TrueLayer nabs $130M at a $1B+ valuation as open banking rises as a viable option to card networks

Open banking — a disruptive technology that seeks to bypass the dominance of card networks and other traditional financial rails by letting banks open their systems directly to developers (and new services) by way of APIs — continues to gain ground in the world of financial services. As a mark of that traction, a startup playing a central role in open banking applications is announcing a big round of funding with a milestone valuation.

TrueLayer, which provides technology for developers to enable a range of open-banking-based services has raised $130 million in a funding round that values the London-based startup at over $1 billion.

Tiger Global Management is leading the round, and notably, payments juggernaut Stripe is also participating.

Open Banking is a relatively new area in the world of fintech — the UK was an early adopter in 2018, Europe then signed on, and it looks like we are now seeing more movements that the U.S. may soon also join the party — and TrueLayer is considered a pioneer in the space.

The vast majority of transactions in the world today are still made using card rails or more antiquated banking infrastructure, but the opportunity with open banking is to build a completely new infrastructure that works more efficiently, and might come with less (or no) fees for those using it, with the perennial API promise: all by way of few lines of code.

“We had a vision that finance should be opened up, and we are actively woking to remove the frictions that exist between intermediaries,” said CEO Francesco Simoneschi, who co-founded the company with Luca Martinetti (who is now the CTO), in an interview. “We want a financial system that works for everyone, but that hasn’t been the case up to now. The opportunity emerged five years ago, when open banking came into law in the UK and then elsewhere, to go after the most impressive oligopoly: the card networks and everything that revolves around them. Now, we can easily say that open banking is becoming a viable alternative to that.”

It seems that the world of finance and commerce is slowly catching on, and so the funding is coming on the heels of some strong growth for the company.

Services that TrueLayer currently include payments, payouts, user account information and user verification; while end users range from neobanks, crypto startups, and wealth management apps through to e-commerce companies, marketplaces and gaming platforms.

And the startup says it now has “millions” of consumers making open banking transactions enabled by TrueLayer’s technology, and some 10,000 developers are building services based on open banking standards. TrueLayer so far this year has doubled its customer base, picking up some key customers like Cazoo to enable open-banking based payments for cars; and it has processed “billions” of dollars in payments, with payment volume growing 400%, and payment up 800%.

The plan is to use the funding to invest in building out that business further — specifically to extend its payments network to more regions (and more banks getting integrated into that network), as well as to bring on more customers using open banking services for more regular, recurring transactions.

“The shift to alternative payment methods is accelerating with the global growth of online commerce, and we believe TrueLayer will play a central role in making these payment methods more accessible,” said Alex Cook, partner, Tiger Global, in a statement. “We’re excited to partner with Francesco, Luca and the TrueLayer team as they help customers increase conversion and continue to grow the network.”

Notably, Stripe is not a strategic investor in TrueLayer at the moment, just a financial one. That is to say, it has yet to integrate open banking into its own payments infrastructure.

But you can imagine how it would be interested in it as part of the bigger mix of options for its customers, and potentially also to build its own standalone financial rails that well and truly compete with those provided by the card networks (which are such a close part of what Stripe does that its earliest web design was based on the physical card, and even its name is a reference to the stripe on the back of them.

There are other providers of open banking connectivity in the market today — Plaid out of the U.S. is one notable name — but Simoneschi believes that Stripe and TrueLayer on the same page as companies.

“We share a profound belief that progress comes through the eyes of developers so it’s about delivering the tools they need to use,” he he said. “We are in a very complementary space.”

#api, #bank, #banking, #ceo, #cto, #europe, #finance, #financial-services, #funding, #london, #mobile-payments, #money, #online-banking, #online-commerce, #online-payments, #open-banking, #partner, #payment, #payments-infrastructure, #payments-network, #stripe, #tiger-global-management, #truelayer, #united-kingdom, #united-states, #web-applications

China Roundup: Beijing is tearing down the digital ‘walled gardens’

Hello and welcome back to TechCrunch’s China roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.

This week, China gets serious about breaking down the walled gardens that its internet giants have formed for decades. Two major funding rounds were announced, from the newly established autonomous driving unicorn Deeproute.ai and fast-growing, cross-border financial service provider XTransfer.

Tear down the walls

The Chinese internet is infamously siloed, with a handful of “super apps” each occupying a cushy, protective territory that tries to lock users in and keep rivals out. On Tencent’s WeChat messenger, for instance, links to Alibaba’s Taobao marketplace and ByteDance’s Douyin short video service can’t be viewed or even redirected. That’s unlike WhatsApp, Telegram or Signal that offer friendly URL previews within chats.

E-commerce platforms fend off competition in different ways. Taobao uses Alibaba’s affiliate Alipay as a default payments option, omitting its arch rival WeChat Pay. Tencent-backed JD.com, a rival to Alibaba, encourages its users to pay through its own payments system or WeChat Pay.

But changes are underway. “Ensuring normal access to legal URLs is the basic requirement for developing the internet,” a senior official from China’s Ministry of Industry and Information Technology said at a press conference this week. He added that unjustified blockages of web links “affect users’ experience, undermine users’ rights, and disrupt market orders.”

There is some merit in filtering third-party links when it comes to keeping out the likes of pornography, misinformation and violent content. Content distributors in China also strictly abide by censorship rules, silencing politically sensitive discussions. These principles will stay in place, and MIIT’s new order is really to crack anticompetitive practices and wane the power of the bloated internet giants.

The call to end digital walled gardens is part of MIIT’s campaign, started in July, to restore “orders” to the Chinese internet. While crackdowns on internet firms are routine, the spate of new policies announced in recent months — from new data security rules to heightened gaming restrictions — signify Beijing’s resolution to curb the influence of Chinese internet firms of all kinds.

The deadline for online platforms to unblock URLs is September 17, the MIIT said earlier. Virtually all the major internet companies have swiftly issued statements saying they will firmly carry out MIIT’s requirements and help promote the healthy development of the Chinese internet.

Internet users are bound to benefit from the dismantling of the walled gardens. They will be able to browse third-party content smoothly on WeChat without having to switch between apps. They can share product links from Taobao right within the messenger instead of having their friends copy-paste a string of cryptic codes that Taobao automatically generates for WeChat sharing.

Robotaxi dream

Autonomous driving startup Deeproute.ai said this week it has closed a $300 million Series B round from investors including Alibaba, Jeneration Capital, and Chinese automaker Geely. The valuation of this round was undisclosed.

We’ve seen a lot of publicity from Pony.ai, WeRide, Momenta and AutoX but not so much Deeproute.ai. That in part is because the company is relatively young, founded only in 2019 by Zhou Guang after he was “fired” by his co-founders at the once-promising Roadstar.ai amid company infighting.

Investors in Roadstar.ai reportedly saw the dismissal of Zhou as detrimental to the startup, which had raised at least $140 million up to that point, and subsequently sought to dissolve the business. It appears that Zhou, formerly the chief scientist at Roadstar, still commands the trust of some investors to support his reborn autonomous driving venture.

Like Pony.ai and WeRide, Deeproute is trying to operate its own robotaxi fleets. While the business model gives it control over reams of driving data, it’s research- and cash-intensive. As such, major Chinese robotaxi startups are all looking at faster commercial deployments, like self-driving buses and trucks, to ease their financial stress.

Cross-border trade boom

The other major funding news this week comes from Shanghai-based XTransfer, which helps small-and-medium Chinese exporters collect payments from overseas. The Series C round, led by D1 Partners, pulled in $138 million and catapulted Xtransfer’s valuation to over $1 billion. The proceeds will go towards product development, hiring and global expansion.

Founded by former executives from Ant Group, XTransfer tries to solve a pain point faced by small and medium exporters: opening and maintaining bank accounts in different countries can be difficult and costly. As such, XTransfer works as a payments gateway between its SME customer, the party that pays it, and their respective banks.

As of July, XTransfer’s customers had surpassed 150,000, most of which are in mainland China. The company of over 1,000 employees is also expanding into Southeast Asia.

While business-to-business export is booming in China, more and more products are also being directly sold from Chinese brands to consumers around the world. Some of the most successful examples, like Shein and Anker, use a different set of payments processors for their direct-to-consumer sales, which tend to be in bigger volume but smaller in average ticket value.

#alibaba, #alibaba-group, #alipay, #ant-group, #asia, #beijing, #bytedance, #china, #china-roundup, #geely, #jack-ma, #jd-com, #momenta, #online-payments, #robotaxi, #shanghai, #shein, #southeast-asia, #taobao, #tc, #tencent, #wechat, #xtransfer

SpotOn raises $300M at a $3.15B valuation and acquires Appetize

Last year at this time, SpotOn was on the brink of announcing a $60 million Series C funding round at a $625 million valuation.

Fast forward to almost exactly one year later, and a lot has changed for the payments and software startup.

Today, SpotOn said it has closed on $300 million in Series E financing that values the company at $3.15 billion — more than 5x of its valuation at the time of its Series C round, and significantly higher than its $1.875 billion valuation in May (yes, just three and a half months ago) when it raised $125 million in a Series D funding event.

Andreessen Horowitz (a16z) led both the Series D and E rounds for the company, which says it has seen 100% growth year over year and a tripling in revenue over the past 18 months. Existing investors DST Global, 01 Advisors, Dragoneer Investment Group, Franklin Templeton and Mubadala Investment Company too doubled down on their investments in SpotOn, joining new backers Wellington Management and Coatue Management. Advisors Douglas Merritt, CEO of Splunk, and Mike Scarpelli, CFO of Snowflake, also made individual investments as angels. With the new capital, SpotOn has raised $628 million since its inception.

The latest investment is being used to finance the acquisition of another company in the space — Appetize, a digital and mobile commerce payments platform for enterprises such as sports and entertainment venues, theme parks and zoos. SpotOn is paying $415 million in cash and stock for the Los Angeles-based company.

Since its 2017 inception, SpotOn has been focused on providing software and payments technology to SMBs with an emphasis on restaurants and retail businesses. The acquisition of Appetize extends SpotOn’s reach to the enterprise space in a major way. Appetize will go to market as SpotOn and will work to grow its client base, which already includes an impressive list of companies and organizations including Live Nation, LSU, Dodger Stadium and Urban Air. 

In fact, Appetize currently covers 65% of all major league sports stadiums, specializing in contactless payments, mobile ordering and menu management. So for example, when you’re ordering food at a game or concert, Appetize’s technology makes it easier to pay in a variety of contactless ways through point of sale (POS) devices, self-service kiosks, handheld devices, online ordering, mobile web and API integrations.

Image Credits: SpotOn

SpotOn is taking on the likes of Square in the payments space. But the company says its offering extends beyond traditional payment processing and point-of-sale software. Its platform aims to give SMBs the ability to run their businesses “from building a brand to taking payments and everything in between.” SpotOn’s goal is to be a “one-stop shop” by incorporating tools that include things such as custom website development, scheduling software, marketing, appointment scheduling, review management, analytics and digital loyalty.

The combined company will have 1,600 employees — 1,300 from SpotOn and 300 from Appetize. SpotOn will now have over 500 employees on its product and technology team, according to co-founder and co-CEO Zach Hyman. It will also have clients in the tens of thousands, a number that SpotOn says is growing by “thousands more every month.”

