoffs” in the second quarter of 2022, according to an analysis by Roger Lee from Layoffs.fyi. For context, that’s 3,709 of the 36,861 startup employees laid off overall in the second quarter, meaning that fintech accounted for 10.1% of the total. Based on this classification, the fintech space ranked third after food and transportation, respectively. However, the site has categorized companies like Better.com into the “Real Estate” category. So if you include layoffs at this company, which totaled around 3,000 people in the first quarter of 2022, the numbers in fintech rise even higher, with fintech becoming the category with the highest percentage of layoffs at 15.4%. — in the first half of 2022.
In particular, in all in 2020, 8,715 fintech employees were fired. And, of course, there are many more fintech companies around today than then. In 2020, fintech lagged behind the transportation and travel categories when it came to layoffs as a percentage of total, Li told TechCrunch via email.
It is noteworthy that ZERO employees were laid off in fintech. for the whole year 2021according to Lee’s analysis.
Thus, in the first half of 2022, 4,189 fintech employees were laid off at 45 events; that’s the number of 46,740 startup employees laid off overall, accounting for 11.2% of the total. For comparison, in the first half of 2020 at the beginning of the COVID-19 pandemic, there were 8375 people.
Klarna’s layoff of 700 employees, or 10% of its workforce, and the layoff of 300 Robinhood employees were among the largest layoffs in the second quarter.
Note that it’s important to keep in mind that there must have been other layoffs that weren’t recorded here, so the true numbers are probably even higher.
Layoffs are incredibly hard on affected workers, out of work, and on the companies themselves. But as we’ve seen over time, some companies do better than others. I thought this post by Latitud co-founder Brian Requart summed it up nicely: “Layoffs are hard, and I don’t want to belittle it, but chances are, talent will quickly redistribute. If you’ve lost your job, hold on. If you have to let people go, the most important thing is to treat them well. Not only because it’s right, but because you’re sending a message to the people who stay with you.”
Both Bolt and Better (how about that alliteration) have been the subject of (many) negative headlines in recent months. To say that their reputation has been shaken is an understatement. Coincidentally, both companies shared some news this week in an apparent attempt to improve their tarnished reputations. In what many considered a dizzying turn of events, Bolt’s one-click purchase is over pay off retail giant ABG Group and make it a shareholder. After the latter made so many disparaging remarks about the former, one might wonder why she would want to own a stake in the company. It kind of doesn’t make sense, although Insider has suggested that this has been ABG’s goal this year since the start of the trial. However, I had a good conversation with Bolt CEO and former Amazon exec Maju Kouruvilla and the most important takeaways were that (1) the company is aiming for more responsible growth by cutting some jobs in Q2 and “really doubling effort is the main value proposition”; (2) Bolt claims they have 3 years of runway operation, which is impressive if true; and (3) although its earnings seemed much lower than one would expect from a $11 billion company, Bolt is not giving up and settling this case can definitely be seen as a win, even if it’s a bit confusing.
In the case of Better.com, the digital mortgage lender revealed a number of new hired senior executives which, frankly, were stunning. Among them are former executives from companies such as Zillow, Casper and LendingTree, among others. I didn’t speak to Better CEO Vishal Garg, but he made a preliminary statement expressing his excitement about all the new people coming on board after a flurry of senior layoffs and a turbulent environment. It’s amazing that so many people are willing to bet on Better after everything that’s happened since December 1st. Is the company really changing? Let’s see.
A couple of years ago I did deep dive in the Atlanta startup scene and was amazed to see how reliable it is. Last week, Veronica Irvine of Protocol takes a look at a southern city through a fintech lens, writing, “San Francisco has Square, Stripe and Plaid. But Atlanta has CoreCard, Kabbage and CheckFree. It also lays claim to pioneering payment cards, electronic payments and ATMs. Many of the day-to-day fintech innovations we have come to rely on have come from the Atlanta metropolitan area.”
Preliminary figures confirm what we all already know: investment in the fintech world has slowed. Steve McLaughlin, Managing Partner at Financial Technology Partners (also known as FT Partners) posted on LinkedIn that “financial activity slowed markedly compared to the first quarter and last year period, but activity remained fairly strong compared to any period other than 2021; activity really waned as the quarter went on.” For example, in the second quarter, total dollar volume raised by private fintechs worldwide reached $27.5 billion, down 27% from the first quarter and 31% down from a year ago. However, Q2 has been higher every quarter until 2021.
It’s rare these days for a week to go by without some layoffs in the industry. Brazilian startup Loft announced this last week. lay off 380 employees, or 12% of its workforce. Earlier this year, 159 people were laid off. In an emailed statement, Loft described the move as “a reorganization of his work.” It is clear that Latin America is not immune from the downturn in the housing market, including due to rising interest rates.
Last week, two big names in fintech came together. in London Revolution said it strip work (which launched in Ireland) to support payments in the UK and Europe and “accelerate entry into new markets”. Specifically, Revolut will facilitate payments through Stripe’s existing infrastructure.
Financing and M&A
Deal of the Week
Fintech in El Salvador n1co (read: nee-koh) has raised $12 million at a post-investment valuation of $64.8 million, which she describes as a historic pre-finance round for the region. The fintech company was founded by the same founders as Hugo, a super app that recently sold to Delivery Hero for $150 million – Alejandro Argumedo, Ricardo Cuellar and Juan Maceda.
Alejandro McCormack told TechCrunch that he was invited to join the trio as a co-founder and is serving as COO/Interim CEO due to his previous experience at N26 and Raisin. He said the original trio of founders “once again bet on a region that is usually forgotten in the tech landscape.” With a focus on payments, n1co says it has already registered more than 1,000 merchants who now accept credit and debit card payments using n1co technology, such as QR codes, payment links, and online store processing. With a monthly transaction volume of almost $1 million across five countries (El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic), McCormack said via email that n1co will use new capital to accelerate growth (currently 30% m/m) , development of their POS-devices. and push through your checking account and Visa debit card, which will be launched soon.
The company believes that with the release of the n1co card, it will become the first neobank to target Central America and the Dominican Republic, a region of about 55 million people. “This represents a larger addressable market than Colombia, with lower banking penetration and an average of about 1.5 smartphones per adult,” McCormack added.
Interestingly, the startup chose to forgo the typical venture capital route during its acquisition, instead focusing on regional groups that it believes will add value to its business model, including the largest gas station operators in the region, one of the largest supermarket chains and other large companies. regional retail groups. “In total, the volume of card transactions is about $1.4 billion per year — the amount they have committed to process with n1co,” McCormack said.
Seen on TechCrunch
a16z leads $6.5M seed round for Adaptive, construction software and fintech game. Notably, the founders and executives of Airbase, Brex, and Ramp also invested in the round.
I finished this week. Same time, same place next week. Thanks again for reading and stay safe! xoxo Mary Ann
Credit: techcrunch.com /