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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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US shopping app downloads on Black Friday reached a record 2.8M installs
Many U.S. consumers spent this year’s Black Friday sales event shopping from home on mobile devices. That led to first-time installs of mobile shopping apps in the U.S. to break a new record for single-day installs on Black Friday 2020, according to a report from Sensor Tower. The firm estimates that U.S. consumers downloaded approximately 2.8 million shopping apps on November 27th — a figure that’s up by nearly 8% over last year.
However, this number doesn’t necessarily represent faster growth than in 2019, which also saw about an 8% year-over-year increase in Black Friday shopping app installs, the report noted. This could be because mobile shopping and the related app installs are now taking place throughout the month of November, though, as retailers adjusted to the pandemic and other online shopping trends by hosting earlier sales or even month-long sales events.
Image Credits: Sensor Tower
The data seems to indicate this is true. Between November 1 and November 29, U.S. consumers downloaded approximately 59.2 million shopping apps from across the App Store and Google Play — an increase of roughly 15% from the 51.7 million they downloaded in Novenber 2019. That’s a much higher figure than the 2% year-over-year growth seen during this same period in 2019.
Another shift taking place in mobile shopping is the growing adoption of apps from brick-and-mortar retailers. During the first three quarters of 2020, apps from brick-and-mortar retailers grew installs 27%. This trend continued on Black Friday, when five out of the top 10 mobile shopping apps were those from brick-and-mortar retailers, led by Walmart.
Image Credits: Sensor Tower
Walmart saw the highest adoption this year, with around 131,000 Black Friday installs, followed by Amazon at 106,000, then Shopify’s Shop at 81,000. Combined, the top 10 apps saw 763,000 total new installs, or 27% of the first-time downloads in the Shopping category.
Because the firms are only looking at new app installs, they aren’t giving a full picture of the U.S. mobile shopping market, as many consumers already have these apps installed on their devices. And many more simply shop online via a desktop or laptop computer.
To give these figures some context, Shopify reported on Saturday it had seen record Black Friday sales of $2.4 billion, with 68% on mobile. And today, Amazon announced its small business sales alone topped $4.8 billion from Black Friday to Cyber Monday, a 60% year-over-year increase, but it didn’t break out the percentage that came from mobile.
Sensor Tower and rival app store analytics firm App Annie largely agreed on the top five shopping apps downloaded this Black Friday. They both saw Walmart again beating Amazon to become the most-downloaded U.S. shopping app on Black Friday — as it did in 2019. The two firms reported that Amazon remained No. 2 by downloads, followed by Shopify’s Shop app, then Target. However, Sensor Tower put Best Buy in fifth place, followed by Nike, while App Annie saw those positions swapped.
Image Credits: App Annie
The rest of Sensor Tower’s top 10 included SHEIN, Sam’s Club, Klarna, then Offer Up, while App Annie’s list was rounded out by SHEIN, Sam’s Club, Wish, then Offer Up.
The pandemic’s impact may not have been obvious given the growth in online shopping this year, but the recession it triggered has played a role in how U.S. consumers are paying for their purchases. “Buy Now, Pay Later” apps like Klarna were up this year, even breaking into the top 10 per Sensor Tower’s data. The firm also noted that many new shopping apps launched this year focused on discounts and deals, and retailers ran longer sales this year, as well.
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Alma is a Klarna-like payment startup that lets you buy now and pay later
Meet Alma, a French startup that helps you offer a new payment option for your expensive goods. Like Klarna, clients can choose to pay over three or four installments. But the comparison stops here, as Klarna isn’t available in France. Alma just raised a $14.1 million (€12.5 million) funding round.
Idinvest, ISAI and Picus Capital are investing in today’s funding round. Additionally, Alma has opened a $19.2 million (€17 million) credit line to finance merchant payments.
As a merchant, when you integrate Alma in your payment flow, your customers can choose Alma to make it less intimidating. Instead of getting charged when you pay, you can choose to buy now and pay over three or four installments. Merchants get paid instantly.
“We handle risk and cash advance in house,” co-founder and CEO Louis Chatriot told me. “When it comes to the risk of non-payment, we have implemented a series of verifications, filters and algorithms in order to detect fraud and high-risk profiles.”
The company creates multiple categories depending on your profile. It can ask for more information if Alma has some doubts, such as API access to your bank statement. Assessing risk is particularly difficult in France, as there’s no central credit scoring system.
Merchants can choose to pay the processing fees in full — 3.8% of the transaction for a payment in three intallments, 4.2% for a payment in four installments. But they also can share the processing fees with the end customer.
Alma is compatible with most e-commerce platforms, such as Shopify, Magento and Prestashop. Merchants can also offer Alma as a payment option in retail stores.
Over 1,000 merchants are using Alma already — the startup processes tens of millions of euros of transactions per year. Clients include Bobbies, Asphalte, Cowboy, Weebot, The Cool Republic and The Socialite Family.
With today’s funding round, the company wants to attract more merchants and launch two new payment options — pay later and a more traditional option to pay now. In addition to that, Alma currently redirects customers to its own checkout page. The startup wants to integrate its payment widget directly on e-commerce websites.
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The team behind Cookies is joining Klarna
All the work that went into creating peer-to-peer payment app Cookies isn’t disappearing forever. After filing for bankruptcy, Swedish tech company Klarna approached the team behind Cookies so that they can join another fintech company. The entire Cookies team except one co-founder is joining Klarna, as Klarna announced and t3n reported. I don’t think the two co-founders can… Read More
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The payments market in the U.S. couldn’t be be more competitive, and now yet another player is entering the mix. Stockholm-based Klarna is set to announce its U.S. team ahead of expansion plans into North America, which will begin in earnest at the beginning of 2015.