The acquisition is not the first for SpotOn, which also acquired SeatNinja earlier this year.

But in Appetize it saw a company that was complementary both in its go-to-market and tech stacks, and a “natural fit.”

SMEs are going to benefit from the scalable tech that can go with them, including things like kiosks and offline modes, and for the enterprise clients of Appetize, they’re going to be able to leverage products like sophisticated loyalty programs and extended marketing capabilities,” Hyman told TechCrunch. 

SpotOn was not necessarily planning to raise another round so soon, Hyman added, but the opportunity came up to acquire Appetize.

“We spent a lot of time together, and it was too compelling to pass up,” he told TechCrunch.

For its part, Appetize — which has raised over $77 million over its lifetime, according to Crunchbase — too saw the combination as a logical one.

“It was important to us to retain a stake in the business. We were not looking to cash out,” said Appetize CEO Max Roper. “We are deeply invested in growing the business together. It’s a big win for our team and our clients over the long term. This is a rocketship that we are excited to be on.” 

No doubt that the COVID-19 pandemic only emphasized the need for more digital offerings from small businesses to enterprises alike.

“There has been a high demand for our services and now as businesses are faced with a Covid resurgence, no one is closing down,” Hyman said. “So they see a responsibility to install the necessary technology to properly run their business.”

One of the moves SpotOn has made, for example, is launching a vaccination alert system in its reservation management software platform to make it easier for consumers to confirm they are vaccinated for cities and states that have those requirements.

Clearly, a16z General Partner David George too was bullish on the idea of a combined company.

He told TechCrunch that the two companies fit together “extremely nicely.”

“It felt like a no-brainer for us to want to lead the round, and continue to support them,” George said.

Since first investing in SpotOn in May, the startup’s growth has “exceeded” a16z’s expectations, he added.

“When companies are growing as fast as it is organically, they don’t need to rely on acquisitions to fuel growth,” he said. “But the strategic rationale here is so strong, that the acquisition will only turbocharge what is already high growth.”

While the Series E capital is primarily funding the acquisition, SpotOn continues to double down on its product and technology.

“This is our time to shine and invest in the future with forward thinking technology,” Hyman told TechCrunch. “We’re thinking about things like how are consumers going to be ordering their beer at a Dodgers game in three years? Are they going to be standing in line for 25 minutes or are they going to be interacting and buying merchandise in other unique ways? Those are the things we’re looking to solve for.”

#andreessen-horowitz, #appetize, #david-george, #dragoneer-investment-group, #dst-global, #finance, #fintech, #franklin-templeton, #funding, #fundings-exits, #instagram, #los-angeles, #ma, #mobile-web, #mubadala-investment-company, #online-payments, #payment-processing, #payments, #recent-funding, #saas, #san-francisco, #splunk, #spoton, #startup, #startups, #venture-capital

Billogram, provider of a payments platform specifically for recurring billing, raises $45M

Payments made a huge shift to digital platforms during the Covid-19 pandemic — purchasing moved online for many consumers and businesses; and a large proportion of those continuing to buy and sell in-person went cash-free. Today a startup that has been focusing on one specific aspect of payments — recurring billing — is announcing a round of funding to capitalize on that growth with expansion of its own. Billogram, which has built a platform for third parties to build and handle any kind of recurring payments (not one-off purchases), has closed a round of $45 million.

The funding is coming from a single investor, Partech, and will be used to help the Stockholm-based startup expand from its current base in Sweden to six more markets, Jonas Suijkerbuijk, Billogram’s CEO and founder, said in an interview, to cover more of Germany (where it’s already active now), Norway, Finland, Ireland, France, Spain, and Italy.

The company got its start working with SMBs in 2011 but pivoted some years later to working with larger enterprises, which make up the majority of its business today. Suijkerbuijk said that in 2020, signed deals went up by 300%, and the first half of 2021 grew 50% more on top of that. Its users include utilities like Skanska Energi and broadband company Ownit, and others like remote healthcare company Kry, businesses that take invoice and take monthly payments from their customers.

While there has been a lot of attention around how companies like Apple and Google are handling subscriptions and payments in apps, what Billogram focuses on is a different beast, and much more complex: it’s more integrated into the business providing services, and it may involve different services, and the fees can vary over every billing period. It’s for this reason that, in fact, even big companies in the realm of digital payments, like Stripe, which might even already have products that can help manage subscriptions on their platforms, partner with companies like Billogram to build the experiences to manage their more involved kinds of payment services.

I should point out here that Suijkerbuijk told me that Stripe recently became a partner of Billograms, which is very interesting… but he also added that a number of the big payments companies have talked to Billogram. He also confirmed that currently Stripe is not an investor in the company. “We have a very good relationship,” he said.

It’s not surprising to see Stripe and others wanting to more in the area of more complex, recurring billing services. Researchers estimate that the market size (revenues and services) for subscription and recurring billing will be close to $6 billion this year, with that number ballooning to well over $10 billion by 2025. And indeed, the effort to make a payment or any kind of transaction will continue to be a point of friction in the world of commerce, so any kinds of systems that bring technology to bear to make that easier and something that consumers or businesses will do without thinking about it, will be valuable, and will likely grow in dominance. (It’s why the more basic subscription services, such as Prime membership or a Netflix subscription, or a cloud storage account, are such winners.)

Within that very big pie, Suijkerbuijk noted that rather than the Apples and Googles of the world, the kinds of businesses that Billogram currently competes against are those that are addressing the same thornier end of the payments spectrum that Billogram is. These include a wide swathe of incumbent companies that do a lot of their business in areas like debt collection, and other specialists like Scaleworks-backed Chargify — which itself got a big investment injection earlier this year from Battery Ventures, which put $150 million into both it and another billing provider, SaaSOptics, in April.

The former group of competitors are not currently a threat to Billogram, he added.

“Debt collecting agencies are big on invoicing, but no one — not their customers, nor their customers’ customers — loves them, so they are great competitors to have,” Suijkerbuijk joked.

This also means that Billogram is not likely to move into debt collection itself as it continues to expand. Instead, he said, the focus will be on building out more tools to make the invoicing and payments experience better and less painful to customers. That will likely include more moves into customer service and generally improving the overall billing experience — something we have seen become a bigger area also during the pandemic, as companies realized that they needed to address non-payments in a different way from how their used to, given world events and the impact they were having on individuals.

“We are excited to partner with Jonas and the team at Billogram.” says Omri Benayoun, General Partner at Partech, in a statement. “Having spotted a gap in the market, they have quietly built the most advanced platform for large B2C enterprises looking to integrate billing, payment, and collection in one single solution. In our discussion with leading utilities, telecom, e-health, and all other clients across Europe, we realized how valuable Billogram was for them in order to engage with their end-users through a top-notch billing and payment experience. The outstanding commercial traction demonstrated by Billogram has further cemented our conviction, and we can’t wait to support the team in bringing their solution to many more customers in Europe and beyond!”

#apple, #battery-ventures, #billing, #billogram, #broadband, #business-software, #ceo, #e-health, #economy, #europe, #finance, #financial-technology, #finland, #france, #funding, #general-partner, #germany, #google, #ireland, #italy, #kry, #merchant-services, #money, #netflix, #norway, #online-payments, #partner, #spain, #stockholm, #stripe, #sweden, #web-applications

Sequoia Heritage, Stripe and others invest $200M in African fintech Wave at $1.7B valuation

Francophone Africa has its first unicorn, and if you’ve been following tech on the continent, you will be very unsurprised to hear that it’s coming from the world of fintech.

Wave, a U.S. and Senegal-based mobile money provider, has raised $200 million in Series A round of funding. The investment is the largest-ever Series A round for the region, and it values Wave at $1.7 billion.

Four big-name backers jointly led the round — Sequoia Heritage, a private investment fund and a subsidiary of Sequoia; Founders Fund; payments upstart Stripe; and Ribbit Capital. Others in the round include existing investor Partech Africa and Sam Altman, the former CEO of Y Combinator and current CEO of OpenAI.

The mobile money market in sub-Saharan Africa is growing exponentially. This past year, up to $500 billion has moved through the accounts of 300 million active mobile money users in the region. But despite being one of the largest alternative financial infrastructures known globally, this represents only a fraction of the overall market. 

The International Monetary Fund says that as of 2017, only 43% of adults in sub-Saharan Africa were “banked” by way of a traditional bank or mobile money account. When it comes to growing that proportion, however, mobile money — based on simpler technology and with an easier onboarding process — wins out, and it is set to capture more market share faster than traditional banking in the region. And this has investors, especially foreign ones, excited and looking to get on board.

(Neobanking, based on mobile technology too, falls somewhere in the middle of the two).

From Sendwave to Wave

If you’re wondering why you haven’t heard of Wave, the reason might be because you don’t know it’s a spinoff from Africa-focused remittance provider Sendwave.

Drew Durbin and Lincoln Quirk founded Sendwave in 2014 to offer little or no fee remittances from North America and Europe to select African and Asian countries. The YC-backed company became a WorldRemit subsidiary last year when the global fintech paid up to $500 million in cash and stock for Sendwave.

Wave

L-R: Drew Durbin and Lincoln Quirk

But before that, the team stealthily worked on a mobile money product described as having no account fees and “instantly available and accepted everywhere.”

In 2018, the product was piloted as Wave in Senegal but it was still within the Sendwave ecosystem. When WorldRemit acquired Sendwave, Durbin and his team turned their focus to Wave.

“We saw an opportunity to make a bigger impact by trying to build a better, much more affordable mobile money service than the telcos are building throughout much of sub-Saharan Africa,” Durbin told TechCrunch in an interview. “We didn’t see any companies besides the telcos trying to solve that problem.”

Going up against incumbents

Telecom operators and banks have been the early entrants in the mobile money space, not least because they control much of the infrastructure in the process, from having mobile subscribers using handsets on their networks through to building the financial services to manage money and payments at the back end, and everything in between. 

Third-party providers, mostly fintechs, have tried to capture some market share from these incumbents. Wave, however, wants to disrupt it.

Durbin tells TechCrunch that unlike M-Pesa, the mobile payment provider led by Safaricom, and other products of telecom operators like Orange and Tigo, Wave is building a mobile money service that is “radically affordable.”

The Dakar-based platform is akin to PayPal (with mobile money accounts, not bank accounts) runs an agent network that uses their cash on hand to service Wave users. According to the company, users can make free deposits and withdrawals and charge a 1% fee whenever they send money.

Durbin says this is 70% cheaper than telecom-led mobile money and whenever there is a transfer problem, refunds are made instantly, unlike with incumbents where users might need to wait for some days.   

Wave’s technology also differs from telecom-led mobile money. Whereas the incumbents mostly focus on USSD (although there are provisions to use applications), Wave is solely app-based. For users without a smartphone, Wave also provides a free QR-card to transact with an agent.

By building its own infrastructure full-stack — agent network, agent and consumer applications, QR cards, business collections, and disbursements — Wave has been able to fuel its growth to several million monthly active users and billions of dollars in annual volume.

