welcome to the exchange! If you got this in your inbox, thanks for signing up and your vote of confidence. If you are reading this as a post on our site, sign up here so that you can receive it directly in the future. maria anna She’s on a much-needed break this week, so I’ll fill in for her and bring you the latest fintech news from the week before. Now let’s dive into fintech news because you’re probably wondering what’s up with your favorite bank, and I promise to get to that first. Come on! — christina
We’ve learned a lot more about the Silicon Valley Bank collapse since you last read this newsletter (a lot).
The latest was SVB Financial filing for Chapter 11. And First Republic Bank, which got caught up in all this mess earlier this week, found some saviors in the way of some of the country’s biggest banks which are reportedly they came together to bolster the bank with about $30 billion in bailout deposits.
This week, some of my colleagues delved into the effects on consumers, businesses, banks, investors, etc., all over the world, who had made deposits in SVB. If anything, it shows how connected the startup ecosystem really is.
Annie Njanja and Tage Kene-Okafor obtained information on the African companies affected by the collapse of SVB. For example, they talked to Nala, a mobile money transfer startup, which was able to withdraw its funds from SVB before it collapsed. By contrast, Chipper Cash was among several start-ups that were unable to access a portion of their funds at the time.
They noted how prolific SVB was in the startup ecosystem when it came to companies opening SVB bank accounts, especially those that were part of a US accelerator program, even explaining how difficult that process was when prospective account holders they did not have a Social Security number. or US-based address. They also wrote that this type of incident, along with existing high-risk banking options, “have reinforced the need to create local solutions” in Africa.
“If you want a US-based bank, that instills credibility (still) with investors, those are your options,” said Stephen Deng, co-founder and general partner at DFS Lab, an early-stage venture capital firm. focused on Africa. “I think what changes is that founders need to know how they manage counterparty risk. Sweeping networks and treasury management are the most important thing”.
Meanwhile, Brian Heater reached out to founders and investors in the robotics sector, typically a capital-intensive industry, about what the consequences could mean for them in terms of access to future capital and continued diversification of funding sources.
An interesting comment came from Playground Global’s Peter Barrett, who said: “If SVB rises from the ashes, and we act to mitigate the weaponization of concentrated digital media, money may not become incredibly expensive for energy-intensive technologies. capital like robotics. On the other hand, now that we have the engine memory for bank runs, things could get complicated. How would an adversary best attack robotics innovation? We saw how destructive a handful of influential tweets and emails can be in dismantling a valued and respected 40-year-old institution. Why bother with a cyberattack when a few well-placed, all-caps words from seemingly trustworthy sources can hurt thousands of our most innovative companies?
Indeed. As you can imagine, this is all continuing to develop, so stay tuned for more.
Moving on, we are constantly told to diversify our holdings in the financial world: have money in several different mutual funds, or have some money in checking and some money in savings. At TechCrunch+, this whole SVB thing got Natasha Mascarenhas thinking about how to do this.
He talked to some founders and investors about the concept of “single points of failure.” Specifically, where else can a company diversify, such as founding team and succession plans, to ensure it doesn’t have all its eggs in one basket.
Before I get into more news, I wanted to mention that while people have been taking money out of SVB, there are some who still support the bank. For example, Brex announced that it was depositing $200 million of your money into SVB — extracting it from other big banks to do it. CNN also reported on other.
weekly news
Some companies that provide banking services to start-ups stepped up after the collapse of Silicon Valley Bank to offer their services and help companies maintain cash flow. Mary Ann reported on some companies, such as Rhowhich saw an increase in new clients, including Mercury, which moved quickly over the weekend to launch a new product called the Mercury Vault. This product “offers customers enhanced FDIC insurance of up to $3 million through a new product following the collapse of Silicon Valley Bank. That’s 12 times the industry standard for institutions of $250,000 in FDIC insurance offered by other institutions.” Then on Friday the company increased that, announcing on twitter that “by Monday, Mercury customers will have access to up to $5 million in FDIC insurance, 20 times the limit per bank.”
Stripe He was quite active this week. I updated a previous story where Mary Ann worked on Stripe looking for additional funding. At the time, it was expected to bring in around $2 billion, but instead Stripe ended up with $6.5 billion but at a reduced valuation of $50 billion. Proceeds from Series I will be used to “provide liquidity to current and former employees and address employee tax withholding obligations related to stock awards, which will result in the retirement of Stripe stock that will offset the issuance of new shares for Series I investors”. Additionally, Stripe was chosen to work with OpenAI to monetize ChatGPT and DALL-E.
Reports Manish Singh: “PhonePe has raised another $200 million as part of an ongoing round, a move that has now helped it rake in $650 million in recent weeks despite the market plunge as the Indian fintech giant bolsters its chest of cash. war following its recent separation from parent company Flipkart. walmart, which owns the majority of PhonePe, has invested $200 million in the startup. The ongoing round values the Bangalore-based company at $12 billion pre-money. The startup has said it plans to raise up to $1 billion as part of the ongoing round.
Natasha Mascarenhas reports: “The founders are still dusting themselves off a week after the Silicon Valley Bank collapsed. the rumors are swirling about who might be looking to buy the embattled bank’s assets. Some major firms urged their portfolio managers to diversify their assets when the bank collapsed and continue to do so, despite regulators stepping in to ensure all depositors had access to their stored cash. While asset diversification seems like a no-brainer in hindsight, actually following that advice is harder than it sounds.”
According Sieve‘s Trust and digital security index for the first quarter of 2023Businesses, Buy Now, Pay Later (BNPL) experienced a 211% increase in payment fraud in 2022 compared to 2021. The report analyzed more than 34,000 sites and apps and highlighted some specific scams that fraudsters use to steal to BPNL companies and merchants. For example, Telegram is a platform where Sift said “a rapidly proliferating scammer advertises the services they could provide with stolen information,” including fake credit cards and selling compromised email credentials. In one scheme, Sift observed a scammer advertising “unlimited access” to an account at three major BNPL providers for just $35.
adyenproviding end-to-end payment capabilities, said that further advanced its digital authentication solution, which combines security and seamless payment experiences for IT customers. In tests, Adyen was able to authenticate the consumer on behalf of the issuer, while on the merchant’s checkout page, helping merchants see up to 7% conversion lift.
Financing and M&A
Spotted on TechCrunch
Wingspan raises $14 million for its all-in-one payroll platform for contractors
Here’s a new corporate card startup, backed by $157m in equity, debt, going after Brex, Ramp
Metaverse payment platform Tilia gets strategic investment from JP Morgan
Indonesia’s Broom Develops Automated Asset-Backed Loans for Used Car Dealers
Nigerian fintech FairMoney acquires PayForce in retail business banking game
and in other places
Masttro secures $43 million growth equity investment led by FTV Capital
Cover Genius, an insurtech for integrated protection, acquires Clyde
Greek fintech Natech secures €10 million in convertible bonds to expand
Payment infrastructure startup Payabli closes $12M
Apexx Global, a payment orchestration startup, raised $25 million
Toku, the Chilean recurring payment company, raises $7.15 million
That is all for now. I hope you enjoyed my takeover of the Mary Ann column. Don’t worry, she’ll be back for the March 26 issue! Have a great week, Cristina.
