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Airwallex raises $200M at a $4B valuation to double down on business banking
Business, now more than ever before, is going digital, and today a startup that’s building a vertically integrated solution to meet business banking needs is announcing a big round of funding to tap into the opportunity. Airwallex — which provides business banking services directly to businesses themselves as well as via a set of APIs that power other companies’ fintech products — has raised $200 million, a Series E round of funding that values the Australian startup at $4 billion.
Lone Pine Capital is leading the round, with new backers G Squared and Vetamer Capital Management, and previous backers 1835i Ventures (formerly ANZi), DST Global, Salesforce Ventures and Sequoia Capital China also participating.
The funding brings the total raised by Airwallex — which has head offices in Hong Kong and Melbourne, Australia — to $700 million, including a $100 million injection that closed out its Series D just six months ago.
Airwallex will be using the funding both to continue investing in its product and technology as well as to continue its geographical expansion and to focus on some larger business targets. The company has started to make some headway into Europe and the U.K. and that will be one big focus, along with the U.S.
The quick succession of funding and rising valuation underscore Airwallex’s traction to date around what CEO and co-founder Jack Zhang describes as a vertically integrated strategy.
That involves two parts. First, Airwallex has built all the infrastructure for the business banking services that it provides directly to businesses with a focus on small and medium enterprise customers. Second, it has packaged up that infrastructure into a set of APIs that a variety of other companies use to provide financial services directly to their customers without needing to build those services themselves — the so-called “embedded finance” approach.
“We want to own the whole ecosystem,” Zhang said to me. “We want to be like the Apple of business finance.”
That seems to be working out so far for Airwallex. Revenues were up almost 150% for the first half of 2021 compared to a year before, with the company processing more than US$20 billion for a global client portfolio that has quadrupled in size. In addition to tens of thousands of SMEs, it also, via APIs, powers financial services for other companies like GOAT, Papaya Global and Stake.
Airwallex got its start like many of the strongest startups do: It was built to solve a problem that the founders encountered themselves. In the case of Airwallex, Zhang tells me he had actually been working on a previous startup idea. He wanted to build the “Blue Bottle Coffee” of Asia Pacific out of Australia, and it involved buying and importing a lot of different materials, packaging and, of course, coffee from all around the world.
“We found that making payments as a small business was slow and expensive,” he said, since it involved banks in different countries and different banking systems, manual efforts to transfer money between them and many days to clear the payments. “But that was also my background — payments and trading — and so I decided that it was a much more fascinating problem for me to work on and resolve.”
Eventually one of his co-founders in the coffee effort came along, with the four co-founders of Airwallex ultimately including Zhang, along with Xijing Dai, Lucy Liu and Max Li.
It was 2014, and Airwallex got attention from VCs early on in part for being in the right place at the right time. A wave of startups building financial services for SMBs were definitely gaining ground in North America and Europe, filling a long-neglected hole in the technology universe, but there was almost nothing of the sort in the Asia Pacific region, and in those earlier days solutions were highly regionalized.
From there it was a no-brainer that starting with cross-border payments, the first thing Airwallex tackled, would soon grow into a wider suite of banking services involving payments and other cross-border banking services.
“In the last six years, we’ve built more than 50 bank integrations and now offer payments across 95 countries, payments through a partner network,” he added, with 43 of those offering real-time transactions. From that, it moved on to bank accounts and “other primitive stuff” with card issuance and more, he said, eventually building an end-to-end payment stack.
Airwallex has tens of thousands of customers using its financial services directly, and they make up about 40% of its revenues today. The rest is the interesting turn the company decided to take to expand its business.
Airwallex had built all of its technology from the ground up itself, and it found that — given the wave of new companies looking for more ways to engage customers and become their one-stop shop — there was an opportunity to package that tech up in a set of APIs and sell that on to a different set of customers, those who also provided services for small businesses. That part of the business now accounts for 60% of Airwallex’s business, Zhang said, and is growing faster in terms of revenues. (The SMB business is growing faster in terms of customers, he said.)
A lot of embedded finance startups that base their business around building tech to power other businesses tend to stay at arm’s length from offering financial services directly to consumers. The explanation I have heard is that they do not wish to compete against their customers. Zhang said that Airwallex takes a different approach, by being selective about the customers they partner with, so that the financial services they offer would not be in direct competition with those of its customers. The GOAT marketplace for sneakers, or Papaya Global’s HR platform are classic examples of this.