Wave

Image Credits: Wave

The two-year-old startup claims to be the largest mobile money player in Senegal and that over half of the country’s adults are active users. That pegs the number of users between 4 million and 5 million, and Wave wants to replicate this growth in Ivory Coast, the second market it officially expanded to last year.

This sort of growth pressure on telecom operators. That has indeed been the case for the leading telecom operator in both regions, Orange. In June, the telecom operator stopped users in Senegal from purchasing Orange airtime via Wave’s mobile application.

Per this report, Wave argued that Orange was applying anti-competitive tactics by restricting it from selling directly or via an approved wholesaler. Orange said it had made proposals “in line with those offered to its other providers” and that Wave wanted special treatment.

To reach a fair decision, both parties are working with the regulatory body in charge, Regulatory Authority for Telecommunications and Posts (RATP). And if the regulator isn’t capable of settling the issue, BCEAO, the regional bank of Francophone countries, is the next in line to resolve the dispute.

According to Wave’s CEO, the bank’s regulatory approach is one reason why Wave has been able to take on the telecom operators in the first place. But among all the West African countries where mobile money is prevalent, why start with Senegal, an emerging market?

“Senegal is a big enough market that we would have to work really hard to potentially win the market. But also a small enough market that if we were doing well, we could win the market quicker than if we were in a giant country. And so that combination of those two things made it seem like a good place to start,” Durbin remarked.

Following this fundraise, Wave will deepen its presence in Senegal and Ivory Coast and grow its already 800-strong team across product, engineering, and business. In addition, Wave will expand into other markets it feels are regulatory-friendly like Uganda.

I think there’s a pretty broad array of countries that have strong central banks and clear regulations are open to new players, or even want new players to come in and try to compete with the telcos. And so we have a lot of licenses that are in progress, and we’ll try to prioritize the countries where we’re able to get started sooner over the ones that it takes longer.”

A unicorn after two rounds

While some reports say Wave had raised $13.8 million prior to this, Durbin declined to comment on the figure when asked. However, he did mention that Partech, the French outfit with an African fund, invested in a seed round alongside other investors like Founders Fund and Stripe.

In addition to Sequoia and Sam Altman, the same crop of investors also participated in this monster Series A round.

In a market that has typically lacked innovation, Partech general partner Tidjane Deme says the investment will help Wave improve its service.

“Since 2018, we’ve supported Wave because we were convinced mobile money is still an unsolved problem in Africa,” he said in a statement. “Wave has great product design, stellar execution, and a strong financial trajectory. We are proud to see it become the first unicorn from Senegal.”

In May, Sequoia Capital invested in Egyptian fintech Telda, its first big deal on the continent. The Wave investment, meanwhile, is coming via subsidiary Sequoia Heritage and is the latter’s first investment in an Africa-focused startup. 

In a call with TechCrunch, Altman said that Wave ticked the boxes he considers before an investment — strong founders, an important problem in a large market, working product, and traction.

“I’ve known these founders for a long time, and I think they’re like off the charts good. I’ve been super impressed with their ability to figure out what users want and how to grow,” he said. “I think the company is solving the most important problem around money transfer in Africa and fixing the inefficient agent networks.”

The largest venture rounds for any venture in Africa remain OPay’s recent $400 million fundraise and Jumia’s equivalent in 2016. Both were Series C rounds. The next biggest rounds include Interswitch’s $200 million investment from Visa and Flutterwave’s $170 million Series C.

All these companies attained unicorn status following their respective rounds. The same goes for Wave but more spectacularly, considering the company bagged it in a Series A round, it’s transcending the region and is one of the largest A-rounds globally this year.

Wave joins OPay and Flutterwave as the newly minted unicorns in Africa this year — that is, startups valued above $1 billion — and the fourth African unicorn after Interswitch. Other billion-dollar companies include publicly traded Jumia and Egyptian fintech Fawry.

Funding rounds in Africa keep getting bigger and the continent has reached an inflection point. However, some skeptics have questioned the valuations of previous unicorns; Wave wouldn’t be an exception.

The argument would be around why Wave commands such a high valuation when for instance, two prominent telecom operators, Airtel and MTN, are looking to list their mobile money businesses between $2 to $6 billion despite being in the operations for several years across multiple African countries.

Yet like any investor optimistic about a portfolio company, Altman doesn’t believe Wave is overvalued. In fact, he thinks the company is undervalued.

“The opportunity in front of the company is massive. But plenty of times, I’ve gotten it wrong, so you never know. However, I have been fortunate to make a number of great investments and I feel Wave has as good of a shot as you can ask for,” he said. “Africa is going to be the fastest growing and most important market over the next coming decades for many companies. I think people are realizing how big the market opportunity is and how much value is going to be created and we’ll see a lot more things like this happen.”

#africa, #finance, #financial-services, #founders-fund, #funding, #m-pesa, #mobile-money, #online-payments, #orange, #payments, #startups, #tc, #wave

All the reasons why you should launch a credit or debit card

Over the previous two or three years we’ve seen an explosion of new debit and credit card products come to market from consumer and B2B fintech startups, as well as companies that we might not traditionally think of as players in the financial services industry.

On the consumer side, that means companies like Venmo or PayPal offering debit cards as a new way for users to spend funds in their accounts. In the B2B space, the availability of corporate card issuing by startups like Brex and Ramp has ushered in new expense and spend management options. And then there is the growth of branded credit and debit cards among brands and sports teams.

But if your company somehow hasn’t yet found its way to launch a debit or credit card, we have good news: It’s easier than ever to do so and there’s actual money to be made. Just know that if you do, you’ve got plenty of competition and that actual customer usage will probably depend on how sticky your service is and how valuable the rewards are that you offer to your most active users.

To learn more about launching a card product, TechCrunch spoke with executives from Marqeta, Expensify, Synctera and Cardless about the pros and cons of launching a card product. So without further ado, here are all the reasons you should think about doing so, and one big reason why you might not want to.

Because it’s (relatively) easy

Probably the biggest reason we’ve seen so many new fintech and non-fintech companies rush to offer debit and credit cards to customers is simply that it’s easier than ever for them to do so. The launch and success of businesses like Marqeta has made card issuance by API developer friendly, which lowered the barrier to entry significantly over the last half-decade.

“The reason why this is happening is because the ‘fintech 1.0 infrastructure’ has succeeded,” Salman Syed, Marqeta’s SVP and GM of North America, said. “When you’ve got companies like [ours] out there, it’s just gotten a lot easier to be able to put a card product out.”

While noting that there have been good options for card issuance and payment processing for at least the last five or six years, Expensify Chief Operating Officer Anu Muralidharan said that a proliferation of technical resources for other pieces of fintech infrastructure has made the process of greenlighting a card offering much easier over the years.

#banking, #business-intelligence, #cardless, #credit-card, #debit-cards, #ec-column, #ec-fintech, #expensify, #finance, #financial-services, #financial-technology, #fintech-infrastructure, #fintech-startup, #marqeta, #mastercard, #mobile-payments, #online-payments, #payment-processing, #payment-processor, #payments, #startups, #synctera, #tc

Balance raises $25M in a Ribbit Capital-led Series A to grow its ‘consumer-like B2B checkout platform’

Balance, a payments platform aimed at B2B merchants and marketplaces, has raised $25 million in a Series A funding round led by Ribbit Capital.

Avid Ventures participated in the financing, in addition to existing backers Lightspeed Ventures, Stripe, Y Combinator Continuity Fund, SciFi VC and UpWest. Other individual investors that put money in the round include early employees and executives from Plaid, Coinbase, Square, Stripe and PayPal, such as Jaqueline Reses, formerly head of Square Capital. The financing comes just over six months after Balance announced a $5.5 million seed round.

The motivation for starting the company was simple, said CEO and co-founder Bar Geron: “We wanted to create an online B2B experience that doesn’t suck.” He and Yoni Shuster, both former PayPal employees, started the company in early 2020.

B2B payments, he said, have historically differed from B2C primarily in that they have not taken place at the moment of purchase (or at the point of sale) but rather within 30 days and with an invoice. This is not an efficient process for merchants or vendors alike, the company maintains.

Meanwhile, most businesses have avoided paying for their supply with credit cards, because cards can quickly max out, Geron said.

“The only element that keeps many merchants offline is payments,” he told TechCrunch. “It’s a process that is stuck in the flow of those marketplaces and keeping them from scaling. We got fascinated with the problem.”

After starting out at Y Combinator, Balance has developed what it describes as a “consumer-like B2B checkout platform for merchants and marketplaces,” or a “self-serve digital checkout experience company for B2B businesses.”

What that means is that Balance has built a B2B payments platform that allows merchants to offer a variety of payment methods, including ACH, cards, checks and bank wires, as well as a variety of terms, including payment on delivery, net payment terms and payment by milestone. Behind the scenes, Balance underwrites the terms of those transactions requiring financing by evaluating the risk of the customer, the merchant and the specific payment terms selected. Balance is built on top of Stripe and offers all of Stripe’s credit card payment options, but then extends far beyond them.

Balance, according to Geron, invested “a lot” in APIs for marketplaces.

“We have a very robust API platform so that these businesses can manage the entire payment flow without being exposed to the risk and regulation of payments,” he told TechCrunch. “And this is all happening without them even touching the funds.”

The plus for merchants is the ability to get immediate payout that is always reconciled like credits. Marketplaces are equipped with automated vendor disbursement, a full compliance umbrella and reconciliation management, Balance says.

“We want to make the online payments experience for businesses as seamless as it is for consumer payments, and we want to do it globally,” Geron told TechCrunch.

The startup has already partnered with e-commerce giants such as BigCommerce and Magento and will soon also work with Salesforce, according to Geron. Its customers range from startups to publicly traded marketplaces to e-commerce enterprises across a variety of industries such as steel, freight, hardware, food ordering, medical supply and apparel. They include Bryzos, Choco, Zilingo and Bay Supply, among others.

It’s early days yet, but Balance has seen growth of about 500% to 600% since the time of its last raise in February, Geron said. The company, which has offices in Tel Aviv and New York, has about 30 employees.

Jordan Angelos, a general partner at Ribbit and former head of M&A and investment at Stripe, believes the fact that Balance has built its platform specifically for “rapidly scaling” B2B marketplaces and merchants is reflective of a “well-placed” focus.

“B2B marketplaces, for example, have a very particular set of payments and capital markets-related needs that can be much more holistically and elegantly solved with Balance’s flexible toolkit than alternatives,” he wrote via email. “Payments and checkout are two sides of the same coin, and Balance’s products allow users to address them together to better serve their customers as well as their own margins.”

#api, #avid-ventures, #balance, #e-commerce, #ecommerce, #finance, #funding, #fundings-exits, #lightspeed-ventures, #new-york, #online-payments, #payments, #recent-funding, #ribbit-capital, #startups, #stripe, #tel-aviv, #venture-capital, #y-combinator

Branch raises $48M from Lee Fixel’s Addition, Indeed to provide accelerated payments to workers

Branch, which has built a flexible workforce payments platform, announced today it has raised $48 million in Series B funding and closed on a $500 million credit facility.

