Weekly update #38

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.

Before jumping to the main topics for this week, I am exploring partnerships with the newsletter. So this edition is sponsored by Notion, which is offering a 6-months free plan of its plus product to all founders submitting an application for their startups program.

In order to redeem the free trial, submit an application using this linkhttps://ntn.so/michelemattei, select Michele Mattei as partner and include the following partner key: STARTUP4110P62416. I really hope it will be helpful for many founders out there!

Coming back to us, I’ve been reading mainly two very interesting reports this week, and I wanted to share the main takeaways from both with you. The first one is “Embedded finance: how banks and customer platforms are converging” from McKinsey & Company. In this report, the strategy consulting company deep dive on the correlation between embedded finance growth and the many actors involved in the fintech ecosystem. Here my main takeaways.

Some banks introduced internet banking in the 1980s, but it did not become popular until the mid-2000s when internet usage became widespread. According to McKinsey's analysis, by 2008, the penetration of internet banking channels ranged between 30 percent and 40 percent in most EU markets, with Germany and the United Kingdom at 38 percent. The mobile banking channel began to gain traction around 2008, coinciding with the widespread adoption of smartphones. From 2008 to 2019, the number of cash withdrawals per person in Europe decreased from 27 to 24 per year, and the number of bank branches per capita dropped by 40 percent. Between 2019 and 2023, the mobile banking channel became more dominant, driven by pandemic-related physical distancing measures. Consequently, the use of all other banking channels declined both in relative and absolute terms.

As banks add functionality and remote advisory through the mobile bank between now and 2030, mobile is likely to continue gaining share at the expense of all other bank-captive channels.

Between 2019 and 2023, the mobile channel became more dominant, buoyed by pandemic-related physical distancing. Use of all other channels decreased as a share of interactions and in absolute numbers.

Over a seven-year period from 2016 to 2023, the "buy now, pay later" (BNPL) share of e-commerce sales in seven European markets increased significantly from 2 percent to 10 percent. This rise paralleled the growing share of e-commerce in overall retail sales, further cementing BNPL's role in the retail payments landscape. In the Nordic countries, loan volumes from point-of-sale financing, including BNPL, grew by 8 to 10 percent annually from 2016 to 2022, compared to a 4 to 5 percent annual growth rate for other retail lending products. Across Europe, the embedded-finance channel accounted for 5 to 6 percent of lending revenues from retail and small to medium-sized enterprises in 2023, with projections suggesting it could reach 20 to 25 percent by 2030.

The second report I read is “SaaS Valuations multiples: 2015 to 2024” from Adventis Advisors. This is a complete analysis on the valuation of SaaS businesses, updated every quarter. I love to keep updated on latest valuation trends, mostly in fintech, and I am always amazed by the differences when there is a new trend in the market.

The index of SaaS companies saw gradual growth from 2015 to 2020, driven by increasing valuation multiples and the rapid expansion of these companies. Following significant monetary and fiscal stimulus measures and the acceleration of digitalization due to COVID-19, the index surged in 2020, reaching over 600 points by early 2021. However, as investor sentiment shifted, interest rates rose, and profitability became a priority again, investors began selling off SaaS companies, particularly those that were not profitable.

There was peak IPO activity at the height of the bubble, followed by a freeze in the IPO market. Note: This is an equal-weight index, with 01.01.2015=100; IPO date=100 for companies that went public after 01.01.2015. In the last quarter this index felt 9% year to date, while in comparison it rose by 14% from Q3 2023 to Q4 2024.

Revenue multiples experienced gradual growth from 2015 to 2019, reaching a median of 13.6x before the COVID-19 downturn. Although the market dropped in March 2020, it quickly rebounded, with multiples swiftly recovering. During the peak of these valuations, many SaaS companies went public, with the top 25% highest-valued companies trading at over 30x revenue. The highest multiple recorded in our sample was Asana, which closed at 89.0x LTM revenue in November 2021.

As of May 2024, the median EV/Revenue multiple for companies in the Aventis SaaS Index was 6.2x.