However, as Airwallex continues to grow, you can’t help but wonder whether one of those partners might like to gobble up all of Airwallex and take on some of that service provision role itself. In that context, it’s very interesting to see Salesforce Ventures returning to invest even more in the company in this round, given how widely the company has expanded from its early roots in software for salespeople into a massive platform providing a huge range of cloud services to help people run their businesses.
For now, it’s been the combination of its unique roots in Asia Pacific, plus its vertical approach of building its tech from the ground up, plus its retail acumen that has impressed investors and may well see Airwallex stay independent and grow for some time to come.
“Airwallex has a clear competitive advantage in the digital payments market,” said David Craver, MD at Lone Pine Capital, in a statement. “Its unique Asia-Pacific roots, coupled with its innovative infrastructure, products and services, speak volumes about the business’ global growth opportunities and its impressive expansion in the competitive payment providers space. We are excited to invest in Airwallex at this dynamic time, and look forward to helping drive the company’s expansion and success worldwide.”
Updated to note that the coffee business was in Australia, not Hong Kong.
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Amount raises $99M at a $1B+ valuation to help banks better compete with fintechs
Amount, a company that provides technology to banks and financial institutions, has raised $99 million in a Series D funding round at a valuation of just over $1 billion.
WestCap, a growth equity firm founded by ex-Airbnb and Blackstone CFO Laurence Tosi, led the round. Hanaco Ventures, Goldman Sachs, Invus Opportunities and Barclays Principal Investments also participated.
Notably, the investment comes just over five months after Amount raised $86 million in a Series C round led by Goldman Sachs Growth at a valuation of $686 million. (The original raise was $81 million, but Barclays Principal Investments invested $5 million as part of a second close of the Series C round). And that round came just three months after the Chicago-based startup quietly raised $58 million in a Series B round in March. The latest funding brings Amount’s total capital raised to $243 million since it spun off from Avant — an online lender that has raised over $600 million in equity — in January of 2020.
So, what kind of technology does Amount provide?
In simple terms, Amount’s mission is to help financial institutions “go digital in months — not years” and thus, better compete with fintech rivals. The company formed just before the pandemic hit. But as we have all seen, demand for the type of technology Amount has developed has only increased exponentially this year and last.
CEO Adam Hughes says Amount was spun out of Avant to provide enterprise software built specifically for the banking industry. It partners with banks and financial institutions to “rapidly digitize their financial infrastructure and compete in the retail lending and buy now, pay later sectors,” Hughes told TechCrunch.
Specifically, the 400-person company has built what it describes as “battle-tested” retail banking and point-of-sale technology that it claims accelerates digital transformation for financial institutions. The goal is to give those institutions a way to offer “a secure and seamless digital customer and merchant experience” that leverages Amount’s verification and analytics capabilities.
Image Credits: Amount
HSBC, TD Bank, Regions, Banco Popular and Avant (of course) are among the 10 banks that use Amount’s technology in an effort to simplify their transition to digital financial services. Recently, Barclays US Consumer Bank became one of the first major banks to offer installment point-of-sale options, giving merchants the ability to “white label” POS payments under their own brand (using Amount’s technology).
“The pandemic dramatically accelerated banks’ interest in further digitizing the retail lending experience and offering additional buy now, pay later financing options with the rise of e-commerce,” Hughes, former president and COO at Avant, told TechCrunch. “Banks are facing significant disruption risk from fintech competitors, so an Amount partnership can deliver a world-class digital experience with significant go-to-market advantages.”
Also, he points out, consumers’ digital expectations have changed as a result of the forced digital adoption during the pandemic, with bank branches and stores closing and more banking done and more goods and services being purchased online.
Amount delivers retail banking experiences via a variety of channels and a point-of-sale financing product suite, as well as features such as fraud prevention, verification, decisioning engines and account management.
Overall, Amount clients include financial institutions collectively managing nearly $2 trillion in U.S. assets and servicing more than 50 million U.S. customers, according to the company.
Hughes declined to provide any details regarding the company’s financials, saying only that Amount “performed well” as a standalone company in 2020 and that the company is expecting “significant” year-over-year revenue growth in 2021.
Amount plans to use its new capital to further accelerate R&D by investing in its technology and products. It also will be eyeing some acquisitions.
“We see a lot of interesting technology we could layer onto our platform to unlock new asset classes, and acquisition opportunities that would allow us to bring additional features to our platform,” Hughes told TechCrunch.