Lee Fixel’s Addition –– which has also backed the likes of Flipkart, Stripe and Coinbase – led the equity financing while the credit facility was secured in the form of purchased assets from funds managed by Neuberger Berman.

Drive Capital, Crosscut Ventures, Bonfire Ventures, Matchstick Ventures, and HR Tech Investments LLC, a subsidiary of Recruit Holdings Co., Ltd. (an affiliate of job search site Indeed) also participated in the equity funding, among other investors. With the latest investment, Minneapolis-based Branch has brought in a total of $58 million in equity funding since its 2015 inception.

The raise marks Branch’s first since 2017.

Branch CEO and founder Atif Siddiqi declined to reveal at which valuation the company’s current round was raised but did note that it saw 300% revenue growth year over year in 2020, and a 700% increase in the number of enterprises using its platform.

Branch was founded to give companies a more cost-effective, faster way to pay employees and  contractors, which in turn theoretically can maybe help them attract and retain talent and save money compared to using traditional payment methods. 

When Siddiqi first started the company, Branch was focused on a use case of helping workers pick up additional hours at companies they already worked at to grow their income. But then the team started looking for other ways to help these workers financially.

One of our strengths was that we were connected to a lot of very disparate enterprise systems. And we were collecting a lot of really interesting employment data,” Siddiqi told TechCrunch. “With that data, we realized we could really build a better financial service experience for this consumer.”

Branch typically focuses on low to moderate income users, and sits between the company and its worker payment flows.

It started off with earned wage access and then began accelerating payments for workers. It has since expanded into use cases such as digital tip payments.

“One of the things we saw when we were working with a lot of Domino’s franchisees is that a lot of them didn’t have enough cash at the end of the day to tip out their drivers,” Siddiqi explains. Rather than be forced to go to an ATM to get cash, some turned to Branch’s Wallet offering, which gives franchise owners the ability to push tip payments in real time after a driver finishes a shift.

“Tips represent about 40% of a driver’s income on a monthly basis so that’s pretty significant,” Siddiqi said.

Branch then expanded into contractor payments, such as helping companies pay their 1099 contractors faster with a “uniform” payment experience.

“We realized we could rebuild a better financial service experience from the ground up, and that’s where you find Branch today,” Siddiqi said.

Siddiqi said the company tries to provide as many free options as possible such as not charging for instant transfers into the Branch Wallet and non-instant transfers to another financial account.

Like many other fintechs, the startup monetizes primarily off of interchange fees. It also charges a transaction fee for pushing funds instantly from the Branch Wallet to another financial account.

“Faster payments is a compelling and transformative benefit expected by today’s workforce,” Siddiqi said. “We’ve seen how it can significantly improve cash flow for both companies and workers, so we’re excited to deliver instant payments and other engaging tools to more sectors and workforces, from other workers living paycheck to paycheck to independent contractors growing their own businesses.”  

As part of the company’s efforts to grow beyond the multi-billion dollar earned wage access market, it has expanded into contractor and influencer payments with a new deal with influencer marketing platform Tagger and other on-demand delivery platforms. 

Branch also recently inked an agreement with Kelly, a global staffing firm. Other customers include Delivery Drivers, Inc. (DDI), an independent contractor management solution specializing in last-mile delivery, and HR and IT management platform Rippling.

The company is similar to another fintech, GigWage, but the biggest difference – according to Siddiqi –– is that Branch has built its own payment rails and system to push out funds instantly, and also has offerings for W-2 workforces.

Drive Capital Partner Andy Jenks believes that the company’s financial services address pay cycle gaps and cash flow challenges in a way “that can save time and costs for both workers and the companies they work for.”

“We’ve seen how impactful Branch’s acceleration of payments for employers and the W-2 workforce has been,” he wrote via email, “and look forward to their expansion into contractor payments where they can serve a range of rapidly growing industries such as last-mile delivery, logistics and influencers.”

#apps, #bonfire-ventures, #branch, #contractor, #crosscut-ventures, #drive-capital, #finance, #financial-services, #fintech, #funding, #fundings-exits, #matchstick-ventures, #minneapolis, #online-payments, #payments, #recent-funding, #startup, #startups, #tc, #venture-capital

xentral, an ERP platform for SMBs, raises $75M Series B from Tiger Global and Meritech

Enterprise Resource Planning systems have traditionally been the preserve of larger companies, but in recent years the amount of data small medium sized businesses can generate has increased to the point where even SMEs/SMBs can get into the world of ERP. And that’s especially true for online-only businesses.

At the beginning of the year we covered the $20 million Series A funding of Xentral, a German startup that develops ERP for online small businesses, but it clearly didn’t plan to stop there.

It’s now raised a $75 million Series B funding from Tiger Global and Meritech, following up from existing investors Sequoia Capital, Visionaries Club (a B2B-focused VC out of Berlin), and Freigeist.

The cash will be used to enhance product, hire staff and expand the UK operation towards a more global ERP market, which is expected to reach $32 billion by 2023.

Speaking to me over a call, Benedikt Sauter, founder and CEO of central, said: “We hook into Shopify, eBay, Amazon, Magento, WooCommerce, and also CRM systems like Pipedrive to collect the software together in one place, and try to do it all automatically in the background so that companies can really focus. Our goal is that a business owner who decides on Friday that they need a flexible ERP can implement and configure xentral over the weekend and hand it over to their team on Monday.”

The German startup covers services like order and warehouse management, packaging, fulfillment, accounting, and sales management, and, right now, the majority of its 1,000 customers are in Germany. Customers include the likes of direct-to-consumer brands like YFood, KoRo, the Nu Company and Flyeralarm.

John Curtius, Partner at Tiger Global, said: “Our diligence has uncovered a delighted customer base at xentral and a product offering that has evolved into a true mission-critical platform for ecommerce merchants globally. We are excited to partner with such product visionaries as Benedikt and Claudia as the business scales to serve customers not only in Europe but around the globe in the future.”

Xentral was Sequoia’s first investment in Europe since officially opening for business in the region this year. Sequoia backed other European startups before, including Graphcore, Klarna, Tessian, Unity, UiPath, n8n, and Evervault — but all of those deals were done from the US. Sequoia and its new partner in Europe, Luciana Lixandru, is understood to be joining Xentral’s board along with Visionaries’ Robert Lacher.

Alex Clayton, General Partner at Meritech said: “Meritech invested in NetSuite in 2008 with the vision of bringing ERP to the cloud… We believe that xentral will bring automation to hundreds of thousands SME businesses, dramatically improving multi-channel processes and data management in an ever-growing e-commerce market.”

Sauter and his co-founder Claudia Sauter (who is also his wife) built the early prototype of central originally for their first business in computer hardware sales.

#amazon, #articles, #artificial-intelligence, #berlin, #business, #business-partner, #ceo, #co-founder, #crm, #data-management, #ebay, #erp-software, #europe, #general-partner, #germany, #graphcore, #klarna, #luciana-lixandru, #magento, #meritech, #netsuite, #online-payments, #partner, #pipedrive, #sequoia-capital, #shopify, #tc, #tiger-global, #uipath, #united-kingdom, #united-states, #visionaries-club, #woocommerce, #xentral, #yfood

What Square’s acquisition of Afterpay means for startups

On Sunday Square announced it was gobbling up Afterpay in a deal worth $29 billion at the time of announcement. Alex followed up yesterday with more details on why the deal made sense for Square and Afterpay over here, but we wanted to ask some notable VCs what it means for the startup market.

For context, the Square deal follows a ton of money and interest flowing into the BNPL market. Just this year, VCs have invested in companies like Alma ($59.4 million, January 2021), Scalapay ($48 million, January 2021), Wisetack ($19 million, February 2021), Zilch ($80 million, April 2021) and Dividio ($30 million, June 2021).

Most of the investors we reached out to were generally bullish on the Square and Afterpay integration, but they were less excited about opportunities for other consumer BNPL businesses to emerge.

Then there’s Klarna, which raised $639 million at a post-money valuation of $45.6 billion in June, after raising $1 billion in March at a post-money valuation of $31 billion.

There’s also interest from some major public companies. After a slow start, PayPal is aggressively pushing BNPL services with merchants that offer it as a payment option. And there are reports that Apple is building its own BNPL offering through Apple Pay.

We reached out to Commerce Ventures founder and GP Dan RosenBetter Tomorrow Ventures founding partner Jake Gibson, Fika Ventures partner TX Zhuo, and Matthew Harris of Bain Capital Ventures to see what they thought of the deal, as well as what it might mean for the opportunity for other BNPL companies and startups.

The main takeaways? “Buy now, pay later” may be effective at driving retail conversion, but scale matters and long-term margins look slim for BNPL startups.

Now, let’s hear from the venture community.

The venture view

Why is the BNPL market so hot?

#afterpay, #bain-capital-ventures, #better-tomorrow-ventures, #bnpl, #ec-ecommerce-and-d2c, #ecommerce, #entrepreneurship, #fika-ventures, #finance, #jake-gibson, #klarna, #online-payments, #payments, #paypal, #private-equity, #scalapay, #startups, #tc, #tx-zhuo, #venture-capital, #zilch

Square to buy ‘buy now, pay later’ giant Afterpay in $29B deal

In a blockbuster deal that rocks the fintech world, Square announced today that it is acquiring Australian buy now, pay later giant Afterpay in a $29 billion all-stock deal.

The purchase price is based on the closing price of Square common stock on July 30, which was $247.26. The transaction is expected to close in the first quarter of 2022, contingent upon certain closing conditions. It values Afterpay at more than 30% premium to its latest closing price of A$96.66.

Square co-founder and CEO Jack Dorsey said in a statement that the two fintech behemoths “have a shared purpose.”

“We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles,” he said in the statement. “Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.”

The combination of the two companies would create a payments giant unlike any other. Over the past 18 months, the buy now, pay later space has essentially exploded, appealing especially to younger generations drawn to the idea of not using credit cards or paying interest and instead opting for the installment loans, which have become ubiquitous online and in retail stores.

As of June 30, Afterpay served more than 16 million consumers and nearly 100,000 merchants globally, including major retailers across industries such as fashion, homewares, beauty and sporting goods, among others.

The addition of Afterpay, the companies’ statement said, will “accelerate Square’s strategic priorities” for its Seller and Cash App ecosystems. Square plans to integrate Afterpay into its existing Seller and Cash App business units, so that even “the smallest of merchants” can offer buy now, pay later at checkout. The integration will also give Afterpay consumers the ability to manage their installment payments directly in Cash App. Cash App customers will be able to find merchants and buy now, pay later (BNPL) offers directly within the app.

Afterpay’s co-founders and co-CEOs Anthony Eisen and Nick Molnar will join Square upon closure of the deal and help lead Afterpay’s respective merchant and consumer businesses. Square said it will appoint one Afterpay director to its board.

Shareholders of Afterpay will get 0.375 shares of Square Class A stock for every share they own. This implies a price of about A$126.21 per share based on Square’s Friday close, according to the companies.

Will there be more consolidation in the space? That remains to be seen, and Twitter is all certainly abuzz about what deals could be next. Here in the U.S., rival Affirm went public earlier this year. On July 30, shares closed at $56.32, significantly lower than its opening price and 52-week-high of $146.90. Meanwhile, European competitor Klarna — which is growing rapidly in the U.S. — in June raised another $639 million at a staggering post-money valuation of $45.6 billion.

