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

Published July 27, 2021

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.

Paystand banks $50M to make B2B payments cashless and with no fees

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.”

B2B marketplaces will be the next billion-dollar e-commerce startups

Venture capitalists react to Visa-Plaid deal meltdown

Published January 13, 2021

Congratulations, you’re no longer selling your company for billions of dollars!

As strange as it sounds, that’s the leading perspective from venture capitalists concerning Plaid, now that its much-touted sale to Visa has fallen apart.

The $5.3 billion deal would have seen banking API startup Plaid join consumer payments and credit giant Visa. But the American government took a dim view of the deal, and according to Axios reporting, Plaid felt like it could be worth more money in time.

The TechCrunch team has collected views from venture capitalists, analysts and Anshu Sharma, CEO of another API-powered startup and a former VC to get a better view on the perspectives in the market concerning the blockbuster breakup.

From the venture capital side of things, most takes we received were bullish regarding Plaid’s chances now that it’s no longer being taken over by Visa. Amy Cheetham, for example, of Costanoa Ventures, said that the result is “good for the company, ultimately.” She added that Plaid may now see better “talent acquisition,” faster product decisions and a better eventual valuation.

“There is so much left for them to build in fintech infrastructure,” Cheetham said in an email, adding that she sees “Stripe-like scale potential” in Plaid. Stripe is reportedly raising capital at a valuation that could reach $100 billion.

Cheetham is not alone in her bullish perspective. Nico Berandi of Animo Ventures wrote to TechCrunch to say that he “still wishes” that his firm had been “around back then to have invested” in Plaid, adding a smiley face at the end of his missive.

Visa will not acquire Plaid after running into regulatory wall

Published January 12, 2021

Visa and Plaid called off their agreement this afternoon, ending the consumer credit giant’s takeover of the data-focused fintech API startup.

The deal, valued at $5.3 billion at the time of its announcement, first broke cover on January 13, 2020, or nearly one year ago to the day. However, the Department of Justice filed suit to block the deal in November of 2020, arguing that the combination would “eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers.”

At the time Visa argued that the government’s point of view was “flawed.”

However, today the two companies confirmed the deal is officially off. In a release Visa wrote that it could have eventually executed the deal, but that “protracted and complex litigation” would take lots of time to sort out.

It all got too hard, in other words.

Plaid’s Zach Perret: ‘Every company is a fintech company’

Plaid was a bit more upbeat in its own notes, writing that in the last year it has seen “an unprecedented uptick in demand for the services powered by Plaid.” Given the fintech boom that 2020 saw, as consumers flocked to free stock trading apps and neobanks, that Plaid saw growth last year is not surprising. After all, Plaid’s product sits between consumers and fintech companies, so if those parties were executing more transactions, the API startup likely saw more demand for its own offerings.

TechCrunch reached out to Plaid for comment on its plans as an independent company, also asking how quickly it grew during 2020. Update: Plaid responded to TechCrunch noting that it saw 60% customer growth in 2020, bringing it to more than 4,000 clients. If we presume even moderate net dollar retention amongst its customer base, Plaid could have grown by triple-digits last year, in percentage terms.

While the Visa-Plaid deal was merely a single transaction, its scuttling doesn’t bode well for other fintech startups and unicorns that might have eyed an exit to a wealthy incumbent. The Department of Justice, in other words, may have undercut the chances of M&A exits for a number of fintech-focused startups or at least created more skittishness around that possible exit path.

If so, expected exit valuations for fintech upstarts could fall. And that could ding both fintech-focused venture capital activity, and the price at which startups in the niche can raise funds. If the Visa-Plaid deal was a huge boon to fintech companies that used it as a signpost to help raise money at new, higher valuations, the inverse may also prove true.

Visa is acquiring Plaid for $5.3 billion, 2x its final private valuation

The DOJ has approved Mastercard’s acquisition of Finicity

Published November 16, 2020

Federal regulators have approved Mastercard’s acquisition of Salt Lake City-based startup Finicity, which provides open-banking APIs. The deal is expected to go for $825 million.