Avant itself made its first acquisition earlier this year when it picked up Zero Financial, news that TechCrunch covered here.
Kevin Marcus, partner at WestCap, said his firm invested in Amount based on the belief that banks and other financial institutions have “a point-in-time opportunity to democratize access to traditional financial products by accelerating modernization efforts.”
“Amount is the market leader in powering that change,” he said. “Through its best-in-class products, Amount enables financial institutions to enhance and elevate the banking experience for their end customers and maintain a key competitive advantage in the marketplace.”
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alt.bank, Brazil’s latest fintech targeting the unbanked, raises $5.5M
It looks like everyone and their mother is trying to reinvent the Brazilian banking system. Earlier this year we wrote about Nubank’s $400 million Series G, last month there was the PicPay IPO filing and today, alt.bank, a Brazilian neobank, announced a $5.5 million Series A led by Union Square Ventures (USV).
It’s no secret that the Brazilian banking system has been poised for disruption, considering the sector’s little attention to customer service and exorbitant fee structure that’s left most Brazilians unbanked, and alt.bank is just the latest company trying to take home a piece of the pie.
Following Nubank’s strategy of launching a bank with colors that are very un-bank-like, signaling that they do things differently, alt.bank similarly launched its first financial product in 2019 — a fluorescent-yellow debit card which the locals have endearingly dubbed, “o amarelinho,” meaning, “the little yellow card.”
The company, founded by serial entrepreneur Brad Liebmann, follows the founder’s $480 million exit of Simply Business, which was acquired by U.S. insurance giant Travelers in 2017.
Unlike many fintechs, alt.bank has a strong social mission and pays commissions for referrals that last for the customer’s lifetime.
“Most fintechs just help wealthy people get wealthier, so I thought let’s do something with a social mission,” Liebmann told TechCrunch in an interview.
To drive home the mission, and really target the unbanked, Liebman and his team of 80 employees have designed an app that can be used by the illiterate. Instead of words, users can follow color-coded prompts to complete a transaction. The company also plans to launch credit products soon.
According to the company, close to a million people have downloaded the android app since launch, but Liebman declined to disclose how many active users the company actually has.
Today, the company’s core offerings include the debit card, a prepaid credit card, Pix (similar to Zelle), a savings account and even telemedicine visits via a partnership with Dr. Consulta, a network of healthcare clinics throughout the country. The prepaid credit card is key because online stores in Brazil don’t accept debit card purchases.
In addition to the perk of ongoing commissions, alt.bank has also partnered with three major drugstores, allowing their users to get 5-30% off any item at the stores, including medication.
While the company is based in São Paulo and São Carlos, Liebmann and his family are currently based in London due to regulations around the pandemic.
The investment in alt.bank marks USV’s first investment in South America, solidifying a trend by other major U.S. investors such as Sequoia who only in the last several years have started looking to LatAm for deals.
“The bar was high for our first investment in South America,” said Union Square Ventures partner John Buttrick. “The combination of the alt.bank business model and world-class management team enticed us to expand our geographic focus to help build the leading digital bank targeting the 100 million Brazilians who are currently being neglected by traditional lenders,” he added in a statement.
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Mobile bank Current raises $220 million Series D, triples valuation to $2.2B
U.S.-based challenger bank Current, which has now grown to nearly 3 million users, announced this morning it has raised a $220 million round of Series D funding, led by new investor Andreessen Horowitz (a16z). The funding swiftly follows Current’s $131 million Series C at the end of last year, at which point the company had doubled its user base over just six months to more than 2 million users.
As a result of the new round, the fintech company has roughly tripled its valuation in five months, to $2.2 billion.
Other participants in the round include returning investors Tiger Global Management, TQ Ventures (the fund managed by media executive Scooter Braun), Avenir, Sapphire Ventures, Foundation Capital, Wellington Management and EXPA. David George, who led the round with a16z, will become a Current board member.
Current began its life as a teen debit card controlled by parents, but later expanded to offer personal checking accounts powered by the same underlying banking technology. Like a range of modern-day “neobanks,” or digital banks, the Current app offers a baseline of standard features like free overdrafts, no minimum balance requirements, faster direct deposits, instant spending notifications, banking insights, free ATMs, check deposits using your phone’s camera and more. It also last year launched a points rewards program in an effort to better differentiate its service from the growing number of competitors and became one of the first banks to transfer the early round of stimulus payments during the pandemic.