No doubt the BNPL fight for the U.S. consumer is only heating up with this deal.

#afterpay, #apps, #buy-now, #cash-app, #credit-card, #director, #finance, #financial-services, #fintech, #jack-dorsey, #klarna, #online-payments, #online-shopping, #pay-later, #payments, #square, #tc, #twitter, #united-states, #up

PayPal’s new ‘super app’ is ready to launch, will also include messaging

PayPal’s plan to morph itself into a “super app” have been given a go for launch. According to PayPal CEO Dan Schulman, speaking to investors during this week’s second-quarter earnings, the initial version of PayPal’s new consumer digital wallet app is now “code complete” and the company is preparing to slowly ramp up. Over the next several months, PayPal expects to be fully ramped in the U.S., with new payment services, financial services, commerce and shopping tools arriving every quarter.

The company has spoken for some time about its “super app” ambitions — a shift in product direction that would make PayPal a U.S.-based version of something like China’s WeChat or Alipay or India’s Paytm. Similar to these apps, PayPal aims to offer a host of consumer services under one roof, beyond just mobile payments.

In previous quarters, PayPal said these new features may include things like enhanced direct deposit, check cashing, budgeting tools, bill pay, crypto support, subscription management, and buy now/pay later functionality. It also said it would integrate commerce, thanks to the mobile shopping tools acquired by way of its $4 billion Honey acquisition from 2019.

So far, PayPal has continued to run Honey as a standalone application, website and browser extension, but the super app could incorporate more of its deal-finding functions, price tracking features, and other benefits.

On Wednesday’s earnings call, Schulman revealed the super app would include a few other features as well, including high-yield savings, early access to direct deposit funds, and messaging functionality outside of peer-to-peer payments — meaning you could chat with family and friends directly through the app’s user interface.

PayPal hadn’t yet announced its plans to include a messaging component until now, but the feature makes sense in terms of how people often combine chat and peer-to-peer payments today. For example, someone may want to make a personal request for the funds instead of just sending an automated request through an app. Or, after receiving payment, a user may want to respond with a “thank you,” or other acknowledgement. Currently, these conversations take place outside of the payment app itself on platforms like iMessage. Now, that could change.

“We think that’s going to drive a lot of engagement on the platform,” said Schulman. “You don’t have to leave the platform to message back and forth.”

With the increased user engagement, the company expects to see a related bump in average revenue per active account.

Schulman also hinted at “additional crypto capabilities,” which were not detailed. However, PayPal earlier this month increased the crypto purchase limit from $20,000 to $100,000 for eligible PayPal customers in the U.S., with no annual purchase limit. The company also this year made it possible for consumers to check out at millions of online businesses using their cryptocurrencies, by first converting the crypto to cash then settling with the merchant in U.S. dollars.

Though the app’s code is now complete, Schulman said the plan is to continue to iterate on the product experience, noting that the initial version will not be “the be-all and end-all.” Instead, the app will see steady releases and new functionality on a quarterly basis.

However, he did say that early on, the new features would include the high-yield savings, improved bill pay with a better user experience and more billers and aggregators, as well as early access to direct deposit, budgeting tools, and the new two-way messaging feature.

To integrate all the new features into the super app, PayPal will undergo a major overhaul of its user interface.

“Obviously, the [user experience] is being redesigned,” Schulman noted. “We’ve got rewards and shopping. We’ve got a whole giving hub around crowdsourcing, giving to charities. And then, obviously, Buy Now, Pay Later will be fully integrated into it…The last time I counted, it was like 25 new capabilities that we’re going to put into the super app,” he said.

The digital wallet app will also be personalized to the end user, so no two apps are the same. This will be done using both A.I. and machine learning capabilities to  “enhance each customer’s experiences and opportunities,” said Schulman.

PayPal delivered an earnings beat in the second quarter with $6.24 billion in revenue, versus the $6.27 billion Wall St. expected, and earnings per share of $1.15 versus the $1.12 expected. Total payment volume from merchant customers also jumped 40% to $311 billion, while analysts had projected $295.2 billion. But the company’s stock slipped due to a lowered outlook for Q3, impacted by eBay’s transition to its own managed payments service.

In addition, PayPal gained 11.4 million net new active accounts in the quarter, to reach 403 million total active accounts.

#apps, #cryptocurrencies, #cryptocurrency, #dan-schulman, #finance, #financial-services, #machine-learning, #mobile, #mobile-payments, #money, #online-payments, #paypal, #peer-to-peer, #united-states

South African payments startup Yoco raises $83M Series C backed by Dragoneer

Small and medium enterprises (SMEs) contribute heavily to the economic success of many countries, particularly those in the developing world. They are the backbone of most economies: Globally, SMEs represent about 90% of existing businesses and create more than 50% of employment.

In South Africa, these businesses contribute around one-third of the country’s GDP. Last year, the coronavirus pandemic threatened the existence of some of these SMEs, and its effects linger as owners worry about revenue, sales and cash flow.

Since launching in 2013, South African fintech Yoco has positioned itself as the go-to platform to access offline payments among merchants in the country. Today, the company is announcing $83 million in Series C funding to scale offline and online offerings and expand to new markets.

Despite South Africa’s high card and mobile penetration rates of over 70%, the country’s SMEs still struggle to accept cards. Yoco’s portable card machines have proved masterful in solving this problem; when TechCrunch covered the company three years ago after its $16 million Series B raise, it had little over 30,000 merchants using its platform. Now, that number has quintupled.

As Yoco grew exponentially in providing offline payments, it built an online offering. After being in beta for a while, the rollout came right on time some days into South Africa’s lockdown in March last year. This way, South African merchants could continue accepting payments on the platform.

“We want to offer whatever payment methods our merchants need. And we did start in the in-person payment space, focusing on terminals, which was where the biggest demand was,” chief business officer Carl Wazen said. “But the pandemic, which had a devastating effect on so many businesses that relied on in-person trade, accelerated the need for businesses to accept payments online.”

During the height of the lockdowns in South Africa, sentiment across SMEs owners on a scale of -100 to 100 dropped to an all-time low of -12 in Q2 2020, according to Yoco’s small business pulse monitor. It has since improved following the easing of the lockdowns, allowing businesses to move more freely and continue in-person payments. As a result, Yoco’s online payments account for a minute part of the transactions made on the platform.

But that’s not to say people are transacting with cash. In fact, it’s the opposite, according to Wazen. Wazen says one post-pandemic behavior he noticed was that once the lockdown was lifted, people came back to make in-person payments in an accelerated way because they stopped using cash. “Recent consumer behavior shows a shift away from cash, and businesses have to rapidly adapt to this change. This presents a huge opportunity, and it is our mission to support that transition,” he added.

Earlier this year, chief executive Katlego Maphai said Yoco was looking to expand its services into other aspects of digital payments. He listed mobile money, QR payments and electronic funds transfer (ETF) as offerings in its pipeline. Wazen corroborated this, but didn’t provide an update about where the company is with these offerings. He did mention, however, that the company is still very much a card-focused payment provider.

Yoco’s strategy as the foremost card payments provider in South Africa lies in creating access and removing barriers to adopting digital financial services. The company does that by focusing on product capabilities that Wazen claims are the most comprehensive for small and medium businesses. He adds that in terms of market presence, Yoco is also the easiest for merchants to access services through different channels seamlessly.

“We’ve got a brand that is recognized now. That’s how we win and it’s about staying as focused as possible on that part of the market that, in our opinion, people like other competitors are not focused on enough.”

South Africa has over 6 million small businesses that still transact only in cash; this provides a huge opportunity for Yoco. According to the company, the number of small businesses that were fully cashless jumped 300% from March to July 2020. Yoco currently serves 150,000 of these businesses and adds over 500 merchants per day. The company claims to be processing more than $1 billion in card payments per year, and in its six years of existence, it has processed over $2 billion in card payments.

Yoco

Image Credits: Yoco

Yoco has raised a total of $107 million. The company’s Series C investment is the largest of its kind in South Africa and one of the largest for any African fintech (third only to Flutterwave and Chipper Cash). Wazen also claims it is the largest by any small business-focused payments platform in the Middle East and Africa.

Yoco is currently one of the most valuable startups on the continent, and as a fintech startup, it comes as no surprise. The sector continues to dominate startup venture capital funding in Africa while its heavy hitters bring first-time investors to the continent.

In Yoco’s case, it’s Dragoneer Investment Group. The fund has famously backed fintech giants like Chime, Klarna, Nubank, Mercado Libre and Square.

Other investors that participated include new investors Breyer Capital, HOF Capital, The Raba Partnership, 4DX Ventures and TO Ventures; and existing investors Partech, Velocity Capital Fintech Ventures, Orange Ventures and Quona Capital. Current and former executives from global tech companies such as Coinbase, Revolut, Spotify and Gojek took part as well.

“We couldn’t be more excited to partner with the Yoco team,” Christian Jensen, co-head of private investments at Dragoneer, said in a statement. “At Dragoneer, we look for great teams that are building durable businesses with wonderful economic models, and that is exactly what we’ve found at Yoco. Yoco is already beloved by customers, and the product roadmap that the company is investing behind will drive even more value for merchants. While there is tremendous room for continued growth domestically, the opportunity for Yoco goes well beyond South Africa.”

There are three core enablers to Yoco’s thriving business, Wazen pointed out. First is its product capabilities, second is its platform and third is its market presence. This investment will be there to accelerate all three. Yoco is transitioning from a pure payment acceptance play into a full financial ecosystem on the product side. The platform play will see Yoco continue to integrate and take advantage of regulatory easing vertically, and Yoco is deepening its market presence in South Africa.

While Wazen believes Yoco has barely scratched the surface in South Africa, he’s looking forward to replicating its growth in other parts of Africa and the Middle East. With over 100 million SMEs transacting in cash across both regions, Yoco plans to reach at least a million within the next four years.

To accomplish this, Yoco is increasing its team by 200 people remotely and across its offices in Cape Town and Amsterdam within the next year. The company is also tapping into a current trend that has seen African soonicorns and unicorns hire former top employees from global companies to scale theirs to new heights. While it doesn’t mention names, some of Yoco’s new hires include a former VP of product at Monzo, a former product marketing director at Paypal and a former head of communications at Uber. The company has also brought on board a new chairman, Juan Fuentes, the former managing director of fintech unicorn Pagseguro.

#africa, #dragoneer-investment-group, #funding, #online-payments, #payments, #south-africa, #startups, #tc, #yoco

Nium crosses $1B valuation with $200M Riverwood Capital-led round

Business-to-business payments platform Nium announced Monday that it raised more than $200 million in Series D funding and saw its valuation rise above $1 billion.

The company, now Singapore-based but shifting to the Bay Area, touted the investment as making it “the first B2B payments unicorn from Southeast Asia.”

Riverwood Capital led the round, in which Temasek, Visa, Vertex Ventures, Atinum Capital, Beacon Venture Capital and Rocket Capital Investment participated, along with a group of angel investors like DoorDash’s Gokul Rajaram, FIS’ Vicky Bindra and Tribe Capital’s Arjun Sethi. Including the new funding, Nium has raised $300 million to date, Prajit Nanu, co-founder and CEO, told TechCrunch.

