From crypto startups raising millions despite Elon Musk pulling out of the bitcoin frenzy to subscription-based firms capitalising on the Covid-19 crisis, this is what you can learn from the 40 FinTech funding rounds of last week.
FinTech, RegTech and PayTech companies continue to make waves and the 40 ventures in the sector that topped up their coffers last week prove that.
However, even though FinTech Global reported on a smattering of investment rounds in everything from neobanks and FinTechs for gaming companies to cybersecurity and buy now pay later businesses last week, two segments of the industry that stood out were cryptocurrency enterprises and subscription payment firms.
Before delving into the leading subsectors, let’s look at the top rounds from last week. Subscription management software for e-commerce ReCharge earned the horn after raising $227m in a Series B growth round at a $2.1bn valuation led by Summit Partners, ICONIQ Growth and Bain Capital Ventures. The SaaS platform has evolved from a subscription billing/payments platform to include a broader set of offerings aimed at helping e-commerce businesses boost revenues and cut operating costs.
Boasting 15,000 customers and 20 million subscribers across 180 countries on its platform, the firm counts Harry’s, Oatly, Fiji Water, Billie and Native among its clients. Since its 2014 inception, the firm has doubled its processing volume each year for the past five years and has processed over $5.3bn in transactions. This is testament that subscription-based models are indeed becoming more popular leading to a corresponding increase in the necessity for subscription billing management platforms – moreso after the ongoing Covid-19 pandemic. The subscription and billing management market was valued at $3.8bn in 2018 and is expected to reach $10.5bn by 2025, according to Zion Market Research.
ReCharge is hardly alone in catching investor’s attention. More recently in April this year, Chargebee nabbed $125m giving it the unicorn status. Firms such as Zuora, Recurly, Chargify, Spreedly, Vindicia and Braintree have continued to scale up.
Moving on to the second largest round, crypto firm Bitso bagged the unicorn status after a massive $250m round. Despite the volatility and uncertainty surrounding digital assets, the cryptocurrency market cap stood at around $2.43tn, according to data from Coinmarketcap.com, proving that Tesla CEO Elon Musk’s tweets will not dampen the industry just yet.
Other crypto-based startups which banked considerable rounds last week included Bitpanda which topped its Series B, Babel Finance and Hashdex. Apart from getting funding, companies are also launching crypto-focused services as the industry continues to go from strength to strength. US blockchain software company Block.one invested $10bn into its new cryptocurrency exchange subsidiary Bullish Global, a new blockchain-based cryptocurrency exchange for automated market making, lending and portfolio management tools. To add on, cryptocurrency wallet and payment platform Zumo partnered with Visa to launch a crypto-friendly virtual card.
Furthermore, as more investors pump in money towards digital currencies, a slew of companies are integrating crypto payments into their offering. For instance, Revolut introduced new features for users which enable them to transfer funds from Bitcoin holdings to their own digital wallets.
Apart from corporates embracing the digital coin, governments too are looking into the potential benefits of crypto. Last week, the Bank of Israel has opened a public consultation on the potential issuance of a digital shekel. This comes after the UK Chancellor of the Exchequer Rishi Sunak told the Bank of England to look at the case for a potential ‘Britcoin’ or central-bank-backed digital currency.
Despite the rise in the sector, it is important to recognise that everything is not just hunky-dory among cryptocurrency startups. NatWest blocked crypto payments after FCA’s warning to cryptocurrency customers that bitcoin and other digital assets are risky investments proving that regulators still remain apprehensive.
However, the robust competition and continued investor interest in cryptocurrency startups is a sign that there’s strong demand for the alternate payment means among enterprises.
Last week was also big for the InsurTech sector with Kin Insurance, Yuanbao, Artivatic, Sustema and Planck all grabbing the headlines last week for achieving cash injections.
The one to grab all the limelight, however, was Ethos. Not only did it foray into the billion-dollar company club and saw its users grow by more than 500% year-over-year, but the firm had an investor line-up including Jay-Z’s Roc Nation alongside other giants such as Sequoia Capital, Accel, GV – formerly Google Ventures, and General Catalyst. Considering the company’s previous rounds came from investment firms of Hollywood and sports celebrities like Will Smith’s Smith Family Circle, Robert Downey Jr.’s Downey Ventures and Kevin Durant’s Durant Company, it’s hardly surprising that the life insurance firm continues to get investor attention. Indeed, the startup might have 99 problems but capital ain’t one.
Queen B’s husband, Jay Z, wasn’t the only celeb to park his dosh in tech firms last week. No Strings Attached actor Ashton Kutcher’s Sound Ventures backed the all-in-one back-office platform for the creator community Collective in a $20m round. Expressing bullishness in the firm, the What Happens in Vegas actor said, “I would have loved something like this when I was getting started,” and that he is “proud to be supporting a company that’s making it easier for creators to focus on what they do best by taking care of the back office work that creates so much friction for so many early entrepreneurs.”