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. Google is buying Wiz for $23 billion, Sequoia Capital is looking to buy Stripe shares at a $70 billion valuation, while Klarna is lining up advisors for its long awaited IPO and Cash App is coming out of the UK market. In the VC market, we saw Alpine Space Ventures closing a $170 million fund, the italian vc Primo Ventures closing a first milestone of $40 million, 13books Capital launching a $121 million fintech fund, and Menlo Ventures collaborating with Anthropic to launch a $100 million AI fund. On the italian market, Tot closed a partnership with Adyen and Mastercard to launch business cards, Hui.land raised $25 million, and Cubbit closed a $12.5 million funding round. Finally, some very interesting founding rounds from fintech companies like Partior , Octane® , OCN (onecarnow.com) , Haruko , Adaptive , Caliza , Matera , dopay , wamo and many others.

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

Closed deals

• LegalFly raises a $15 million series A funding round
• Fintech lenders Octane® closed a $365 million asset backed deal in order to strengthens market position
• Argentinian fintech tapi raises $22 million in a series A funding round
• Mexican fintech OCN (onecarnow.com) raises a $86 million funding round
• Digital asset management platform Haruko raises $6 million in a series A funding round
• Instinct Digital secures £5m from AlbionVC to enhance investment reporting tools
• Construction fintech Adaptive closes a $19 million series A led by Emergence Capital
• Brasilian fintech Caliza raises $8.5 million to reshape money transfer in LATAM
• Jeff App raises $2 million to boost financial inclusion in emerging markets
• Brasilian fintech Matera has secured a $100 million investment from Warburg Pincus LLC
• dopay secures $13.5m in Series A extension to expand digital payroll in emerging markets
• PEXX’s secures $4.5 million to boost its stablecoin payment innovations
• Y Combinator-backed CrowdVolt (YC W24) wants to shake up the secondary ticket market with a $1.4 million pre-seed round
• Xapien secures $10 million to transform compliance in financial services with AI-driven research
• Blockchain startup Allium closes a $16.5 million series A funding round
• Indian fintech Auxilo Finserve Private Limited raises $33 million to support the student community
• UK fintech wamo raises $5 million and plan an expansion in Italy
• South-east Asian fintech Partior raises a $60 million series B round

Insights on the VC industry

• Alpine Space Ventures closed a $170 million new fund
• Mundi Ventures receives a $25 million investment from AGENCIA ESPAÑOLA DE COOPERACION INTERNACIONAL PARA EL DESARROLLO - AECID
• Marktlink Capital closes a second VC fund of funds at $80 millions
• 13books Capital closes a new fintech fund at $121 million
• Menlo Ventures and Anthropic team up on a $100M AI fund
• Italian VC Primo Ventures raises $40 million to invest in early stage climate startups

News on the market

• Google is reported in talks to acquire Wiz for $23 billion
• UK shoppers hit by payments outage affecting Visa and Mastercard
• How much is Stripe worth in 2024? According to Sequoia Capital, willing to buy shares from current investors, approximately $70 billion
• BNP Paribas partners with Ant International to boost cross borders payments for merchants and retails
• Tiger Global Management is reported in talks to led the $500 million Revolut share deal
• Klarna lines up banks and advisors for a 2025 IPO
• Monzo Bank will launch bank accounts for children in the UK
• Meridien Holding Investments acquires a 27% stake in the fintech DKK Partners
• It seems to be a massive global IT outage going on, affecting banks, media and airlines
• Cash App is coming out of the UK market

A special look in the Italian market

• Hui.land secures $25 million in equity commitment from Nimbus Capital
• Italian deep tech startup Cubbit closes a $12.5 million funding round
• Italian fintech Tot partners with Adyen and Mastercard to provide business users with unlimited debit cards

And here some useful resources for everyone involved in the ecosystem:

Events you don’t want to miss

• B4i Demo Day Batch IX | Milan - 16.07.2024 (Link to the invite or website)
• BolzanoSlushD | Bolzano - 03.09.2024 (Link to the invite or website) I still have some discount codes for this one, reach out to me if you want one!
• Italian Tech Week | Turin - 25-27.09.2024 (Link to the invite or website)
• Bits & Pretzels founders festival | Munich 29.09-01.10.2024 (Link to the invite or website)
• Milan Fintech Summit | Milan - 08-09.10.2024 (Link to the invite or website)

You have a cool event you want to mention or to sponsor? Feel free to send me a DM.

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.
• Shoppy Code:Gift card platform that offers a points based loyalty program. They share part of the profits coming from marketing budgets with their customers. Raising $500k.

You want to be present in this list? Feel free to shoot me a DM on Linkedin.

Take also a look at the last edition of the newsletter, Weekly update #37