These days, Current is partnering with creators, like the recently announced MrBeast (aka Jimmy Donaldson), who said last week on his YouTube channel that he will personally send $1 to the first 100,000 people who sign up using his Creator code. MrBeast is also an investor.
Like other fintechs in its same space, Current has benefitted from the younger generation’s adoption of mobile banking apps instead of larger, traditional banks, which they feel don’t serve their interests. Its average customer age is 27, for example. Digital banks can keep costs down by not having to pay for the overhead of brick-and-mortar locations, allowing them to roll out benefits like reduced or zero account fees and other consumer-friendly protections.
Current today continues to offer teen banking, in a challenge to mobile banking app Step, which has also leveraged social media influencers to get the word out with a younger demographic. But Step today is appealing to the 13 to 18-year-old crowd directly, offering banking services and a secured card. Current, meanwhile, targets its service to the parents.
Its teen account costs $36 per year, while personal checking is available both as a free and premium ($4.99/mo) service. The company in the past has said its primary focus is the more than 130 million Americans who live paycheck to paycheck. This continues to be its main drive today, though the mission may attract a broader slice of the American population over time.
“We are still focused on onboarding people to the financial system, making sure that everyone has access to everything, and then democratizing — or going out and getting that value — in this new world that’s being rewritten and bringing it back to as many people as possible,” says Current CEO and founder Stuart Sopp. “Now, in that increase of scope and time. I think we’re going to pick up more and more people.”
Current says the new funds will be used to grow the company and its member base as it expands it range of banking products. One key area of new investment will be cryptocurrency, it says, which will involve a partnership and an educational component to help Current’s users better understand the crypto market.
As it turns out, Sopp’s background includes crypto, in addition to Wall Street trading. In fact, an early version of Current designed by Sopp and CTO Trevor Marshall involved crypto.
“A little-known fact is that Current started with Bitcoin wallet addresses and Ripple gateways,” he says. But the team realized the technology was a little too nascent at the time, and moved to mobile banking. “We have this background, and this knowledge of how it all works. Now do we need to build it ourselves? No, I don’t think we need to build it all ourselves. There’s lots of good companies out there,” he says.
Crypto fits into Current’s vision of democratizing access to financial systems to those in the U.S. who are today underserved by traditional banking and investing products and services.
“There’s a ton of value being created [in crypto] and we want to make sure we have this nexus of providing safe, and trustworthy financial services in that world, as well as what we already exist in,” notes Sopp. “And then, lending, credit cards,” he adds, noting how important these moves are “done safely, in a respectful way for our demographic — because traditionally most of our members have a FICO score of 650.”
In addition, Current will use the new funds for hiring across all roles, including marketing, product, engineering, finance, customer success, fraud and risk, and, of course, crypto. The company today has 100 employees, and plans to grow to around 200 or 300 in the next 18 months.
Current’s fundraise remarkably falls on the same day that competitor Step and Greenlight, both which focus on families, also raised new rounds.
“This new generation of customers doesn’t want to bank in physical branches,” said a16z’s David George, in a statement. “We believe there will be a shift in the next 10 years to mobile and consumer-focused banking services powered by innovation in technology, and with Current’s exceptional growth over the past year, they’ve clearly demonstrated they’re at the forefront of this trend. Their product is among the best in the market, and they have proven an ability to reach customers who previously were unserved or underserved by traditional banks,” he said.
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Cash-and-send fintech startup Diem raises $5.5M seed led by Fasanara Capital
Diem, a London, U.K.-based fintech startup, has raised a seed round of $5.5 million led by Fasanara Capital, and angel investor Chris Adelsbach, founder of Outrun Ventures. Additional investors include Andrea Molteni (early investor in Farfetch), Ben Demiri (co-chairman at fashion tech PlatformE) and Nicholas Kirkwood (founder of the eponymous brand).
Diem is a debit card with an app affording instant cash access, traditional banking service benefits (debit card, domestic and international bank transfers), but also allowing consumers to dispose of goods for eventual resale. The idea here is that this feeds into the so-called circular economy, making Diem attractive from an environmental point of view. Some estimates put the amount of worth of goods disposed of in the last 15 years at $6.9 trillion.
Here’s how it works: You have an old item of clothing, phone, book or bag, for instance. You load the item it into the app. The app makes you an offer for what the item is worth. If you accept, cash is loaded into your account immediately. You send the item to Diem, which is then resold. The incentive, therefore, is not to throw away the object and add to landfill, because you have now turned it into cash. Think “neo bank meets people who sell your stuff on eBay.”