The B2B payments sector is already hot, yet underpenetrated, according to some experts. To give an idea just how hot, Nium was seeking $150 million for its Series D round, received commitments of $300 million from eager investors and settled on $200 million, Nanu said.

“This is our fourth or fifth fundraise, but we have never had this kind of interest before — we even had our term sheets in five days,” he added. “I believe this interest is because we’ve successfully managed to create a global platform that is heavily regulated, which gives us access to a lot of networks. This is an environment where payment is visible, and our core is powering frictionless commerce and enabling anyone to use our platform.”

Nium’s new round adds fuel to a fire shared by a number of companies all going after a global B2B payments market valued at $120 trillion annually: last week, Paystand raised $50 million in Series C funding to make B2B payments cashless, while Dwolla raised $21 million for its API that allows companies to build and facilitate fast payments. In March, Higo brought in $3.3 million to do the same in Latin America, while Balance, developing a B2B payments platform that allows merchants to offer a variety of payment methods. raised $5.5 million in February.

Nium’s approach is to provide access to a global payment infrastructure, including card issuance, accounts receivable and payable, and banking-as-a-service through a single API. The company’s network enables customers to then send funds to more than 100 countries, pay out in more than 60 currencies, accept funds in seven currencies and issue cards in more than 40 countries, Nanu said. The company also boasts money transfer, card issuances and banking licenses in 11 jurisdictions.

Francisco Alvarez-Demalde, co-founding partner and managing partner at Riverwood, said in an email that the combination of software — plus regulatory licenses — and operating a fintech infrastructure platform on behalf of neobanks and corporates is a global trend experiencing hyper-growth.

Riverwood followed Nium for many years, and its future vision was what got the firm interested in being a part of this round. Alvarez-Demalde said that “Nium has the incredible combination of a great market opportunity, a talented founder and team, and we believe the company is poised for global growth based on underlying secular technology trends like increasing real-time payment capabilities and the proliferation of cross border commerce.

“As a central payment infrastructure in one API, Nium is a catalyst that unlocks cross-border payments, local accounts and card issuance with a network of local market licenses, partners and banking relationships to facilitate moving money across the world,” he added. “Enterprises of all types are embedding financial services as part of their consumer experience, and Nium is a key global enabler of this trend.”

Nanu said the new funding enables the company to move to the United States, which represents 3% of Nium’s revenue. He wants to increase that to 20% over the next 18 months, as well as expand in Latin America. The investment also gives the company a 12- to 18-month runway for further M&A activity.  In June, Nium acquired virtual card issuance company Ixaris, and in July acquired Wirecard Forex India to expose it to India’s market. He also plans to expand the company’s payments network infrastructure, invest in product development and add to Nium’s 700-person headcount.

Nium already counts hundreds of enterprise companies as clients and plans to onboard thousands more in the next year. The company processes $8 billion in payments annually and has issued more than 30 million virtual cards since 2015. Meanwhile, revenue grew by over 280% year over year.

All of this growth puts the company on a trajectory for an initial public offering, Nanu said. He has already spoken to people who will help the company formally kick off that journey in the first quarter of 2022.

“Unlike other companies that raise money for new products, we aim to expand in the existing sets of what we do,” Nanu said. “The U.S. is a new market, but we have a good brand and will use the new round to provide a better experience to the customer.”

 

#api, #arjun-sethi, #asia, #atinum-capital, #beacon-venture-capital, #dwolla, #enterprise, #funding, #gokul-rajaram, #mobile-payments, #nium, #online-payments, #payments, #paystand, #prajit-nanu, #recent-funding, #riverwood-capital, #singapore, #tc, #temasek, #venture-capital, #vertex-ventures, #visa

Checkout is the key to frictionless B2B e-commerce

The COVID-19 pandemic cemented e-commerce into everyone’s daily habits in 2020, and as we look ahead, B2B e-commerce is quickly becoming the next frontier for founders and investors.

Businesses have shifted online, and the emergence of B2B marketplaces and e-commerce infrastructure is fueling a new wave of growth that’s estimated to reach $3.6 trillion in annual gross merchandise value (GMV) by 2024.

But one major component remains missing from the stack: checkout, which has the opportunity to be the ultimate enabler for B2B e-commerce more broadly.

The challenge of B2B e-commerce

Historically, B2B e-commerce has been held back by deeply entrenched behaviors and a lack of cloud-based infrastructure. While the market is quickly evolving, there are nuances to B2B purchases that make the path to purchase more complex than in consumer e-commerce. Broadly speaking, these constraints fall into three buckets:

Payments: PayPal unlocked the early days of consumer e-commerce, and Stripe’s ease of integrating card payments has powered the last decade. But in B2B, the challenge has always been that sellers don’t want to pay a 3% surcharge — so much so that they’d rather suffer through the pain of physical checks and accounts payable. In 2018, 60% of B2B payment flows were conducted via checks, and the persistence of non-digital payments has been a major bottleneck to e-commerce.

Permissions: Most B2B transactions go through contracting and procurement, which requires multiple parties to sign off on each transaction. This creates friction in the path to purchase, as the seller can’t tell if the buyer is authorized. Rather than being able to hit buy, buyers often need to fill out a form so a sales person can get in touch. This can slow the transaction from seconds to weeks.

Credit: The majority of B2B transactions are completed on some form of credit, be it working capital loans, factoring, or in the form of days payable. Credit applications are typically completed on paper forms (or at best hosted PDFs) that armies of people at internal credit departments review. For context, there are over 1,000 employees at John Deere with “credit” in their job descriptions. This costs a lot and results in sensitive information being shared on paper documents, which further slows the transaction.

The net result of these constraints is the inability to make instant online purchases, like we’re used to as consumers. It’s a combination of fintech problems that require a platform rather than a series of point solutions.

Why is checkout the answer?

While the term “checkout” may not seem particularly novel, modern checkout is a distinctly new category in fintech combining digital payments, identity, fraud, credit and much more. It creates a powerful network, the type that can not only build trust but enable one-click transactions at scale.

#api, #column, #e-commerce, #ec-column, #ec-fintech, #ecommerce, #finance, #financial-services, #klarna, #online-payments, #payments, #payments-infrastructure, #rapyd, #resolve, #rho, #tillit

WhenThen’s no-code payments platform attracts $6M from European VCs Stride and Cavalry

The payments space – amazingly – remains up for grabs for startups. Yes dear reader, despite the success of Stripe, there seems to be a new payments startup virtually every other day. It’s a mess out there! The accelerated growth of e-commerce due to the pandemic means payments are now a booming space. And here comes another one, with a twist.

WhenThen has built a no-code payment operations platform that, they claim, streamlines the payment processes “of merchants of any kind”.  It says its platform can autonomously orchestrate, monitor, improve and manage all customer payments and payments ops.

The startup’s opportunity has arisen because service providers across different verticals increasingly want to get into open banking and provide their own payment solutions and financial services.

Founded 6 months ago, WhenThen has now raised $6 million, backed by European VCs Stride and Cavalry.

The founders, Kirk Donohoe, Eamon Doyle and Dave Brown  are three former Mastercard Payment veterans.

Based “out of Dublin, CEO Donohoe told me: “We see traditional businesses embracing e-comm, and e-comm merchants now operating multiple business models such as trade supply, marketplace, subscription, and more. There is no platform that makes it easy for such businesses to create and operate multiple payment flows to support multiple business models in one place – that’s where we step in.”

He added: “WhenThen is helping ecommerce digital platforms build advanced payment flows and payment automation, in minutes as opposed to months. When you start to integrate different payment methods, different payment gateways, how you want the payment to move from collection through to payout gets very, very complex. I’ve been doing this for over a decade now, as an entrepreneur building different businesses that had to accept collect and pay payments.”

He said his founding team “had to build very complex payment flows for large merchants, airlines, hotels, issuers, and we just found it was ridiculous that you have to continue to do the same thing over and over again. So we decided to come up with WhenThen as a better way to be able to help you build those flows in minutes.”

Claude Ritter, managing partner at Cavalry said: “Basic payment orchestration platforms have been around for some time, focusing mostly on maximizing payment acceptance by optimizing routing. WhenThen provides the first end-to-end payment flow platform to equip businesses with the opportunity to control every stage of the payment flow from payment intent to payout.”

WhenThen supports a wide range of popular payment providers such as Stripe, Braintree, Adyen, Authorize.net, Checkout.com, etc., and a variety of alternative and locally preferred payment methods such as Klarna Affirm, PayPal, BitPay.

“For brave merchants considering global reach and operating multiple business models concurrently, I believe choosing the right payment ops platform will become as important as choosing the right e-commerce platform. Building your entire ecomm experience tightly coupled to a single payment processor is a hard correction to make down the line – you need a payment flow platform like WhenThen,” added Fred Destin, founder of Stride.VC.

#adyen, #authorize-net, #bitpay, #ceo, #checkout-com, #dublin, #e-commerce, #entrepreneur, #europe, #finance, #financial-services, #fred-destin, #klarna, #managing-partner, #mastercard, #merchant-services, #mobile-payments, #money, #online-payments, #open-banking, #payment-gateway, #payment-processor, #payment-solutions, #paypal, #stripe, #tc

Venmo removes its global, public feed in a significant app redesign

PayPal-owned payments app Venmo will no longer offer a public, global feed of users’ transactions, as part of a significant redesign focused on expanding the app’s privacy controls and better highlighting some of Venmo’s newer features. The company says it will instead only show users their “friends feed” — meaning, the app’s social feed where you can see just your friends’ transactions.

Venmo has struggled over the years to balance its desire to add a social element to its peer-to-peer payments-based network, with the need to offer users their privacy.

A few years ago, the company was forced to settle a complaint with the FTC over its handling of privacy disclosures in the app along with other issues related to the security and privacy of user transactions. One of the concerns at the time was a setting that made all transactions public by default — a feature the FTC said wasn’t being properly explained to customers. As part of the settlement, Venmo had to inform both new and existing users how to limit the visibility of their transactions, among other changes.

However, privacy issues have continued to follow Venmo over the years. More recently, BuzzFeed News was able to track down President Biden’s secret Venmo account because of the lack of privacy around Venmo friend lists, for example. Afterwards, the company rolled out friend list privacy controls to address the issue.

Image Credits: Venmo

In the newly updated app, Venmo will still highlight this friend list privacy setting so users can choose whether or not they want to have their profile appear on other people’s friends’ lists. Users will also still be able to remove or add contacts from their friend list at any time, block people, and set their transaction privacy either as they post or retroactively to public, private, or friends-only. It’s unclear what advantage posting publicly has though, as the global, public feed is gone. Instead, public transactions would be visible to a users’ non-friends only when someone visited their profile directly.

In addition to the privacy changes, Venmo’s redesign aims to make it easier for people to discover the app’s new features, the company says.