Ethos’ funding follows a trend of celebrities endorsing FinTech firms. Last week, we reported Wealthsimple’s colossal $610m round which scored investment from Life is Good singer Drake, Ryan Reynolds, Michael J. Fox, NBA players Kelly Olynyk and Dwight Powell and NHL all-star Patrick Marleau as well as LoanSnap banking it’s Series B from MANTIS Venture capital, the investment group founded by Grammy Award-winning pop duo, The Chainsmokers.
Clearly, nothing says star power like a FinTech startup.
With all that out of the way, let’s take a closer look at the rounds from last week.
ReCharge nets $277m at a valuation of $2.1bn
US-based subscription e-commerce platform ReCharge scored $277m through its Series B investment round, which was led by Summit Partners, ICONIQ Growth and Bain Capital Ventures.
Founded in 2014, ReCharge aims to be the leading provider of subscription management software for e-commerce. It allows brands to easily add subscription offerings to their business, ultimately turning one-time transactions into loyal, repeat customers. The newly turned unicorn has experienced exponential growth, doubling its processing volume each year for the past five years as well as a 91% subscriber growth in 2020. ReCharge has now processed more than $5.3bn in transactions and more than doubled annual recurring revenues from 2019 to 2020.
InsurTech Ethos banks $200m with support from Jay Z
InsurTech company Ethos has raised $200m in a Series D investment round, boosting its valuation to $2bn.
The latest funding round was led by General Catalyst with other investors including Sequoia Capital, Accel, Google’s GV and Jay-Z’s Roc Nation also participated, alongside Glade Brook Capital Partners. It has previously attracted Hollywood’s big stars to invest money.
Rather than selling permanent life insurance, Ethos bills itself as a more equitable insurance provider by only offering term life insurance, which policy-holders only have to pay for a fixed period of time.
Bitso earns the horn after a Tiger Global-led $250m round
Regulated crypto exchange in Latin America Bitso raised $250m in a Series C round of funding that values the company at $2.2bn, making it the most valuable crypto platform in Latin America.
Tiger Global and Coatue co-led the round, which also included participation from Paradigm, BOND & Valor Capital Group and existing backers QED, Pantera Capital and Kaszek. The latest funding comes just four months after the startup raised $62m in a Series B round. In 2020 alone it processed more than $1.2bn in international payments including remittances and payments between companies.
AI-based PayTech firm CloudWalk banks $190m
Brazil-based payment technology network CloudWalk raised $190m through its Series B funding round, which was led by Coatue with participation from DST Global, FIS, The Hive Brazil, and Valor Capital. The latest investment round brings CloudWalk’s total funding raised to $206m.
Founded in 2013, CloudWalk describes itself as a global payment network that was built on modern technology stalks and blockchain. The company is focused on disrupting the payments ecosystem for small-and-medium enterprise merchants and their customers.
Chinese InsurTech Yuanbao inks $156m
Yuanbao raised $156m in a Series C funding round that was led by Source Code Capital and included Cathay Capital and Hike Capital.
The InsurTech only launched last year and holds a national insurance brokerage license. It operates as a marketplace, selling coverage options from third-party insurers. It aims to use the fresh capital to fund the R&D of its core technologies and build smart insurance services.
Despite being in its early stages, Yuanbao has already onboarded millions of users with the help of its network of third-party insurers. Yuanbao has teamed up with domestic insurers including Huaxia Life Insurance, China Life Insurance, Sunshine Insurance, and People’s Insurance Company of China.
Forge Global hauls in $150m
San Francisco-based private securities marketplace Forge Global raised more than $150m in funding.
Backers included Deutsche Börse and new investors Temasek, Wells Fargo Strategic Capital, LUN Partners Group and others. The company received FINRA approval to operate as a single broker-dealer with SharesPost, which Forge merged with, in 2020. Since its inception, the company has completed more than $9B in transactions in nearly 400 private companies.
NetSPI reels in $90m in growth funding
Enterprise penetration testing and attack surface management provider NetSPI raised $90m in growth funding. The round was led by KKR, with participation from Ten Eleven Ventures.
The investment will be used to further accelerate NetSPI’s rapid growth by expanding the company’s cybersecurity and client experience teams, investing in product innovation and deepening operations across the US and international markets.
Arkose Labs nabs $70m to scale its fraud prevention platform
Cybersecurity firm Arkose Labs secured $70m in Series C funding led by SoftBank Vision Fund 2. Wells Fargo Strategic Capital, as well as previous investors in M12 and PayPal Ventures also participated in the fund.
The funding brought the firm’s total investment to date to $114m. The new funds will filter in part to research and development, building upon the Arkose model of undermining economic drivers behind fraud until attackers opt-out. The firm analysed more than 15 billion online sessions in 2020 and stopped 4.6 billion attacks it claimed.
Kin Insurance collects $63.9m
Home insurance startup Kin has raised $63.9m in a Series C round led by Senator Investment Group and Hudson Structured Capital Management.
This new funding follows the company’s $35m Series B from August last year and $47m round from 2019. Altogether, the company has raised over $116m in funding. Kin uses data and technology to offer coverage at a competitive price which is especially useful for homes that are older or in high-risk areas and hard to find coverage for.