Geri Cupi said in a statement: “Diem’s mission is to empower consumers to value, unlock, and enjoy wealth they never knew they had. All of this while fuelling the circular economy and supporting the commitment to sustainability as our key value proposition. DIEM makes it possible for capitalism and sustainability to co-exist.”
Lead Investor and CEO at Fasanara Capital, Francesco Filia, said: “Fasanara is excited to announce our partnership with DIEM and Geri Cupi… [it’s] a new generation fintech powered by principles of circular economy and look forward to support its growth.”
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The Robinhood competitor landscape intensifies as Invstr raises $20M
One of the biggest gripes about investing apps is that they are not acting responsibly by not educating users properly and allegedly letting them fend for themselves. This can result in people losing a lot of money, as evidenced by the number of lawsuits against Robinhood.
Today, an eight-year-old company that has been focused on nothing but financial education is now offering trading and banking services in the U.S..
Over the years, London-based Invstr has built out an educational platform with features such as an investing academy. It’s created a Fantasy Finance game, which gives users the ability to manage a virtual $1 million portfolio so they can learn more about the markets before risking their own money for real. Via social gamification, Invstr has set out to make the educational process fun.
It has also built a community around users so they can learn from each other (something another Robinhood competitor Gatsby is also doing).
Over 1 million users have downloaded the platform globally.
Invstr, according to CEO and founder Kerim Derhalli, is taking a different approach from competitors by offering education and learning tools upfront. And in addition to giving users the ability to make commission-free stock trades, it’s also giving them a way to digitally bank and invest using their Invstr+ accounts “without ever needing to move money from one place to another.”
Invstr takes it all a step further for subscribers who have access to an “Invstr Score,” performance stats and behavioral analytics among other things.
Derhalli said moving in this direction with the company was part of his business plan from day one.
“I think the most powerful trend in the U.S. is self-directed investing,” Derhalli told TechCrunch. “Younger generations have grown up in an app world and they expect to be autonomous and do things for themselves. Many distrust the banking system, and they don’t want to follow in their parents’ footsteps when it comes to banking and finance. We think this is a massive opportunity.”
In the unveiling of its new offerings, Invstr also announced Wednesday that it has closed on a $20 million Series A in the form of a convertible offering. This builds upon $20 million it previously raised across two seed rounds from investors such as Ventura Capital, Finberg, European angel investor Jari Ovaskainen and Rick Haythornthwaite, former global chairman of Mastercard.
Derhalli said he felt compelled to found Invstr after seeing firsthand how a lack of knowledge and confidence can prevent individuals from starting to invest. He worked for three decades in senior leadership roles at Deutsche Bank, Lehman Brothers, Merrill Lynch and JPMorgan before founding Invstr “so that anyone, anywhere could learn how to invest.”
Invstr is offering its new investing services in partnership with Apex Clearing, which formerly provided execution and settlement services to Robinhood. Its digital banking services are being offered through a partnership with Vast Bank. To address the security piece, Invstr said its user data is also protected by technology from Okta.
The company, which also has offices in New York and Istanbul, plans to use the new capital to launch new brokerage and analytics tools and a portfolio builder.
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Flourish, a startup that aims to help banks engage and retain customers, raises $1.5M
It’s not uncommon these days to hear of U.S.-based investors backing Latin American startups.
But it’s not every day that we hear of Latin American VCs investing in U.S.-based startups.
Berkeley-based fintech Flourish has raised $1.5 million in a funding round led by Brazilian venture capital firm Canary. Founded by Pedro Moura and Jessica Eting, the startup offers an “engagement and financial wellness” solution for banks, fintechs and credit unions with the goal of helping them engage and retain clients.
Also participating in the round were Xochi Ventures, First Check Ventures, Magma Capital and GV Angels as well as strategic angels including Rodrigo Xavier (former Bank of America CEO in Brazil), Beth Stelluto (formerly of Schwab), Gustavo Lasala (president and CEO of The People Fund) and Brian Requarth (founder of Viva Real).
With clients in the U.S., Bolivia and Brazil, Flourish has developed a solution that features three main modules:
- A rewards engine designed to incentivize users to save or invest money.
- An intelligent and automated micro-savings feature where users can create personalized rules (such as transferring $15 into a rainy day fund every time their favorite sports team wins).
