The bright side of fintech funding results

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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

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Last week, CB Insights released its global VC report, and PitchBook released its own US-focused VC report. Of course, we were eager to read the findings of both.

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Alex Wilhelm and Natasha Mascarenhas, who are also my partners in crime on Shares Podcast – and I looked up the numbers to give you all details here.

At a high level, it is not surprising that funding flowing into fintech startups declined both globally and in the US in the second quarter of 2022. And it’s not just about funding. Everything was wrong. New births of unicorns, M&A, IPO.

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But the results are not as dull and doomed as it might seem at first glance.

First, fintech still accounts for a significant share of global funding. In 2021, it is estimated that 21% of all venture capital deals were in fintech. In the second quarter of 2022, investment in fintech startups was not far behind investment in the second quarter of 2022, according to CB Insights. Fintech continues to attract serious investor interest.

One more thing. While it is clear that fintech investment globally and in the US will be much more muted this year, it is still on track to outperform 2020 results. To summarize, as Alex wrote: “We are seeing a decline, but not a complete retreat; the fintech world is still more active in terms of capital than it was two years ago.”

Finally, I took some time a few weeks ago and wrote that investors seem to prefer later-stage deals. Judging by the results of the CB Insights report, this actually contradicted what was happening throughout the second quarter.

I can tell you from a reporter’s point of view that we are significantly reducing the cost of covering one-off funding rounds and new fund closures. As always, there are too many for us to cover them all and do a good comprehensive job. We also come to the question of how valuable this practice is. While new fund raises and closings remain big news, most of us here at TC are more selective than ever. In our opinion, it is more important to connect the dots for our readers and generally be available for important breaking news than to settle for 10 embargoes a week. So when you’re giving a presentation, be sure to include what makes your company/news stand out. Why is it unique? Why should our readers care? Is this against the trend? I could go on and on

So while we’re still pitching (a whole bunch), we’re reviewing pitches with a wider lens more than ever and hope you do the same when you pitch.

Weekly news

The category of corporate spending continues to evolve. Last week, I spoke with Airbase founder and CEO Tejo Kote about how the company had just received $150 million in debt financing led by Goldman Sachs. Companies are constantly closing credit lines, but the reasons those behind the moves are often more interesting than the funding itself.

In an interview with Zoom, Kote confirmed that generating revenue from SaaS remains a priority for the company. But, he said, because the company had served mid- and early-stage companies for many years, it offered them a pre-funded card they could use to make purchases. However, Airbase has realized in recent months that many can benefit from being able to shop with a “30-day reserve,” the executive said.

“We started this process by offering a payment card model because as we continue to grow and scale revenues and expand our customer base more aggressively, we have found that there are definitely customers who cannot afford to give up 30 -day subscription. float that the card provides them either because of cash flow or because of philosophical considerations,” Cote said.

Notably, a Brex competitor that has begun offering credit cards to startups announced earlier this year:big push” in both software and business. Now it looks like Airbase is making a big push into the corporate card space.

“Now we offer a line of cards and we have an underwriting option. For the past six to eight months, we’ve been doing it on our own,” Kote told TechCrunch. “As this product of ours continues to scale, we obviously don’t want to use our equity dollars to guarantee our clients and drive this capital turnover.” Hence his recent debt financing.

Kote said he doesn’t think the move puts Airbase in the credit category.

“We are not a lender. We will never be a creditor,” he said. “We’re taking on more risks, but we’re doing a lot of risk management, and we have a risk management team that we’re continuing to build.”

In the news scoresKlarna finally confirmed what we already knew – that she had raised more money. at a significantly lower price. This prompted Alex to ask if this new estimate was really makes Affirm “cheap”? Meanwhile, Stripe – another fintech with European roots – saw its stock’s intrinsic value drop 28%, sources told the Wall Street Journal and as reported by TechCrunch. The magazine reported that the valuation decrease is due to an independent-party price change for 409A, and that it impacts the value of Stripe’s common stock. For its part, Stripe declined to comment.

Speaking of payment giants, Mastercard announced expanding your partner network enable open banking to accelerate the adoption of open banking for fintech companies, merchants and lenders. Its goal, a spokesperson told me via email, is to “provide its customers with easy access to qualified fintech partners who can quickly find open banking solutions for payments and lending.”

More fintech news this week:

Seen on TechCrunch

PayTalk promises to handle all types of payments with voice, but the app has a long way to go.

Wave, a $1.7 billion Stripe-backed African fintech company, cut 15% of its staff in June.

Plaid adds read-only support for leading crypto exchanges

And elsewhere

Marqeta appoints former Twilio chief as its new chief product officer

Goldman Hires Google CEO to Lead Newly Created Applied Innovation Division

Financing and M&A

Seen on TechCrunch

Child finance startup GoHenry enters Europe with Pixpay acquisition

Google’s Gradient supports Penny to help British workers consolidate and manage their pension baskets

Africa-focused Zazuu raises $2M to scale its cross-border payments market

Kadmos, a fintech company that helps migrant workers get paid, is raising $29.5 million.

Uprise banks invest $1.4 million in ‘family office’ for Generation Z

For businesses looking for low-code fintech infrastructure options, there is Quiltt for that.

Mexican FinTech Startup Stori Achieves Unicorn Status With $50M Capital Raising

Wefox grabs $400M at $4.5B valuation to counter insurance downturn trend

Seen elsewhere

Brazilian lender Creditas raises $200M and buys bank

Northwestern Mutual Expands Business Accelerator for Black Entrepreneurs

As fintech converges with proptech, a $52 million valuation emerges for Stake after the $12 million Series A close.

Prepaid Technologies acquires incentive supplier WorkStride

Now for the non-fintech PSA: for all the robotics tech lovers out there, TechCrunch has created a great session lineup for #TechCrunchRobotics! And BONUS, it’s a free event. Secure your place Today. Speaking of events, I’m so glad to be present TechCrunch Disruption this October and get to know not only my colleagues, but also many of our regular readers!

That’s all for this Sunday. I wish you all a good week and only good mood. Xoxo, Mary Ann

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