“We were notified that the Department of Justice completed its review of our planned acquisition of Finicity and has cleared it to move forward,” Mastercard wrote in a statement. “We are pleased to have reached this milestone.”

Finicity allows users to be able to decide how their financial information is shared and who can make money decisions on their behalf through open APIs. The buy will allow Mastercard to offer consumers and businesses more choice in these transactions, without requiring them to do heavy lifting themselves.

Finicity, according to Crunchbase, has raised nearly $80 million in known venture capital as a private company. When closed, it will be one of the largest fintech acquisitions at nearly $1 billion in 2020.

The DOJ approval comes just two weeks after the body filed an antitrust lawsuit challenging Visa’s proposed $5.3 billion buy of Plaid. Plaid, which empowers a large chunk of financial services through its data network, including Venmo and Acorns, is being accused of making Visa a monopoly in online debt services.

DOJ files antitrust lawsuit challenging Visa’s $5.3 billion acquisition of Plaid

Plaid has denied these claims, saying that “Visa intends to defend the transaction vigorously.” The feds are also looking into Intuit’s $7 billion proposed buy of Credit Karma, which was first announced in February 2020.

The approval of the Mastercard-Finicity transaction could be a shot in the arm for fintech startup valuations. After both the Plaid and Credit Karma deals came under increasing regulatory scrutiny, it was an open questions whether big-dollar M&A was going to be an option for fintech unicorns.

If the path was closed due to regulatory concerns, fintech startups would have to either pursue earlier, smaller sales themselves, or wait for an eventual IPO. If that was the case, venture capitalists might shun putting as much capital to work in the sector. However, the Finicity approval makes it clear that not all fintech M&A worth $500 million or more is going to encounter oversight headaches. That should be welcome news for late-stage fintech valuations.

4 takeaways from fintech VC in Q3 2020

Dear Sophie: How can I get my 2-year foreign residency requirement for my J-1 waived?

Published September 16, 2020

Sophie Alcorn
Contributor

Sophie Alcorn is the founder of Alcorn Immigration Law in Silicon Valley and 2019 Global Law Experts Awards’ “Law Firm of the Year in California for Entrepreneur Immigration Services.” She connects people with the businesses and opportunities that expand their lives.

What your company can learn from the Bank of England’s resilience proposal

Published July 23, 2020

Kolton Andrus
Contributor

Kolton is co-founder and CEO of Gremlin, the chaos engineering company helping the world build a more reliable internet.

Identify critical business services

The operational resilience framework recommends focusing on the services that serve external customers. While internal applications are important for productivity, this customer-first mentality is sound advice for determining a starting place for reliability efforts. While it’s ultimately up to the business to weigh the criticality of the different services they offer, the ones necessary to make payments, retrieve payments, investing or insuring against risks are all recommended priorities.

Why COVID-19 could delay Interswitch, Africa’s next big IPO

Published May 4, 2020

The economic effects of COVID-19 could delay Africa’s next big IPO — that of Nigerian fintech unicorn Interswitch.

If so, it wouldn’t be the first time the Lagos-based payments company’s plans for going public were postponed; the tech world has been anticipating Interswitch’s stock market debut since 2016.

For the continent’s innovation ecosystem, there’s a lot riding on the digital finance company’s IPO. After e-commerce venture Jumia, it would become only the second listing of a VC-backed African tech company on a major exchange. And Interswitch’s stock market debut — when it occurs — could bring more investor attention and less controversy to the region’s startup scene.

What is Interswitch?

TechCrunch reached out to Interswitch on the window for listing, but the company declined to comment. The tech firm’s path from startup to IPO aspirant traces back to the vision of founder Mitchell Elegbe, a Nigerian electrical engineering graduate whose entire career has pretty much been Interswitch.

Africa’s tech scene is still fairly young, but it does have a timeline with several definitive points. An early one would be the success of mobile money in East Africa, with the launch of Safaricom’s M-Pesa in 2007. Another is the notable wave of VC-backed startups and founders that launched around 2010.

