Hey hey fintech fans,
This week we had a bit of a dilemma — is a Twitter rift a what’s hot or what’s not? We decided on the latter, because idea snatching is never good. But some Twitter heat certainly does spice up our little sector. Also up this week: - The fintech that wants to enable BlackRock's voting right plans
- Another backwards step for fintech feminism
- What does Klarna's credit score move really mean?
— Amy, fintech reporter & Steph, writer
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💵 Splashing the cash. Last week saw BNPL provider Scalapay announce a cheeky $27m extension of its Series B round — from its compatriot Poste Italiane. It boosts the whopper round to $526m, not bad for Italy’s first unicorn. And the news dropped just a week after its UK challenger Starling Bank completed a £130m internal fundraise for a planned acquisition spree — it's now valued at £2.5bn. All eyes are on where these two splash the cash next.
🇫🇷 The big old regulatory nod. The world’s biggest crypto exchange Binance recently landed regulatory approval from France and permission to expand in Europe — the first approval of the exchange by a G7 member. Binance chief exec Changpeng Zhao, or “CZ” as he’s known to crypto fans, is a big fan of the country, as he recently told Sifted. As part of a €100m investment Binance has also promised to help develop Web3 and blockchain projects at French incubator Station F.
💰 Another SaaSy raise. This morning, it comes in the form of a $200m equity and debt Series D raise for Paddle, which provides the behind-the-scenes billing payments infrastructure for those hot hot SaaS companies across 200 markets. The round was led by US investment giant KKR and makes Paddle the UK's latest unicorn. It also brings the total amount raised by the fintech to $293m.
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💡 Snatching ideas. So, Stripe announced its new Financial Connections product, which aligns bank accounts’ financial data to speed up some transactions. But that's exactly what Plaid, a former Stripe partner, does. According to Plaid’s chief exec Zachary Perret, in a (now-deleted) tweet to Stripe business lead Jay Shah, this partnership involved quite a few “probing questions” — which he seemed upset to find resulted in a pretty similar product to his own. Perret’s tweet has now vanished from the Twittersphere, though, and been replaced with this … peacemaker (?).
💼 Lots of layoffs. Just after we wrote about B2B BNPL hotting up in Europe, an Aussie oldie, BizPay, reportedly cut 30% of its workforce. Then in the US, we’ve seen Robinhood, Blend and Better.com say goodbye to staff. How long before this trend plagues Europe?
♀️ Grid Girls, but make it fintech. Over at Sifted fintech towers, we're already excited for Money20/20 in June — watch this space for talk announcements. But one thing that didn't spark our enthusiasm? The fact you can hire "booth models". The origins of this idea are yet unclear... is it official? Or the result of some nifty email scraping by the provider company? But nevertheless — c'mon, fintech world. Not another backwards step.
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Meet the three uni friends that want to give voting rights to BlackRock shareholders |
Fintech Tumelo started off life as a project to get the University of Cambridge to be a more engaged shareholder with its £4bn endowment fund. But now the startup — which aims to take shareholder activism to retail investors who invest through fund managers — has just raised a $19m Series A led by the US-based fintech investor Treasury, to conquer the US.
The dream? Policy change that aligns investment managers with shareholders. And to make that happen the world's biggest fund manager BlackRock will have a big role to play.
Amy O'Brien finds out more about the cofounders' ambitious plans. |
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How many people in the UK are overlooked and financially underserved?
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A report from PwC and credit app TotallyMoney found that there are 20.2m people in the UK that are financially underserved today. That could be due to a thin credit file, a bad credit history or a low income, and means more than one in three adults may have difficulty accessing credit from mainstream lenders.
A further 8.9m people showed signs of financial fragility. And with the cost of living rising, we wonder what fintechs will step up to the mark and close the gap. |
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What does Klarna's UK credit score move really mean? |
Europe’s most valuable startup Klarna last week announced that, as of June 1, it will share data with credit bureaus TransUnion and Experian on whether users in the UK pay off their buy now, pay later (BNPL) loans in time. It’s a move that was two years in the making, and ties in with one of the key recommendations of the FCA’s Woolard review into regulation of the sector. So Sifted asked some fintech experts what they thought Klarna had up its sleeve.
Do you think this is a good thing for consumers?
Jeff Tijssen, global head of fintech at Bain & Company:
I think it's a very positive sign, and will ultimately benefit the sector as a whole. Klarna is effectively taking the lead. I know there are other BNPL players that were also looking at doing something similar, so I wouldn’t be surprised if in the near future others follow suit. But obviously they said they've been working with Experian and TransUnion for two years; it isn’t that straightforward to go and do this. So it's not as if you just flip the switch and suddenly you can do what Klarna is doing. It takes time and resources.
Why does being one step ahead of regulation matter for Klarna?
Dan Jones, special counsel, fintech, Baker Botts:
Klarna is doing this to say 'we’re embracing regulation as something that distinguishes us in the market'. There's a lot of market perception at the moment, especially with how a lot of the broadsheets present BNPL as being the next payday lending type issue. But I think Klarna is using this opportunity to say, 'well, we're above that, and we’re market leading in terms of how we comply with regulation'. But at the same time, they're doing this knowing that there’s regulation coming down the line anyway — distinguishing themselves with something that they know they’ll have to comply with.
They [BNPL providers] have all been subject to a recent review and investigation by the FCA anyway under the CRA, so they know that they're going to be the first targets for this.
Is it now an arms race for who will get the thumbs up from regulators? Is it all down to who has the resources to survive?
Jones: That's the distinction between the much smaller players and the Klarnas of the world — the types of clients they’re targeting. Remember, Klarna’s customers are not the end users like you and me. They're the retailers, the brands that want to offer this as a payment mechanism. And the incentive for Klarna is being able to build their platform into high street shops as a mechanism of payment. Those brands want to keep a squeaky clean reputation. So for Klarna, their sales pitch is ‘we're ahead of the game on regulation, and we’re treating customers fairly’.
For the smaller firms that want to offer a cheaper solution, they want to avoid all the costs associated with FCA compliance, creditworthy checks and all these extra processes they have to add on top. For them, they're still trying to gain critical mass by pushing through in the absence of regulation. So they're always going to push the boundaries. And it's something you see across all fintech startups, wanting to push the boundaries of what they can and can't do within the scope of customer fairness and regulation.
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All VCs evaluate founding teams, but are they doing the right kind of due diligence? Join experts from Entrepreneur First and HV Capital as they demystify the founder due diligence process and reveal how the rigid methodology can be improved to capture founders’ potential to develop. Not yet a Sifted Member? Join here.
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Which fintech do you think has the best branding? |
Hey fintech friends, it's Amy (O'B) here. From Yonder and EVERYTHING's swish photography, to Lunar's collab with Will Ferrell — there have sure been some interesting fintech branding moves of late. I'm looking into this fun area of fintech and wanted to ask you, our readers, to vote.
Of all Europe's fintechs, who do you think has the best branding, and why?
Let me know at amyobrien@sifted.eu. May the snazziest branding team win! |
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