- A financial knowledge module, where personal financial transactions and spending patterns are turned into a question and answer game.
In the U.S., Flourish began by testing end-user mechanics with organizations such as CommonWealth and Opportunity Fund. In 2019, it released a B2C version of the Flourish app (called the Flourish Savings App) as a pilot for its banking platform, which can integrate with banks through an SDK or an API. It is also now licensing its engagement technology to banks, retailers and fintechs across the Americas. Flourish has piloted or licensed its solution to U.S.-based credit unions, Sicoob (Brazil’s largest credit union) and BancoSol in Bolivia.
The startup makes money through a partnership model that focuses on user activation and engagement.
Both immigrants, Moura and Eting met while in the MBA program at the Haas School of Business at UC Berkeley. Moura came to the U.S. from Brazil as a teen, while Eting is the daughter of a Filiponio father and mother of Mexican descent.
The pair bonded on their joint mission of building a business that empowered people to create positive money habits and understand their finances.
Currently, the 11-person team works out of the U.S., Mexico and Brazil. It plans to use its new capital to increase its number of customers in LatAm, do more hiring and develop new functionalities for the Flourish platform.
In particular, it plans to next focus on the Brazilian market, and will scale in a few select countries in the Americas.
“There are three things that make Latin America, and more specifically Brazil, attractive to us at this moment,” Moura said. “Currently, the B2B financial technology market is still in its nascency. This combined with open banking regulation and the need for more responsible products provides Flourish a unique opportunity in Brazil.”
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Square’s bank arm launches as fintech aims ‘to operate more nimbly’
Known for its innovations in the payments sector, Square is now officially a bank.
Nearly one year after receiving conditional approval, Square said Monday afternoon that its industrial bank, Square Financial Services, has begun operations. Square Financial Services completed the charter approval process with the FDIC and Utah Department of Financial Institutions, meaning its ready for business.
The bank, which is headquartered in Salt Lake City, Utah, will offer business loan and deposit products, starting with underwriting, and originating business loans for Square Capital’s existing lending product.
Historically, Square has been known for its card reader and point-of-sale payment system, used largely by small businesses – but it has also begun facilitating credit for the entrepreneurs and smalls businesses who use its products in recent years.
Moving forward, Square said its bank will be the “primary provider of financing for Square sellers across the U.S.”
In a statement, Square CFO and executive chairman for Square Financial Services, Amrita Ahuja said that bringing banking capability in house will allow the fintech to “operate more nimbly.”
Square Financial Services will continue to sell loans to third-party investors and limit balance sheet exposure. The company said it does not expect the bank to have a material impact on its consolidated balance sheet, total net revenue, gross profit, or adjusted EBITDA in 2021.
Opening the bank “deepens Square’s unique ability to expand access to loans and banking tools to underserved populations,” the company said.
Lewis Goodwin had been tapped to serve as the bank’s CEO, and Brandon Soto its CFO. With today’s announcement, Square also announced the following new appointments:
- Sharad Bhasker, Chief Risk Officer
- Samantha Ku, Chief Operating Officer
- Homam Maalouf, Chief Credit Officer
- David Grodsky, Chief Compliance Officer
- Jessica Jiang, Capital Markets and Investor Relations Lead
The trend of fintechs becoming bank continues. In February, TechCrunch reported on the fact that Brex had applied for a bank charter.
The fast-growing company, which sells a credit card tailored for startups with Emigrant Bank currently acting as the issuer, said that it had submitted an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Brex Bank.
A number of fintech companies, or those with fintech services, have spun up products typically offered by banks, including deposit and chequings accounts as well as credit offerings. Often, these are designed to provide capital to customers who might not be able to get funding on favorable terms from traditional banking institutions, but who might qualify for business-building loans from a provider who knows their company, like Square, inside and out.
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Barclays adds itemised digital receipts to its banking app in partnership with fintech Flux
Flux, the London fintech that has built a technology platform for banks and merchants to power itemised digital receipts and more, has seen its lengthy pilot with Barclays bear fruit.
Announced formally today — but actually quietly rolled out a few months ago — Flux-powered digital receipts are now available as an opt-in for all U.K. Barclays debit card holders within the bank’s main mobile banking app. Previously, the functionality was only available within the Barclays Launchpad app, which is available for customers that want to try out experimental or upcoming features.
