From: RegTech Analyst
Last week’s FinTech funding rounds highlight the fractured neobank scene, show the sector’s coronavirus struggles and demonstrate some areas industry stakeholders should be interested in right now.
Rippling bagged the biggest round seen in the FinTech sector last week by scoring $145m in its Series B round. That being said, some other investment deals offer huge insights into the market.
Two of the companies that stand out are the challenger banks Bnext and Finndon. These reasonably new players in the neobank segment raised money at a perilous time for the industry. Monzo and Starling Bank announced their latest annual results last week, which provide an insight into just how fractured the space currently is.
Let’s start with Monzo. Twitter quickly filled up with doomsayers predicting the imminent collapse of Monzo when the digital lender unveiled its annual results last week, echoing similar rumours at the beginning of the Covid-19 outbreak.
There’s a reason for the negativity as Monzo’s post-tax losses doubled from £47.1m in 2019 to £113.8m in 2020.
But while accountancy experts were quick to dispel the challenger bank’s auditors’ talk of there being “material uncertainties that cast significant doubt upon the Group’s ability to continue” as fairly standard accountancy speak as businesses must highlight big risks, there’s no doubt that Covid-19 has had a negative impact on Monzo.
In June, the company raised a £60m top-up round, which valued the company at $1.24bn. Impressive as that might sound, it represented a 40% valuation drop in just one year. It had been valued at $2bn in 2019 after a £113m round. Moreover, since the pandemic broke out, Monzo has had to fire or furlough hundreds of staff members and close its Las Vegas office.
Although, it wasn’t all bad news. For instance, customers increased the average funds stored on their Monzo accounts from £142 to £359, suggesting a wider acceptance of its services beyond it just being used as a spending card. It also doubled the amount lent from £16m to £124m in the last year.
In contrast, people were quick to celebrate Starling Bank’s annual results, despite it also doubling its losses in the same period. It’s losses grew from £26.9m to £53.6m over the last year.
One of the reasons why Starling Bank was still bullish, despite the losses, was that it had been able to up its lending capabilities to support small businesses struggling because of Covid-19.
The lending boosted its top line, with the net increase making up the majority of the £6.7m revenue it enjoyed in July. It now has a run rate of £80m. The company is aiming to break even at the end of the year and to expand to Ireland at the beginning of 2021, having just restarted its licensing talks with the Irish central bank.
Interestingly, loan schemes to support UK small businesses through the coronavirus crisis was also one of the key factors behind lending company iwoca’s £100m raise last week.
Not all FinTechs have been so lucky though. In early July, we reported that neobank Tide had been forced to cut off its support to the Bounce Back Loans scheme because it had been unable to secure funding for the loans.
At the time, Tide CEO Oliver Prill said his team was still in talks with the HM Treasury to convince the government to provide funding directly to smaller lenders like Tide instead of them having to source “capital from investors or other financial institutions.” By the way, as we get into more below, Tide was one of the companies that topped up its coffers last week.
Additionally, last week a parliamentary group criticised UK regulators’ treatment of the country’s neobanks during the pandemic. The All-Party Parliamentary Group on Challenger Banks and Building Societies was particularly critical about the guidance and support offered to the sector during the coronavirus crisis.
The group accused lawmakers and regulators of overlooking challenger banks and building societies’ needs and, instead, focused on supporting bigger businesses. For instance, while big banks’ staff were deemed to be essential key workers, the group noted that the same curtsey was not extended to smaller banks or building societies.
Buckle, the gig economy InsurTech startup, was another one of the companies to raise a round last week. This invites us to briefly mention that the gig economy is another area for FinTech businesses to be interested in. There’s a lot of things happening in the sector. In late July, InsurTech startup Zego inked a partnership with e-scooter company Ginger to support its trial in the UK.
FinTech company Sonovate provides another example. The company is set up to help businesses work with temporary workers, including recruitment agencies, consultancies and on-demand marketplaces, to grow through smart, fast and flexible finance. The company teamed up with RegTech venture TruNarrative in February to bolster its onboarding processes.
Student loan startup Eduvanz’s recent raise is another round from last week that highlights an interesting segment in the market. As we noted earlier this week, it is not the only startup launched to support students that have recently raised money. For instance, Leap Finance raised $5.5m in March, Savi Solutions PBC netted $6m in Series A round in April and Splash Financial bagged $12.3m in May.
Of course, the rounds raised this week also saw the regular smattering of cybersecurity fund raises we’ve become accustomed to during the Covid-19 crisis. As we’ve said in the past, this is hardly surprising as businesses are looking to strengthen their digital defences to fight back against the rising tide of cyber criminals trying to leverage the pandemic for their own criminal endeavours.
