Weekly update #50

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

The latest episode of Builders has been released this week. In this episode, I sit down with Hugo Bongers , partner at Motive Ventures , to talk about the European fintech market and the VC environment.

You can find the complete video interview here on YouTube, or you can listen to the podcast here on Spotify or here on Apple Podcast.

As always, if you are a VC manager or a founder and want to be the next guest on the podcast feel free to send me a message on LinkedIn!

Coming back to us, this week I read two interesting reports from McKinsey & Company. The first one is called “How Private Equity funds can use M&A to create outsize returns”, and the second one is “The next era of private credit”. The leitmotif here is the current trend going on in private markets, and how corporates and fund managers can take advantage of it. Here my main takeaways:

Over the past 15 years, private credit has become one of the fastest-growing segments in the financial system. By the end of 2023, the asset class reached nearly $2 trillion—about ten times larger than in 2009. Although this amount is still a small fraction of the broader fixed-income market, private financing solutions continue to perform well and often outperform bank and public alternatives.

To date, the growth of private credit has been largely concentrated in direct lending, a strategy propelled by two main factors: banks pulling back from leveraged lending and the rapid expansion of private equity (PE). However, amid higher interest rates and a slowdown in PE deal activity, the asset class has started to expand into new areas, including a wide range of asset-based financing structures.

In this direction, main examples of new asset types and borrower segments, including asset-backed finance (like aircraft loans and equipment leasing), are infrastructure and project finance assets with long durations, jumbo residential mortgages with high loan-to-value ratios, and higher-risk commercial real estate where banks are reducing exposure. These shifts could lead to significant industry changes, such as decoupling asset origination from downstream parts of the value chain and the emergence of new partnerships and open-architecture business models.

To stay competitive, market participants will need to differentiate themselves in sourcing and fundraising, focusing on achieving scale and effectively using technology, moving deeply into the fintech direction. In the United States, an additional $5 to $6 trillion of such assets could move into the nonbank ecosystem over the next decade, provided interest rates remain elevated, yield assets perform within historical ranges, and the current regulatory environment for banks continues.

The last image comes from the second report, talking about the impact of M&A in the Private Equity value creation process. Add-on acquisitions made up 70% of total private equity (PE) deal count in 2023, an increase from 57% in 2017. This strategy has gained prominence due to changes in the investment and macroeconomic landscape. In the past, PE funds could meet performance targets through methods like operational efficiency for growth, financial engineering, and strategic repositioning, facilitated by accessible low-cost debt financing and higher valuation multiples. These approaches are now more difficult to implement.

To boost returns, PE funds are shifting focus toward transformational strategies that help portfolio companies grow significantly and efficiently. By doing so, they aim to achieve greater synergies in revenue (such as acquiring companies in new markets to expand geographic reach), cost (like acquiring competitors to realize economies of scale), and capital (for example, acquiring a competitor to consolidate inventory, manufacturing, and logistics).

Anyway we saw some very interesting news in the market this week. Revolut is launching in Colombia, while Walmart just launched its pay-by-bank solution in the US. HSBC writes off the last stake in Monese , and maybe FTX creditors will be able to recover their money in the end. In the VC market, we saw the Indian VC TDV Partners closing a ₹50 Crore new fund, Fidelity Investments closing a first Fund I at $250 million, while Summit Partners raises an impressive total of $9.5 billion for its flagship fund. In the italian ecosystem, WithLess closes a $3 million seed round led by Primo Ventures, and xFarm Technologies raises a $36 million series C. Finally, we saw some very interesting finding round from fintech startups like Zepz, Easyvest, Barte, ASAAS, Round Treasury, Quartr, Facet, Kriptown, krti, Farther and many others.

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

Closed deals

• Zepz, formerly known as WorldRemit, raises a $267 million round led by Accel to expand in Africa
• Salmon Group Ltd secures a $30 million series A to expand in South East Asia
• Whatfix raises $125 million to support businesses on investing in new technologies through its digital adoption platform
• Belgian fintech Easyvest raises $13 million to improve retirement investing for Belgian employees
• Brazilian fintech Barte secures $8 million to introduce modular payments in Brasil
• London based fintech Round Treasury raises €1.9 pre-seed round
• Brazilian fintech Asaas secures a R$820 million Series C to fuel SMEs financial automation
• Quartr raises a $6 million round led by Altos Ventures to re-shape how financial institutions do equity researches
• Facet raises a new $35 million round to innovate financial planning
• French fintech Kriptown raises $4.2 to build a blockchain based SME stock exchange
• Kuwait based krti closed a $1.5 million pre-seed round with Core Vision Investment
• Singapore based Surfin secured a $12.5 million round led by Insignia Ventures Partners
• Fintech startup Numeric just announced a $28 million series A led by Menlo Ventures to innovate how we do accounting
• Wealthtech startup Farther announces a $72 million series C round
• AI-powered fintech startup Lendbuzz announces a $262 million securitization

Insights on the VC industry

• Indian VC TDV Partners closes a ₹50 Crore new fund
• Summit Partners closes its latest flagship fund with an impressive $9.5 billion in capital
• Boston based Fidelity Investments closes Fidelity Venture Capital Fund I at $250 million
• Snutx Venture Capital secures a first $200 million fund
• General Catalyst is working on a new $1 billion continuation fund

News on the market

• Walmart is going to launch a pay-by-bank in the US in partnership with Fiserv
• Starling Bank has been fined £29 million by the FCA for failings related to financial sanctions screenings
• HSBC write off the remaining $5.8 million stake in UK fintech Monese
• Bizum introduce Bizum Pay in Spain to compete with Apple Pay and Google Pay
• FTX creditors will end up gaining money from the bankruptcy remarkably
• Fabrick strikes a partnership on cross borders payments with TerraPay
• DeFi Technologies closes the acquisition of Stillman Digital for $5 million
• Mastercard eyes South Africa as first country to introduce real time card payments
• Worldline is set to enter into the embedded payments market
• Fintech startup Pockit announced the acquisition of UK first mobile only banking service Monese
• Revolut makes a significant entry in the Colombian market, and they aim for a full banking license in the country
• UK digital bank Monzo Bank invests $4 million on its Irish division to push the expansion in Europe
• Mercury secures a $100 million credit facility from Natixis Corporate & Investment Banking to scale its corporate credit card solution

A special look in the Italian market

• Italian fintech WithLess closes a €3 million round led by Primo Ventures
• Well it's not fintech, but it is surely worth a post for the Italian startup ecosystem. xFarm Technologies raises a $36 million series C round!

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

Events you don’t want to miss

• VDS+ | Valencia 23-24.10.2024 (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

• Loyyal - Loyalty platform from the MENA region, with entities in the US and South East Asia, provides a B2B2C platform to handle multiple loyalty programs and earn rewards all over the world. Raising a $6M Series A
• Freedhome - Proptech and fintech platform, enabling people to be able to gain profit from real estate by renting them to intermediaries. Raising a $1M seed round

• 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.
• 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.

Take also a look at the last edition of the newsletter, Weekly update #49