Legion lands $55m
CA-based AI-powered workforce management company Legion raised $55m in Series C funding.
The round was led by Stripes with participation from existing investors Norwest Venture Partners, First Round Capital, XYZ Ventures, Webb Investment Network, and Dollar General. The company provides an automated, AI-powered workforce management platform to lower costs, reduce compliance risks and labour inefficiencies.
Lili scores $55m
NYC-based mobile banking service for freelancers in the US Lili raised $55m in Series B funding.
The round, which brings total funding to $80m, was led by Group 11, with participation from Target Global and AltaIR as well as previous investors. The company intends to use the funds to expand the platform with new features related to invoice and payment management, as well as to extend into credit products.
Cloud service provider Zenlayer wins $50m
CA-based global edge cloud service provider Zenlayer closed a $50m Series C financing.
The round was led by a group including Anatole Investment and Prospect Avenue Capital and included existing investor Volcanics Venture. These investors join F&G Venture, NSFOCUS, and Forebright Capital to bring Zenlayer’s total financing to $90m since inception. The company intends to use the funds to enhance its edge cloud technology and expand global network coverage.
Stampli gets $50m in funding
California-based AI-driven accounts payable automation company which enables CFOs and controllers to close the disconnect between accounts payables and the broader organisation Stampli raised $50m in Series C funding.
The round, which brought total funding raised to over $87m, was led by Insight Partners with participation from SignalFire and Nextworld Capital, which joined UpWest, Hillsven, Bloomberg and Naver Corp.
Stampli’s platform integrates with financial systems including NetSuite, Sage Intacct, QuickBooks, Microsoft Dynamics and SAP. The company processes over $20bn invoices annually, it claimed.
Crypto service provider Babel Finance raises $40m
Hong Kong-based global crypto financial service provider Babel Finance raised $40m in Series A funding.
The round was led by Zoo Capital, Sequoia Capital China, Dragonfly Capital, BAI Capital and Bertelsmann, and Tiger Global Management, with follow-on participation from existing investors. The company intends to use the funds to expand operations and its business reach.
Cybersecurity analytics startup VisibleRisk secures $25m
Cybersecurity startup VisibleRisk Inc. raised $25m in funding to drive the adoption of its newly launched software platform, which enables companies to evaluate if their breach prevention efforts are effective.
The financing was provided by Moody’s Corp. and Team8 Labs Ltd. New York-based VisibleRisk’s software platform helps enterprises assess how vulnerable they are to hacking campaigns.
Ashton Kutcher, YouTube, Substack founders back Collective’s $20m Series A
Collective, an all-in-one back-office platform designed to give self-employed people the technology, team and community they need to focus on their passion, secured $20m in Series A funding. General Catalyst led the round, joined by Ashton Kutcher’s Sound Ventures.
This round brought Collective’s total funding to $28.65m. Launched in September 2020 by CEO Hooman Radfar, CPO Ugur Kaner and CTO Bugra Akcay, the platform provides the underserved business-of-one community with tailored financial services to meet their specific needs and access to trusted advisors that oversee accounting, tax, bookkeeping and business formation needs.
Bill Gates and Jeff Bezos’ venture fund back Brazilian neobank Divibank
Brazil-based financing platform where LatAm businesses have access to growth capital via revenue-share financing Divibank closed a $3.6m seed funding round.
The round was led by Better Tomorrow Ventures with participation from Maya Capital, Village Global, Clocktower Ventures, Magma Partners, Gilgamesh Ventures, Rally Cap Ventures and Alumni Ventures Group as well as a slew of angel investors.
Divibank is a data-driven financing platform where businesses have access to capital to finance their growth via revenue-share/non-dilutive financing.
FinTech for gaming firms Sanlo reels in $3.5m
Sanlo, which builds financial products for gaming and app companies, scored $3.5m in funding.
The over-subscribed round was co-led by Index Ventures and Initial Capital, with participation also coming from LVP, Portag3 Ventures and XYZ Venture Capital. A number of angel investors also joined the round, including Kristian Segestrale, Gokul Rajaram and Charley Ma. Capital from the round will be used to grow its team and further the development of its product suite to prepare for its wider launch later this year.
Cryptosense collects $4.8m to reduce data breaches for corporates
Cryptography lifecycle management platform Cryptosense raised $4.8m in a funding round led by Amadeus Capital Partners with participation from BGV and Elaia Partners.
The funds will be used to hire senior-level staff across the product and engineering teams, develop the company’s partner program and further expand the company’s operations across the US.
Cryptosense provides deep visibility and actionable insights that enable security professionals to protect against data breaches and ensure they remain compliant with the regulations in their industry.
Monzo co-founders back Fronted in £1m fundraise
Rental deposit lending business Fronted raised over £1m in a debt and equity deal, increasing their total funding amount to £2m.
Two notable round participants included co-founders of Monzo, Paul Rippon and Gary Dolman. Other distinguished investors included Baroness Kingsmill–former chairperson at Monzo, Ville Vesterinen and Ling Lin.
The money raised will enable Fronted to grow its deposit loan business as well as establish strategic partnerships for the renter-focussed lender.
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