Interswitch CEO Mitchell Elegbe (Photo Credits: Interswitch)

With Interswtich, Elegbe pre-dated both by a number of years, founding his fintech company back in 2002 to connect Nigeria’s largely disconnected banking system. The firm became a pioneer of the infrastructure to digitize Nigeria’s economy.

Interswitch created the first electronic switch whereby Nigerian financial institutions could communicate and thereby operate ATMs and point of sales operations. The company now provides much of the rails for Nigeria’s online banking system.

Another major fintech exit as SoFi acquires banking and payments platform Galileo for $1.2B

Published April 7, 2020

The fintech wars continue to heat up with another major exit in the space.

Consumer financial services platform SoFi announced today that it is acquiring payments and bank account infrastructure company Galileo for $1.2 billion in total cash and stock. The acquisition is dependent on customary closing conditions.

Salt Lake City-based Galileo was founded in 2000 by Clay Wilkes and was bootstrapped to profitability over the intervening two decades. My colleague Jon Shieber wrote a profile of Galileo back in November after the company announced its second round of external funding, a $77 million Series A check from Accel, which was led by growth partner John Locke. The company had previously raised an $8 million Series A round from Mercato Partners in April 2014.

Galileo Financial raises $77 million for its fintech services that were 19 years in the making

Galileo provides APIs that allow fintech companies like Monzo and Chime to easily create bank accounts and issue physical and virtual credit cards, among myriad other services. While simple in theory, banking regulations and financial rules place a huge regulatory burden on fintech companies, burdens that Galileo takes on as part of its platform.

The company has found particular success in the United Kingdom, where all five of the country’s largest fintechs are customers. Globally, it processed an annualized $45 billion in transaction volume last month, up from $26 billion in October 2019 — nearly doubling in just six months.

From a strategic perspective, SoFi’s objective is that Galileo will help power its expanding suite of finance products and offer it another revenue source outside of consumer services. While SoFi was founded a decade ago to offer ways to secure better financial terms for student loans, it now offers a bevy of consumer financial options, including loan, investment and insurance products as well as cash and wealth management tools. With Galileo, it now has a clear B2B revenue component as well.

SoFi, which is now led by ex-Twitter COO Anthony Noto, has also raised hundreds of millions of new capital from the likes of Qatar in recent years. The company was most recently valued at $4.3 billion.

Online lender SoFi has quietly raised $500 million in funding, led by Qatar

Galileo will operate as an independent division of SoFi, and will be continuing its operations with founder Wilkes remaining as chief executive.

As fintech valuations have rapidly expanded in recent years, the companies that empower those fintechs have increasingly become strategic for investors. Earlier this year, Visa bought Plaid for $5.3 billion, in what was considered a key exit for a finance infrastructure company. That exit brought acute investor and strategic interest to the space, interest that almost certainly accrued to Galileo, as well, and helps explain the company’s relatively quick exit from its funding round last year.

Embedded finance, or why fintech mega VC rounds have become so common

As for Accel, the firm has long had a strategy of investing in mostly bootstrapped companies, sometimes a decade or more after their founding, with examples outside of Galileo including 1Password, Qualtrics, Atlassian, GoFundMe and Tenable. Accel also led this type of round into payments platform Braintree, where the firm met the startup’s GM Juan Benitez, who also joined Galileo’s board in November along with Accel’s Locke.

Accel’s valuation of the deal was not publicly disclosed in November, but a source with knowledge of the acquisition today characterizes the firm’s return as more than 4x. Given that Accel held the equity for roughly half a year, that’s quite the IRR multiple in an otherwise challenging global macro context. Given that the acquisition of Galileo was for cash and stock, Accel likely now holds a stake in SoFi, making at least part of the return unrealized.

Galileo was represented by Qatalyst in the transaction.

Updated April 7 to include the $8 million Series A funding round led by Mercato Partners and more context on IRR.

Visa’s Plaid acquisition shows a shifting financial services landscape

Published January 16, 2020

When Visa bought Plaid this week for $5.3 billion, a figure that was twice its private valuation, it was a clear signal that traditional financial services companies are looking for ways to modernize their approach to business.

