Weekly update #57

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 and the VC industry.

The latest episode of Builders has been released this week. In this episode, I sit down with Sahil Phadnis, founder of Affiniti, a US based fintech startup that offers an all-in-one financial operating system tailored specifically for SMBs in backbone industries—those overlooked by other fintech solutions.

Affiniti just raised a $60 million funding round, in order to expand its reach in the US and offer tailor made fintech solutions like credit card to the backbones of the US industrial economy. The company is targeting SMEs in rural areas like Nebraska or Arkansas in order to offer financial services to segments not usually covered by new or even traditional banking.

With him, we will speak about the next wave of fintech investments in 2025, on the targets for Affiniti in the long run, but also about hiring in the fintech space and the upcoming challenges in this market.

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. Next week the podcast will be back with another interesting episode!

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 a very interesting report. If you are reading this newsletter for a while, you probably know that I am a huge fan of McKinsey & Company reports on the status of the economy, mostly if they are talking about financial services. This time, they released a report called “McKinsey on Investing”, a study on the last 10 years on the investing industry in terms of returns, assets and new trends. Here my main takeaways:

Let’s start from the returns. Historically, pivotal moments have unleashed transformative forces that define the eras that follow. For example, the breakup of the Soviet Union marked the beginning of three decades characterized by peace, growing prosperity, and global economic integration—conditions that institutional investors have relied on. During this period, institutional investors achieved a median annual return of 9.5 percent from 2012 to 2021, reflecting the stability and opportunities of that era.

Today, institutional investors widely agree that the current environment is profoundly different from the investment landscape of the past three decades. They identify significant shifts across five key areas that are expected to shape this new era: the global order, technological platforms, demographic trends, energy and resource systems, and the dynamics of capitalization.

While there were some differences across industries, chief investment officers overwhelmingly prioritized three main drivers. Investors also consistently identified factors such as sustainable competitive advantage, return on capital (including earnings and capital allocation), and management track record as crucial considerations when deciding whether to buy or hold a financially healthy company.

Interestingly, respondents did not view outperforming peers in terms of growth as a particularly critical factor—though this could change if a company were underperforming relative to its peers. Broader industry trends were not always decisive either. These seasoned investors recognize that while growth can be unpredictable, fundamentals like strong operations, a focus on competitive advantage, and effective management are what ultimately create long-term value.

Private capital investment in the software sector experienced significant growth, expanding by more than 24 percent annually and even doubling from 2020 to 2021. This surge came as the industry rebounded from the initial impact of the COVID-19 pandemic, completing deals that had been delayed. In 2022, much of the investment activity was driven by large private equity transactions, including three deals exceeding $10 billion in value. However, growth-focused private capital saw a decline from 2021 to 2022. Two major investors, becoming more cautious about valuations and selective in deploying capital, utilized less than 10 percent of their available funds during the year

A substantial amount of dry powder in tech-focused private equity funds is poised to drive future software investments. After a temporary slowdown in 2021, the growth in dry powder levels surged again, increasing by $68 billion between 2021 and 2023. This reflects sustained investor interest in the software sector. However, the potential effects of challenges in the banking sector during 2023 on this momentum remain uncertain.

Anyway we saw some very interesting news in the market this week.There is a lot of movement in the secondary markets, with Stripe, Revolut and OpenAI all letting investors or employees to cash out some shares. Could it be the start of a series of liquidity events in the market? Then we saw Klarna reporting a full quarter of profit in Q3, and Spendesk launching their own financial institution. In the VC market, Theory Ventures closed a $450 million fund, and Extantia raised a $204 million climate fund. But also 21 Invest in Italy and Illumen Capital launching new funds. In the Italian market, we saw Bending Spoons acquiring Brightcove for $233 million and the fintech startup Volta Software raising a $6 million funding round. And finally, some very interesting funding rounds from fintech startups like CredFlow, Fondo, Plum, Cardless, NORBr, Partior, Constrafor, Bleap, Habitto, R2 and many others.

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

Closed deals

• Indian fintech CredFlow raises a $3.7 million series B
• US based Fondo raises a $7 million seed round to empower bookkeeping with AI
• StoreCash secured a $3.7 million seed round to earn cash back instantly at the store
• Amsterdam based NORBr raises $3 million for its global payments platform
• Bond trading platform OpenYield secures $7 million in new funding round
• Aevi secures a $5million venture debt funding from Salica Investments
• San Francisco based fintech Cardless raises $30 million for its co-branded credit card solution
• AI wealthtech startup Range secures a $28 million Series B funding round
• London based OpenTrade secures $4 million to build the next gen of real-world asset backed lending
• Boosted.ai raises $15 million for its AI driven solution for investment managers
• Blockchain payments platform WadzPay secures a $36.7 million funding commitment from GEM
• Plum receives an additional $5 million investment from Eurobank
• Partior secures a $80 million funding round to innovate global financial settlements
• Capitolis secures a $20 million funding round with the participation of many Wall Street giants
• Constrafor secures $264 million to reshape construction finance
• B.P. Marsh & Partners Plc invests $12.6 million in XPT Group
• Scottish Equity Partners (SEP) invests in account payable platform Springtime Technologies
• Former Revolut employees duo raises $2.3 million with Bleap to build a blockchain based bank account
• Japanese fintech Habitto raises a $11.7 million series A
• Google backed R2 raises $59 million between equity and debt

Insights on the VC industry

• Illumen Capital closes a first $32.75 million fund to support emerging fund managers and founders
• 21 Invest launches a healthcare fund with a first target of $70 million
• San Francisco based VC Theory Ventures closes a second $450 million fund
• California based Ferment launches a $20 million Venture Studio

News on the market

• Stripe to buy back shares in a tender offer at a $70 billion valuation
• Revolut facilitated some of their early stage investors to cash out $300 million of shares
• Revolut released a snapshot of their 2025 roadmap, and it includes AI agents, mortgages and smart ATMs
• Revolut will release Revolut Terminal in Italy next week
• Klarna reports a SEK260 million profit in Q3 and strikes some partnerships ahead of holiday season
• OpenAI allows employees to sell shares to SoftBank Group Corp. for $1.5 billion in a tender offer
• Checkout.com expands in Japan and integrate Bizum in Spain
• Spendesk officially launches its own payment institution: Spends Financial Services
• Deel announces the acquisition of the payment startup Atlantic Money

A special look in the Italian market

• Bending Spoons acquires Brightcove for $233 million
• Built between Milan and Paris, Volta Software raises a $6 million funding round to build a Shopify for B2B transactions

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

Events you don’t want to miss

• Blockchain week | Luxembourg 9-13.12.2024

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.
• 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.

• 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 #56