Why last week felt like 2021 in fintech

Welcome back to The Interchange, where we take a look at the hottest fintech news of the previous week. If you want to receive The Interchange directly in your inbox every Sunday, head here to sign up! Last week, we chronicled some big rounds in the fintech space, Intuit’s decision to shutter Mint and what that means for startups and much more. Read on!

The return of mega-rounds

Last week felt like 2021. Well, sort of.

There were at least three nine-figure funding rounds in the fintech space announced over the past week. It’s rare enough these days to see ONE nine-figure round, much less two or three. So we were excited to say the least.

First, I covered Brazilian banking-as-a-service startup QI Tech’s $200 million raise led by General Atlantic. This was a big deal, besides just being a lot of cash, because it also marked the largest venture round in Brazil so far this year — not just in fintech, but across all industries. The company was gracious enough to share revenue figures, which is also not very common, noting that revenue was up 89% in the first half of 2023 compared to the same period last year. This also proves that infrastructure continues to be resilient, even during this downturn. Earlier this year, Visa announced it was going to acquire Brazilian payments infrastructure company Pismo in a $1 billion deal.

Meanwhile, in the Middle East, Tabby nabbed $200 million in a Series D funding round that valued it at $1.5 billion. I was a bit surprised that a buy now, pay later platform would attract so much venture capital considering that so many players in the space have had their challenges in the past year or so. But TC’s Tage broke it down for us, explaining that the markets in which Tabby operates don’t have the same kind of access to credit cards that we do in the U.S. He wrote: “As a result, BNPL serves as a crucial source of credit; where it is seen as a convenience in developed markets with abundant credit options, it is essential for many consumers in the Middle East and, by extension, the Gulf.” Tabby’s profitable, too!

And last but not least, Palo Alto, California–based Next Insurance announced it had landed $265 million in strategic capital from Allianz and Allstate. As reported by CNBC, Next “is nearing $1 billion in premium revenue but remains unprofitable.” In April 2021, TechCrunch reported that the SMB-focused insurance provider had raised a $250 million round at a valuation of $4 billion.

Combined, the three fintech companies raised $650 million alone. And it’s noteworthy that two of the three companies were located in markets outside of the U.S.

While I don’t think this means we’re suddenly going to see mega-rounds on the regular, it’s still encouraging news for the space!

You can listen to Alex Wilhelm, Becca Szkutak and I (Mary Ann) drill down on the topic in Friday’s episode of Equity:

Where do all the Mint users go?

Now that Intuit says it is discontinuing its personal finance app Mint in January, the company hopes most of Mint’s customers will stay on and join Credit Karma. However, some Mint competitors told me they were already seeing a bump in new customers.

Monarch Money, a subscription-based money manager app, was one of them. You might remember that Mary Ann wrote about their $4.8 million seed round in 2021.

The company shared via email that over the past week it saw “twice the number of users” since the news broke. After the story went out, Monarch’s execs got back to me to say that the normal sign-up rate jumped to 10x and ended the day at 20x higher.

I later heard from a number of other Mint competitors, including Copilot co-founder Andrés Ugarte, who told me that Nov. 2 was the company’s “biggest day ever.” Like Monarch, Copilot, who we covered here and here in 2020, is a subscription-based personal finance tracker, and even from the first story, it was going after Mint.

“We’re currently getting more than five times the number of users we see on a daily basis,” Ugarte said via email.

I covered Plenty’s pre-seed round back in May, which provides a platform for couples to manage their finances together. Emily Luk, co-founder and CEO, said via email that the startup interviewed hundreds of millennial couples who manage their finances online, and found that of the 90% who had tried Mint, just 10% were still using it. Their reason? “The budgeting and reporting are too granular for this stage of their life, or it takes too much work to maintain,” Luk said.

“Mint was part of the last generation of products that helped people track and monitor their finances,” Luk said. “The next generation will help people actively manage their money.”

Plenty is still in waitlist mode; however, as a result of the news, the startup added a dropdown item on its waitlist to measure if new users signing up are looking to replace Mint. If so, those people will get early access and a way to import transaction history before Mint’s January 1 cutoff.

Meanwhile, Origin had a well-timed launch on November 3. The startup claims it is “the first personal finance platform to provide holistic tracking of net worth, AI-powered financial guidance, automated investing, easy tax filing, estate planning and the option to meet with a Certified Financial Planner.” It’s too early to know if Mint’s closing will affect user sign-ups, so hopefully I can come back with an update. — Christine

Weekly news

Revolut, the fintech giant based in the U.K., has appointed a new CEO for its U.K. division. Francesca Carlesi will be in charge of Revolut’s division in its home country, and Nik Storonsky remains the CEO of Revolut Ltd. It’s worth noting that today’s news comes as Revolut still doesn’t have a banking license in the U.K. after years of back-and-forth with British regulators. The company applied for a U.K. banking license back in 2021. More here.

Unit, which raised $100 million at a $1.2 billion valuation, has launched a white label app, which it says allows software companies to embed banking and lending into their platform “with only one line of code.”

Klarna employees were set to strike next week in the fintech’s home country of Sweden, according to these tech.eu articles. But by the end of last week, the strike was called off. Via email, Klarna CEO and co-founder Sebastian Siemiatkowski told TechCrunch on Friday that “after an intense week of negotiations,” the company had reached an agreement to join the Banks Employer Organisation by January 1, 2024. More here.

As reported by Yahoo Finance, PayPal announced third-quarter earnings “that topped analyst estimates on both the top and bottom lines. The fintech company reported adjusted earnings of $1.30 compared to an estimate of $1.23. Revenue of $7.42 billion was slightly better than the expected $7.39 billion.” The company’s shares “closed nearly 7% higher at $55.06 on Thursday as a strong full-year profit forecast also calmed market jitters about a spending slowdown,” as reported by Reuters. Interestingly, the company’s new CEO, Alex Chriss, told American Banker: “Our cost base is too high and it is slowing us down. The company’s focus has not been clear.”

Neon Money Club last week became the first Black-owned tech company in the U.S. to launch an American Express card: “According to information provided to AfroTech (and cited by Yahoo Finance), Neon Money Club — co-founded by Luke Bailey and Jackie Liao — has scored a partnership with American Express (Amex) ‘to launch a credit card that will challenge norms through its design and benefits, which include allowing users to invest reward points in the U.S. stock market.’” Hear more from Bailey in this article by TC’s Dominic-Madori Davis here.

Other items we are reading:

Why this investment banker says bank M&A is poised to rebound in 2024

DigiSure launches new tool to prevent fraud on sharing platforms

Amazon unveils buy now, pay later option from Affirm for small business owners

TodayPay teams With Visa to bolster ‘refunds as a service’

Now you can start a fundraiser for any charity of your choice in seconds

Fundings and M&A

As seen on TechCrunch

Charlie’s senior-focused banking puts new funding toward stopping fraud (The round came just six months after the company announced its seed round of funding, and launched. Since then, it has amassed “thousands of users,” according to its CEO.)

Payroll Integrations grabs $20M to build employee financial wellness tools

Seen elsewhere

Atlanta insurance technology startup raises $10M 

Preczn rakes in $6.8M to revolutionise SaaS platforms with operational fintech features 

Kasa Living raises $70M to expand property portfolio

Viably’s groundbreaking $50m financial boost for ecommerce wholesalers

ICYMI: Auquan raises $3.5M in seed funding to deliver AI-powered insights to the financial services industry

Image Credits: Bryce Durbin