Now, a new bottom navigation option will allow users to toggle between their social feed, Venmo’s products like the Venmo Card and crypto, and their personal profile. The newly elevated “Cards” section will allow Venmo Credit and Debit cardholders to manage their cards and access their rewards and offers, as before. Meanwhile, the “Crypto” tab will let users learn and explore the world of crypto, view real-time trends, and buy, sell or hold different types of cryptocurrencies.

Image Credits: Venmo

Venmo first added support for crypto earlier this year, following parent company PayPal’s move to do the same, and now offers access to Bitcoin, Ethereum, Litecoin and Bitcoin Cash. Before, the option appeared as a small button next to the “Pay or Request” button at the bottom of the screen, which contributed to Venmo’s cluttered feel.

The updated app will also include support for new payment types and expanded purchase protections, which Venmo announced last month, and said would arrive on July 20. Customers will now be able to indicate if their purchase is for “goods and services” when they transact with a seller, which will make the transactions eligible for Venmo’s purchase protection plan — even if the seller doesn’t have a proper “business” account.

Because this now charges sellers a 1.9% plus 10-cent fee, there had been some backlash from users who either misunderstood the changes or just didn’t like them. But the move could help to boost Venmo revenue.

PayPal said in February that Venmo grew users 32% over 2020 to reach 70 million active accounts and expects the app to generate nearly $900 million in revenue this year — likely in part thanks to this and other new initiatives, like its crypto transaction fees.

Image Credits: Venmo

Beyond the more functional changes and the privacy updates, Venmo’s redesign also modernizes the look-and-feel of the app itself, which had become a little dated and overly busy. As Venmo had expanded its array of services, the hamburger (three line) menu in the top right of the old version of the app had turned into a long list of options and settings. Now that’s gone. The app uses new iconography, an updated font, and lots of white space to make it feel fresh and clean.

The app’s changes also somewhat de-emphasize the importance of the social feed itself. Although it may still default to that tab, other options now have equal footing with tabs of their own, instead of being hidden away in a menu or in a smaller button.

Venmo says the redesigned Venmo app will begin to roll out today to select customers and will be available to all users across the U.S. over the next few weeks.

#apps, #biden, #buzzfeed, #cryptocurrencies, #federal-trade-commission, #finance, #mobile-payments, #online-payments, #paypal, #peer-to-peer, #president, #united-states, #venmo

Play2Pay raises $13M to convert mobile user engagement into bill payment

The gamification of payments is not a new concept.

A number of companies are attempting to combine gamification and payments in creative ways. And today, one such company, Play2Pay, has raised $13 million in a Series A round of funding.

The Fort Lauderdale, Florida-based startup has a straightforward mission. It wants to give consumers a way to reduce their bills — it claims by an average of 30%! — by playing games, watching videos and completing daily challenges, offers and surveys.

Play2Pay was bootstrapped for the first five years of its life, raising its first external capital in June of 2020 — a $7.5 million seed round from individual angel investors. Telesoft Partners led its Series A round, which included participation from Harbor Spring Capital and individual investors including former AT&T vice chairman Ralph de la Vega, former Reuters CEO Tom Glocer, Madison Dearborn Partners co-founder and senior advisor Jim Perry and Virtusa founder and former CEO, Kris Canekeratne.

The alternative payment platform says it brokers a “value exchange” between brands and consumers, converting attention and engagement into a currency, which can be redeemed for bill payment. Meanwhile, brands get a new way to promote their products and services.

Play2Pay founder and CEO Brian Boroff started the company in 2015 based on a vision that prepaid mobile phone users should have an alternative way to pay for their mobile phone service and that wireless carriers would adopt an ad-funded commercial model.

Today, the company claims to be positioned to be the world’s first “ad supported payment rail” directly integrated into payments platforms of major service providers and financial institutions. It also claims to be the only company that converts user engagement directly into bill payment.

Image Credits: Play2Pay

The “opt-in” offering is currently available to more than 100 million mobile subscribers across the United States, United Kingdom, Mexico, Brazil and Indonesia through partnerships with telecom companies such as AT&T Mexico, Cricket in the U.S., TIM in Brazil, lndosat Ooredoo in Indonesia and U.K.-based Lycamobile.

The rewarding approach seems to be resonating with users. From June 2020 to June 2021, the startup saw its ARR (annual recurring revenue) spike by nearly 300%, according to Boroff, a telecom veteran.

Among the users engaged on the platform, about 25% generated revenue daily, he said. And service providers realized up to 17% revenue expansion as a result of subscriber engagement on the Play2Pay platform, according to Boroff.

“Our distribution model is B2B2C, with Tier-1 service providers worldwide directly integrating our bill payment capability. We’re growing our audience through promotion of the service to their customer base,” he told TechCrunch. 

End users, he added, can share their targeting preferences in exchange for value, giving mobile app developers and brands more information when promoting their own products and services to Play2Pay’s audience.

The platform is free for service providers and merchants, meaning the payment does not have costs or fees from interchange, acquirers, chargebacks or gateways.

Instead, Play2Pay generates revenue from mobile app developers and brands. Those developers and brands pay to access Play2Pay’s mobile audience in order to promote their products and services. For example, a mobile gaming company might pay Play2Pay $100 for every user that downloads their app from the Play2Pay app and plays the game for a period of time (such as two hours). Through its technology and partner network, Play2Pay has attribution tracking to ensure that the end user and mobile gaming company both know how much progress has been made toward completing that goal. Other formats include watching videos, completing surveys and more conventional native advertising in some areas.

All of this revenue is aggregated by Play2Pay, the majority of which is passed on to the end user in the form of in-app currency. The balance goes to service providers such as its wireless carrier partners for promoting the Play2Pay platform and to Play2Pay for running the service and processing payment. Play2Pay collects all of the cash and pays out the various parties accordingly.
The company will use the new capital toward product development, hiring and partner engagement.

#brazil, #finance, #fintech, #florida, #funding, #fundings-exits, #gamification, #gaming, #indonesia, #mexico, #money, #online-payments, #payments, #play2pay, #recent-funding, #startups, #telesoft-partners, #united-states, #venture-capital

Messenger adds Venmo-like QR codes for person-to-person payments in the U.S.

This spring, Facebook confirmed it was testing Venmo-like QR codes for person-to-person payments inside its app in the U.S. Today, the company announced those codes are now launching publicly to all U.S. users, allowing anyone to send or request money through Facebook Pay — even if they’re not Facebook friends.

The QR codes work similarly to those found in other payment apps, like Venmo.

The feature can be found under the “Facebook Pay” section in Messenger’s settings, accessed by tapping on your profile icon at the top left of the screen. Here, you’ll be presented with your personalized QR code which looks much like a regular QR code except that it features your profile icon in the middle.

Underneath, you’ll be shown your personal Facebook Pay UR which is in the format of “https://m.me/pay/UserName.” This can also be copied and sent to other users when you’re requesting a payment.

Facebook notes that the codes will work between any U.S. Messenger users, and won’t require a separate payment app or any sort of contact entry or upload process to get started.

Users who want to be able to send and receive money in Messenger have to be at least 18 years old, and will have to have a Visa or Mastercard debit card, a PayPal account or one of the supported prepaid cards or government-issued cards, in order to use the payments feature. They’ll also need to set their preferred currency to U.S. dollars in the app.

After setup is complete, you can choose which payment method you want as your default and optionally protect payments behind a PIN code of your choosing.

The QR code is also available from the Facebook Pay section of the main Facebook app, in a carousel at the top of the screen.

Facebook Pay first launched in November 2019, as a way to establish a payment system that extends across the company’s apps for not just person-to-person payments, but also other features, like donations, Stars, and e-commerce, among other things. Though the QR codes take cues from Venmo and others, the service as it stands today is not necessarily a rival to payment apps because Facebook partners with PayPal as one of the supported payment methods.

However, although the payments experience is separate from Facebook’s cryptocurrency walletNovi, that’s something that could perhaps change in the future.

Image Credits: Facebook

The feature was introduced alongside a few other Messenger updates, including a new Quick Reply bar that makes it easier to respond to a photo or video without having to return to the main chat thread. Facebook also added new chat themes including one for Olivia Rodrigo fans, another for World Oceans Day, and one that promotes the new F9 movie.

 

#apps, #cryptocurrencies, #e-commerce, #facebook, #facebook-messenger, #finance, #messenger, #mobile, #mobile-payments, #online-payments, #paypal, #qr-code, #social-media, #software, #technology, #united-states, #venmo

Jeeves emerges from stealth with $131M in debt and equity and a16z as a lead investor

Jeeves, which is building an “all-in-one expense management platform” for global startups, is emerging from stealth today with $131 million in total funding, including $31 million in equity and $100 million in debt financing. 

The $31 million in equity consists of a new $26 million Series A and a previously unannounced $5 million seed round.

Andreessen Horowitz (a16z) led the Series A funding, which also included participation from YC Continuity Fund, Jaguar Ventures, Urban Innovation Fund, Uncorrelated Ventures, Clocktower Ventures, Stanford University, 9 Yards Capital and BlockFi Ventures.

A high-profile group of angel investors also put money in the round, including NFL wide receiver Larry Fitzgerald and the founders of five LatAm unicorns — Nubank CEO David Velez, Kavak CEO Carlos Garcia, Rappi co-founder Sebastian Mejia, Bitso CEO Daniel Vogel and Loft CEO Florian Hagenbuch. Justo’s Ricardo Weder also participated in this round and Plaid co-founder William Hockey put money in the $5 million seed funding that closed in 2020 after the company completed the YC Summer 2020 batch.

The “fully remote” Jeeves describes itself as the first “cross country, cross currency” expense management platform. The startup’s offering is currently live in Mexico — its largest market — as well as Colombia, Canada and the U.S., and is currently beta testing in Brazil and Chile. 

Dileep Thazhmon and Sherwin Gandhi founded Jeeves last year under the premise that startups have traditionally had to rely on financial infrastructure that is local and country-specific. For example, a company with employees in Mexico and Colombia would require multiple vendors to cover its finance function in each country — a corporate card in Mexico and one in Colombia and another vendor for cross-border payments.

Image Credits: Left to right: Jeeves co-founders Dileep Thazhmon and Sherwin Gandhi

Jeeves claims that by using its platform, any company can spin up their finance function “in minutes” and get access to 30 days of credit on a true corporate card, noncard payment rails, as well as cross-border payments. Customers can also pay back in multiple currencies, reducing FX (foreign transaction) fees.

“We’re building an all-in-one expense management platform for startups in LatAm and global markets — cash, corporate cards, cross-border — all run on our own infrastructure,” Thazhmon said. 

“We’re really building two things — an infrastructure layer that sits across banking institutions in different countries. And then on top of that, we’re building the customer-, or end user-facing app,” he added. “What gives us the ability to launch in countries much quicker is that we own part of that stack ourselves, versus what most fintechs would do, which is plug into a third-party provider in that region.” 

Image Credits: Jeeves

Indeed, the company has seen rapid early growth. Since launching its private beta last October, Jeeves says it has grown its transaction volume (GTV) by 200x and increased revenue by 900% (albeit from a small base). In May alone, Jeeves says it processed more transaction volume than the entire year to date, and more than doubled its customer base. It says that “hundreds of companies,” including Bitso, Belvo, Justo, Runa, Worky, Zinboe, RobinFood and Muncher, “actively” use Jeeves to manage their local and international spend. On top of that, it says, the startup has a waitlist of more than 5,000 companies — which is part of why the company sought to raise debt and equity.