Early last year, Barclays announced that it has invested in Flux, taking a minority stake, so the strengthening of its partnership isn’t too much of a surprise. Flux also went through the Techstars-powered Barclays accelerator in its very early days. However, not all corporate accelerators lead to great outcomes as corporates are notoriously risk-adverse. This one certainly wasn’t rushed but it’s meaningful regardless, giving Flux a major shot in the arm in reaching mainstream banking customers beyond the existing challenger bank partnerships it has forged.
“Customers who pay using their Barclays debit card for future in store purchases at H&M, shoe retailer schuh and food outlets, which include Just Eat and Papa Johns, will see their receipts sent automatically to their app after making a purchase. They can then easily and securely view their receipts whenever they need by tapping on the transaction,” says Barclays. Crucially, although opt-in, Barclays customers will receive a prompt to set up digital receipts when they purchase items from retailers currently on-boarded to Flux.
Founded in 2016 by former early employees at Revolut, Flux bridges the gap between the itemised receipt data captured by a merchant’s point-of-sale (POS) system and what little information typically shows up on your bank statement or mobile banking app. Off the back of this, it can also power loyalty schemes and card-linked offers, as well as give merchants much deeper POS analytics via aggregated and anonymised data on consumer behaviour, such as which products are selling best in unique baskets.
On the banking side, along with Barclays, Flux has partnered with challenger banks Starling and Monzo. Once banking customers link their account to the service, Flux delivers digital receipts (and where available rewards and loyalty) for transactions at Flux retailer partners.
Longer term, Flux wants to become a standard for the interchange of item level digital receipt data — and the proprietary platform that powers that standard — but has always faced a chicken-and-egg problem: It needs bank integrations to sign up merchants and it needs merchant integrations to sign up banks. Barclays going live properly is another significant turn in the upstart’s flywheel.
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Helping big banks out-Affirm Affirm and out-Chime Chime gives Amount a $681 million valuation
Amount, a new service that helps traditional banks compete in a digital world, has raised $81 million from none other than Goldman Sachs as it looks to help legacy fintech players compete with their more nimble digital counterparts.
The company, which spun out from the startup lending company Avant in January of this year, has already inked deals with Banco Popular, HSBC, Regions Bank and TD Bank to power their digital banking services and offer products like point-of-sale lending to compete with challenger banks like Chime and lenders like Affirm or Klarna.
“Most banks are looking for resources and infrastructure to accelerate their digital strategy and meet the demands of today’s consumer,” said Jade Mandel, a vice president in Goldman Sachs’ growth equity platform, GS Growth, who will be joining the board of directors at Amount, in a statement. “Amount enables banks to navigate digital transformation through its modular and mobile-first platform for financial products. We’re excited to partner with the team as they take on this compelling market opportunity.”
Complementing those customer-facing services is a deep expertise in fraud prevention on the back-end to help banks provide more loans with less risk than competitors, according to chief executive Adam Hughes.
It’s the combination of these three services that led Goldman to take point on a new $81 million investment in the company, with participation from previous investors August Capital, Invus Opportunities and Hanaco Ventures — giving Amount a post-money valuation of $681 million and bringing the company’s total capital raised in 2020 to a whopping $140 million.
Think of Amount as a white-labeled digital banking service provider for Luddite banks that hadn’t upgraded their services to keep pace with demands of a new generation of customers or the COVID-19 era of digital-first services for everything.
Banks pay a pretty penny for access to Amount’s services. On top of a percentage for any loans that a bank processes through Amount’s services, there’s an up-front implementation fee that typically averages at $1 million.
The hefty price tag is a sign of how concerned banks are about their digital challengers. Hughes said that they’ve seen a big uptick in adoption since the launch of their buy-now-pay-later product designed to compete with the fast growing startups like Affirm and Klarna .
Indeed, by offering banks these services, Amount gives Klarna and Affirm something to worry about. That’s because banks conceivably have a lower cost of capital than the startups and can offer better rates to borrowers. They also have the balance sheet capacity to approve more loans than either of the two upstart lenders.
“Amount has the wind at its back and the industry is taking notice,” said Nigel Morris, the co-founder of Capital One and an investor in Amount through the firm QED Investors. “The latest round brings Amount’s total capital raised in 2020 to nearly $140 million, which will provide for additional investments in platform research and development while accelerating the company’s go-to-market strategy. QED is thrilled to be a part of Amount’s story and we look forward to the company’s future success as it plays a vital role in the digitization of financial services.”
FT Partners served as advisor to Amount on this transaction.
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