Weekly update #30

Welcome to this edition of the weekly newsletter. The idea behind this activity is to gather all the information in the startup ecosystem in one place, with a special focus on the fintech market.

This week I’ve been reading a very interesting report on the fintech market, “The 2024 State of Fintech Report” released by F-Prime Capital. In the report, the company calculated an internal index on the overall industry, that reflected the rise and fall of the market, driven by interest rates, funding rounds and acquisitions.

The first takeaway from the report is a very positive one: the correction on the market found its floor and began to recover in 2023. In 2021, we saw unprecedented highs in valuations, revenue multiples, and venture capital funding. However, 2022 brought a significant market correction, resulting in substantial declines in valuations and multiples.

During this time, investors began to distinguish genuinely disruptive fintechs from those simply offering marginal improvements on existing financial services. According to the index, the market saw its lowest point in Q4 2023, at least in public markets, and then started recovering by the end of the year, going from a total market cap of $389 billion in Q4 to $573 billion by 31/12/2023. It was $1.3 trillion in 2021.

The second takeaway is less positive: private markets are still pretty much impacted by the correction. Investment volume fell by about 50 percent last year to 1,639 deals. However, it's noteworthy that more private investments were closed in 2023 than in any year before 2019. Fintech remains one of the largest sectors in venture capital, and that trend is not changing.

Post-Series B valuations suffered the most in 2022, and although they saw a slight increase in 2023, this is somewhat misleading as only the strongest companies secured funding. Those that could afford to wait chose to grow into their prior round valuations. Discounts of 30-40 percent in secondary trading are a leading indicator of 2024 valuations for some late-stage private companies.

The correction was also defined by a huge wave of aggregations in the market, with the M&A activity peaking in 2021 and 2022. The $98 billion in fintech M&A activity in 2023 significantly lagged behind 2021's $349 billion. Despite expectations for increased activity from private equity and strategic buyers, the first half of 2023 was notably quiet. High interest rates disrupted PE borrowing patterns, large fintech companies saw their high multiple acquisition currency diminish, and strategic acquirers concentrated on reducing operational expenses. The collapse of Silicon Valley Bank exacerbated these challenges. However, M&A activity picked up in the second half of 2023, suggesting that we can possibly see a more dynamic market in 2024.

Very often in the history of finance, periods of excessive risk often lead to drama, aggregations and regulatory scrutiny. While we already saw the first two, I think the third one is currently happening. Take a look for example at what is happening in the US with CFPB trying to regulate BNPL, or the current relationship between banking as a service providers and charter banks under examination in the EU, or the latest products built upon crypto assets. And usually, regulation is an enemy of innovation. Here the link to the full report if you want to deep dive on it.

Before jumping to the latest news, a quick request from my side. I will start a small series of podcasts to interview fintech founders and VC managers active in the ecosystem. If you want to be part of it, feel free to drop me a line on Linkedin!

Anyway we saw some very interesting news in the market this week. Revolut let its employees cash in more than $500 million from their stock options before the long awaited IPO, while Stripe is entering the Indian market with a partnership with State Bank of India. Apple released Tap to pay in Canada, while the interest in the Saudi market is growing like nothing before, with Rasan receiving $29 billion in orders for its $224 million IPO. In the Italian market, or better in the German market, we saw the open banking provider Fabrick acquiring finAPI from SCHUFA Holding AG , trying to expand in Europe. In the VC ecosystem, Golden Gate Ventures launched a first $100 million fund, Ryad Capital started 1957 Ventures to invest in saudi fintech, and Mubadala and Bpifrance co-invested in the largest deep tech VC in Africa, Partech Africa II.  Finally, some rounds from very interesting fintech startups like KUDOS , Ember , NG.CASH , mattilda. , Btrust , Novata , WeMoney , Teal , MAJORITY , Colendi , Loopay , and many others.