With Plaid, Visa picks up a modern set of developer APIs that work behind the scenes to facilitate the movement of money. Those APIs should help Visa create more streamlined experiences (both at home and inside other companies’ offerings), build on its existing strengths and allow it to do more than it could have before, alone.

But don’t take our word for it. To get under the hood of the Visa-Plaid deal and understand it from a number of perspectives, TechCrunch got in touch with analysts focused on the space and investors who had put money into the erstwhile startup.

The crypto rich find security in Anchorage

Published January 15, 2020

Not the city, the $57 million-funded cryptocurrency custodian startup. When someone wants to keep safe tens or hundreds of millions of dollars in Bitcoin, Ethereum or other coins, they put them in Anchorage’s vault. And now they can trade straight from custody so they never have to worry about getting robbed mid-transaction.

With backing from Visa, Andreessen Horowitz and Blockchain Capital, Anchorage has emerged as the darling of the cryptocurrency security startup scene. Today it’s flexing its muscle and war chest by announcing its first acquisition, crypto risk modeling company Merkle Data.

Anchorage Founders

Anchorage has already integrated Merkle’s technology and team to power today’s launch of its new trading feature. It eliminates the need for big crypto owners to manually move assets in and out of custody to buy or sell, or to set up their own in-house trading. Instead of grabbing some undisclosed spread between the spot price and the price Anchorage quotes its clients, it charges a transparent per transaction fee of a tenth of a percent.

It’s stressful enough trading around digital fortunes. Anchorage gives institutions and token moguls peace of mind throughout the process while letting them stake and vote while their riches are in custody. Anchorage CEO Nathan McCauley tells me, “Our clients want to be able to fund a bank account with USD and have it seamlessly converted into crypto, securely held in their custody accounts. Shockingly, that’s not yet the norm — but we’re changing that.”

Buy and sell safely

Founded in 2017 by leaders behind Docker and Square, Anchorage’s core business is its omnimetric security system that takes out of the equation passwords that can be lost or stolen. Instead, it uses humans and AI to review scans of your biometrics, nearby networks and other data for identity confirmation. Then it requires consensus approval for transactions from a set of trusted managers you’ve whitelisted.

With Anchorage Trading, the startup promises efficient order routing, transparent pricing and multi-venue liquidity from OTC desks, exchanges and market makers. “Because trading and custody are directly integrated, we’re able to buy and sell crypto from custody, without having to make risky external transfers or deal with multiple accounts from different providers,” says Bart Stephens, founder and managing partner of Blockchain Capital.

Trading isn’t Anchorage’s primary business, so it doesn’t have to squeeze clients on their transactions, and can instead try to keep them happy for the long-term. That also sets up Anchorage to be a foundational part of the cryptocurrency stack. It wouldn’t disclose the terms of the Merkle Data acquisition, but the Pantera Capital-backed company brings quantitative analysts to Anchorage to keep its trading safe and smart.

“Unlike most traditional financial assets, crypto assets are bearer assets: In order to do anything with them, you need to hold the underlying private keys. This means crypto custodians like Anchorage must play a much larger role than custodians do in traditional finance,” says McCauley. “Services like trading, settlement, posting collateral, lending and all other financial activities surrounding the assets rely on the custodian’s involvement, and in our view are best performed by the custodian directly.”

Anchorage will be competing with Coinbase, which offers integrated custody and institutional brokerage through its agency-only OTC desk. Fidelity Digital Assets combines trading and brokerage, but for Bitcoin only. BitGo offers brokerage from custody through a partnership with Genesis Global Trading. But Anchorage hopes its experience handling huge sums, clear pricing and credentials like membership in Facebook’s Libra Association will win it clients.

McCauley says the biggest threat to Anchorage isn’t competitors, though, but hazy regulation. Anchorage is building a core piece of the blockchain economy’s infrastructure. But for the biggest financial institutions to be comfortable getting involved, lawmakers need to make it clear what’s legal.