The shift to remote work globally due to the COVID-19 pandemic has played a large role in why Jeeves has seen so much demand, according to Thazhmon.

“Every company is now becoming a global company, and the service to employees in two different countries requires two different systems,” he said. “And then someone’s got to reconcile that system at the end of the month. This has been a big reason why we’re growing so fast.”

One of Jeeves’ biggest accomplishments so far, Thazhmon said, has been receiving approval to issue cards from its own credit BIN (bank identification number) in Mexico. It can also run SPEI payments directly on its infrastructure. (SPEI is a system developed and operated by Banco de México that allows the general public to make electronic payments.)

“This gives us a lot of flexibility and allows us to offer a truly unique product to our customers,” said Thazhmon, who previously co-founded PowerInbox, a
Battery Ventures-backed MarTech company that he says grew to $40 million in annual revenue in three years.

Jeeves says it will use the fresh capital to onboard new companies to the platform from its waitlist, scale its infrastructure to cover more countries and currencies as well as do some hiring and expand its product line.

A16z General Partner Angela Strange, who is joining Jeeves’ board as part of the investment, is extremely bullish on the startup’s potential.

Strange says she met Thazhmon about a year ago and was immediately intrigued.

“Not only were they working to provide the financial operating system within a country, starting in Mexico, they were designing their software platform to scale across multiple countries,” she said. “Finally — a multicountry/currency expense management & payouts platform, where increasingly companies have employees and operations in multiple countries from the start and can use a single company to manage their financials.”

Strange, who has been investing in Latin America for the past few years, notes that most companies in the region are unable to get a corporate credit card.

“That’s only the tip of the iceberg,” she told TechCrunch. “It’s cumbersome for companies to make bank to bank payouts, handle wires, and they usually also have expenses in the U.S. (and often other countries) so there is also FX. And they manage multiple bank accounts. Not only is paying hard, reconciliation on the backend takes weeks.”

As such, Strange said, with every country having their own bank transfer system, rules around who can issue a credit card, approved payment processors, currencies and bank accounts — payments and expense management across countries can be complex.

Jeeves, according to Strange, “gets as close to the networks/payment rails as possible” since it has its own issuing credit BIN versus needing to connect through legacy players.

Providing an orchestration layer on top of all the rails gives Jeeves the ability “to handle all the payment and reconciliation complexity” so “their customers don’t have to think about it,” she added.

 

#a16z, #andreessen-horowitz, #andressen-horowitz, #angela-strange, #apps, #bank, #banking, #bitso, #brazil, #canada, #chile, #clocktower-ventures, #colombia, #credit-card, #daniel-vogel, #david-velez, #expense-management, #finance, #financial-infrastructure, #financial-services, #funding, #fundings-exits, #jaguar-ventures, #jeeves, #latin-america, #mexico, #money, #national-football-league, #nfl, #nubank, #online-payments, #operating-system, #payment-card, #payments, #profile, #rappi, #recent-funding, #runa, #software-platform, #stanford-university, #startup, #startups, #tc, #uncorrelated-ventures, #united-states, #urban-innovation-fund, #venture-capital, #william-hockey

Privacy.com rebrands to Lithic, raises $43M for virtual payment cards

When Privacy.com was founded in 2014, the company’s focus was to let anyone generate virtual and disposable payment card numbers for free.

The goal was to allow those users to keep users’ actual credit card numbers safe while allowing the option to cut off companies from their bank accounts. In an age of near-constant data breaches and credit card skimmers targeting unsuspecting websites, Privacy.com has made it harder for hackers to get anyone’s real credit card details.

The concept has appealed to many. At the time of its $10.2 million Series A last July, Privacy.com said it had issued 5 million virtual card numbers. Today, that number has more than doubled, to over 10 million, according to CEO and co-founder Bo Jiang.

“We set out to create the safest and fastest way to pay online. Our mobile app and web browser extension lets you generate a virtual card for every purchase you want to make online,” Jiang explained. “That can be especially convenient for things like managing subscriptions or making sure your kid doesn’t spend $1,000 on Fortnite skins.”

Over the years, the New York-based company realized the value in the technology it had developed to issue the virtual and disposable payment cards. So after beta testing for a year, Privacy.com launched its new Card Issuing API in 2020 to give corporate customers the ability to create payment cards for their customers, optimize back-office operations or simplify disbursements.

The early growth of the new card issuing platform, dubbed Lithic, has prompted the startup to shift its business strategy — and rebrand.

In the process of building out its consumer product, Privacy.com ended up building a lot of infrastructure around programmatically creating cards.

“If you think about the anatomy of credit/debit card transactions there’s a number of modern processors such as Stripe, Adyen, Braintree and Checkout,” Jiang told TechCrunch. “On the flip side, we’re focused on card creation and issuing, and the APIs for actually creating cards. That side has lagged the card acquiring side by five to seven years…We’ve built a lot to support card creation for ourselves, and realized tons of other developers need this to create cards.”

As part of its new strategy, Privacy.com announced today that it has changed its name to Lithic and raised $43 million in Series B funding led by Bessemer Venture Partners to double down on its card issuing platform and new B2B focus. Index Ventures, Tusk Venture Partners, Rainfall Ventures, Teamworthy Ventures and Walkabout Ventures also participated in the financing, which brings Lithic’s total raised to date to $61 million.

Image Credits: Lithic CEO and co-founder Bo Jiang / Lithic

Privacy.com, the company’s consumer product, will continue to operate as a separate brand powered by the Lithic card issuing platform.

Put simply, Lithic was designed to make it simple for developers to programmatically create virtual and physical payment cards. Jiang is encouraged by the platform’s early success, noting that enterprise issuing volumes tripled in the last four months. It competes with the likes of larger fintech players such as Marqeta and Galileo, although Jiang notes that Lithic’s target customer is more of an early-stage startup than a large, established company.

“Marqeta, for example, goes after enterprise and is less focused on developers and making their infrastructure accessible. And, Galileo too,” he told TechCrunch. “When you compare us to them, because we’re a younger company, we have the benefit of building a much more modern infrastructure. That allows us to bring costs down but also to be more nimble to the needs of startups.”

The benefits touted by Lithic’s “self-serve” platform include being able to “instantly” issue a card and “accessible building blocks,” or what the company describes as focused functionality so developers can include only the features they want.

Another benefit? An opportunity for a new revenue stream. Developers earn back a percentage of interchange revenue generated by the merchant, according to Lithic. “What we’ve noticed is a lot of folks have really big ambitions to build more of a stack in-house. We offer a path for folks by bringing more of a payments piece of the world that they can build for scale,” he said. “As a result of all these things, we end up not competing head to head with Marqeta, for example, on a ton of deals.”

The company charges a fee per card for Lithic API customers (it’s free for Privacy.com). And it makes money on interchange fees with both offerings.

For Charles Birnbaum, partner at Bessemer Venture Partners, the shift from B2C to B2B is a smart strategy. He believes Lithic is building a critical piece of the embedded fintech and payments infrastructure stack.

“We have been big fans of the Privacy.com team and product since the beginning, but once we started to see such strong organic growth across the fintech landscape for their new card processing developer platform the past year, we just had to find a way to partner with the team for this next phase of growth,” he said.

Index Ventures partner Mark Goldberg notes that as every business becomes a fintech, there’s been an “explosion” in demand for online payments and card issuance.

“Lithic has stood out to us as being the developer-friendly solution here — it’s fast, powerful and insanely easy to get up-and-running,” he said. “We’ve heard from customers that Lithic can power a launch in the same amount of time it takes an incumbent issuer to return a phone call.”

Lithic plans to use its new capital to expand the tools and tech it offers to developers to issue and manage virtual cards as well as enhance its Privacy.com offering.

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WalletsClub wants to be the ‘Visa for e-wallets’ across the world

Digital payments are going mainstream around the world. By the end of 2020, there were more than 300 mobile money providers with over 100,000 active users, according to a report published by GSMA, an industry association for mobile network operators. Altogether, over 300 million mobile money accounts were active every month around the world.

Mobile money providers — more commonly known as e-wallets — are used to transfer money, pay and receive payments through mobile phones without the need for a traditional bank. They are useful so long as they enjoy wide adoption and a strong network effect. But even a popular service like Ant Groups’s Alipay, which has over one billion annual users, is practically unusable outside China due to its low penetration in most countries.

The problem is there is no interoperability between most wallets as there is between traditional banks, suggested Xue Zhixiang, who worked on the basic infrastructure for Alibaba’s cloud unit and Alipay before starting WalletsClub.

Registered in Hong Kong in 2019 with a small operational team in mainland China, WalletsClub sets its sights on becoming the Visa for digital wallets, making money transfers possible between the world’s hundreds of electronic money services.

“We are like a clearinghouse for digital wallets,” said Xue, the company’s CEO.

A clearing system is an intermediary for two parties engaged in a financial transaction. It’s designed to ensure the efficiency and security of a transfer by validating the availability of the funds and logging the transfer between two transacting parties. Payments can be sent and received in real-time using WalletsClub, Xue claimed, and its technology is based on the “ISO 20022” standard, a common language for financial institutions to exchange data across the globe.

In other words, WalletsClub is going after the hundreds of e-wallets around the world rather than individual end-users. Its vision is to let people pay with any mobile wallet anywhere as long as the sender’s service provider or financial institution and the receiver’s equivalent services are members of WalletsClub, similar to how Visa and Mastercard process credit cards issued by different banks that are in their networks. The company plans to monetize by charging a flat fee per transaction.

By adding interoperability to electronic wallets, even small, regional players can thrive because they gain compatibility wherever a clearing system is in place.

Instead of challenging the traditional financial system, WalletsClub wants to provide a way for unbanked individuals to easily move money around through digital wallets, which are easier to obtain than a bank account. A big demand will come from overseas migrant workers who need to send money back to their home countries, such as the millions of Southeast Asian workers abroad.

WalletsClub is potentially encroaching on the territory of a few players. Expatriate workers sending money home currently revert to longstanding remittance services like Western Union or MoneyGram, which have large networks of “agent” locations where users go send or collect money. In 2018, Alipay began allowing users in Hong Kong to send money to GCash accounts in the Philippines, but “the focus of Ant Group is payments rather than remittance,” Xue observed.

In 2019, money sent home from diaspora workers became the largest source of external financing in low- and middle-income countries excluding China, according to World Bank data. The money flows amounted to over $500 billion and surpassed the levels of foreign direct investment in these regions.

The other type of business that a clearinghouse for mobile wallets could threaten is cross-border payment aggregators, which save merchants from having to integrate with various digital payment methods.

The biggest challenge for the nascent startup is to establish trust with clients. At this stage, WalletsClub in talks with electronic money services founded by Chinese entrepreneurs in Hong Kong, Singapore and Canada. Chinese-made wallets are especially plentiful in emerging markets, thanks to these founders’ learning from China’s fintech boom over the decade. Many of them found it hard to compete with behemoths like Tencent and Ant, let alone