But let's take a closer look at the main news of the last seven days:

Closed deals

• Singapore based OSOME raised a $17 million series B
• KUDOS secures $10.2 million in Series A funding to enhance AI-powered smart wallet
• Ember secures a $5 million funding round, and partners with HSBC for digital tax services
• NG.CASH raises R$65 million to expand financial services in Brasil for Gen Z
• Yendo secures $165 million to expand vehicle-backed credit services
• Mexican fintech mattilda. secures $14 million for Latin America expansion
• Invexor leads the $1.5 million funding round of Chilean fintech Btrust
• Scale AI raises $1 billion in series F funding, for a total valuation of $15 billion!
• NYC based Annuity.com raises a $15.7 seed round
• Native Teams secured $6.3 million from Eleven Ventures to expand in Asia
• Climate fintech ekko raised a $2.5 million funding round
• Payments and treasury management startup Vitesse PSP Limited raised $93 million to fuel US expansion
• Novata announces new funding round from Motive Ventures to expand ESG rating services globally
• Australian fintech WeMoney raised $3 million and announced a partnership with Mastercard
• Canadian fintech Teal raised $8 million to build the "Stripe for accounting"
• Capchase secures a $105 credit facility for SaaS revenue acceleration
• Crypto social network Forecaster raised $150 million, with only 80k daily users
• Immigrant banking platform MAJORITY raised $20 million following a 3x revenue growth
• Turkish fintech Colendi raises $65 million in a new Series B round
• Canadian fintech Beacon Platform raises CAD5.25 million to help people establish and work in the country
• Footprint raises $13 million to innovate how people onboard on financial services
• Zeal simplify crypto spending and launches with a $2 million pre-seed round
• French startup Holistic AI raises $220 million, in one of the biggest seed round in Europe
• SoFi strengthens lending capabilities with a $350 million personal loan securitisation placement
• Colombian fintech Loopay secures $10 million to boost Latin America expansion
• Ayan Capital raises $2.3 million in seed round to innovate Islamic car finance in the UK
• CBI Group secures a $15 million series A to boost R&D and innovation for his digital banking offer

Insights on the VC industry

• OpenseedVC launches a first $10 million fund for African startups
• Riyad Capital launches 1957 Ventures to invest in Saudi Fintech
• Golden Gate Ventures hits first close of a $100 million fund to invest in the MENA region
• Mubadala and Bpifrance co-invest in Africa's largest Tech VC fund, Partech Africa II
• ETF Partners raised a $285 million fund to invest in climate tech startups

News on the market

• Revolut employees are set to cash in $500 million in shares sale
• Stripe is set to enter the Indian payment market by a joint venture with State Bank of India
• Mercado Libre kicks off talks for a banking license in Mexico
• Phantom acquires Bitski to boost crypto adoption on the market
• Teen fintech Copper Banking had to discontinue his banking and credit products
• Apple launches tap-to-pay on iPhone in Canada
• Saudi fintech Rasan $224 million IPO receives $29 billion orders!
• PayRetailers acquires Transfeera to expand in Brasil

A special look in the Italian market

• Fabrick entra nel mercato open banking tedesco con l'acquisizione di finAPI da SCHUFA Holding AG

Startups raising funds

• Fantalegends - a Fantasy Football free-to-play mobile game that aims to provide an enjoyable and safe experience, user-centered, with more than 2k daily active users. Raising $1M.
• PopulaRise - The platform that allows companies of every dimension to promote themselves on social media through the collaboration with their clients. B2B2C SaaS. Raising $1M.
• Bitcoin People - Fintech company focused on crypto payments between corporate and cross countries. B2B, SaaS. Raising $500k. Round closed!
• Tutornow - Edtech that provides an online tutoring platform for students with learning disorders. Raising $500k to $1M.
• Recivu - Fintech  startup trying to digitize the receipt flow by getting rid of papers. Looking for $150k in SAFE, already $50k committed.
• Weagle - B2B Tech startup that provides the very first browser designed for company, with total security for sensitive data. Raising $6 millions for their seed round.
• Reach Finance - Reach is the fintech platform for wealth accumulation for the Y&Z generations, they provide users with the tools to build wealth such as a budget tracker, a financial plan and a systematization of investments. Looking for $700k, with already $500k committed.
• wrapp.ai - A fintech startups that offers a virtual accountant and CFO that can help SMEs scale globally. Looking for $1 million, $750k already granted from public funds, looking to close the last $350k.

If you are a startup and want to be present in this list, please contact me directly.

If you are an angel investor or a VC interested in those companies, contact me for an intro!

Take also a look at the last edition of the newsletter, Weekly update #29