With all that in mind, let’s take a deeper look into the companies that raised money last week.
Payroll management company Rippling scores $145m in its Series B
While Rippling may be one out of many HR management and payroll dashboard on the market, it was the only FinTech in this segment to bag a hulk-sized $145m Series B round last week.
Founders Fund led the raise, which also enjoyed cash injections from Greenoaks Capital, Coatue Management, and Bedrock Capital, as well as previous Rippling backers Kleiner Perkins, Initialized Capital and Y Combinator.
So what has Rippling done to justify such an impressive raise? Well, the company has developed a dashboard to help companies manage their employee data and operations, including payroll, app management, device management and employee benefits.
The technology can sync all of a company’s HR data with payroll to ensure paying employees is streamlines. Compliance and tax filings are automated, hours can be tracked, reports can be customised and people can be paid around the world.
The FinTech came out of stealth mode in 2018 and has since grown its team to 250 employees and attracted thousands of customers, it claims.
iwoca collects £100m to support businesses struggling from the pandemic
Small business loan provider iwoca has reportedly raised £100m in funding to increase its capabilities as a Coronavirus Business Interruption Loan Scheme (CBILS) provider. The investor remained unnamed.
The British Business Bank is operating the CBILS through more than 90 accredited lenders, which include high-street banks, challenger banks, asset-based lenders and smaller specialist local lenders. It is set up to support financial support to small businesses across the UK that are struggling because of the Covid-19 pandemic.
Lenders can provide a maximum of £5m through term loans, overdrafts, invoice finance and asset finance, with loans less than £250,000 not requiring a personal guarantee. To incentivise lenders to issue loans, the government is guaranteeing the loan repayments.
Liopa secures £40m funding package from the UK government
Northern Ireland-based Liopa, which offers automated lip reading technology, has been awarded a £40m grant from the UK government. The startup will use the cash to strengthen its technology and research, as well as helping it navigate through the crisis brought on by the pandemic.
Volante Technologies bags $35m in funding as it preps for big expansion plans
Volante Technologies, which offers payments and financial messaging solutions via the cloud, has bagged $35m in its latest equity round. The round was led by Wavecrest Growth Partners, with contributions also coming from BNY Mellon, Citi Ventures, PostePay and Visa Inc. With this new funding, the company will increase its cloud expansion and enter new countries market segments and industry verticals.
Clearbank and Tide bag £25m and £35m
ClearBank and Tide have formed a partnership to help UK SMEs recover from the coronavirus crisis. As part of their mission, the banks have applied for two grants from the Capability Innovation Fund worth £25m and £35m. This funding will be used to offer financial support and products which help SMEs facing uncertain times caused by Covid-19 and Brexit. Their partnership will also combine ClearBank’s payments infrastructure with Tide’s digital banking platform to offer an alternative to high street banks.
Rideshare InsurTech startup Buckle bags $31m for its Series A
Buckle is one of the many InsurTech ventures out there combining new technology and insurance in order to reinvent the insurance model for the gig economy. Now it has added $31m to its war chest through a Series A round. The investment was co-led by HSCM Bermuda and Eos Venture Partners.
Having topped up its finances, Buckle is now looking to strengthen its offering and reinvent the insurance model through the use of new data sources to underwrite risk and make insurance more comprehensive, affordable and easy to buy for rideshare drivers.
Silverfort nets $30m in its Series B as remote working boosts customer demand
Silverfort, the cybersecurity and authentication platform, secured $30m in a Series B round last week. Aspect Ventures led the round. Citi Ventures, Maor Investments, TLV Partners, StageOne Ventures and Singtel Innov8 also supported the raise.
The enterprise will use the money to keep developing its business and its secure authentication platform. The solution provides access policies for any user, device and system, both on-premise and in the cloud. Its user verification tools include multi-factor authentication, risk-based authentication, zero trust and more. Silverfort’s AI-driven risk engine is said to automatically adjust procedures based on a user’s behaviour and stop threats such as account takeovers and ransomware.
Censys secures $15.5m in funding and launches a new cybersecurity tool
Censys, a cybersecurity platform offering internet-wide visibility and real-time risk assessments around threats, has secured $15.5m in its Series A round. The investment was co-led by GV and Decibel, with Greylock Partners also participating in the raise.
In tandem with the funding announcement, the company unveiled its new scan engine that monitors 44% more of the internet than any other cybersecurity solution, it claims. The tool has been in the works for two years.
Shengli Financial Software said to close its $14,3m Series B round
China-based FinTech company Shengli Financial Software has reportedly raised RMB 100m ($14.3m) in its Series B+ round. Sequoia Capital China reportedly led the round, which also saw participation from Fortune Capital, Zhejiang Paradise Silicon Valley Asset Management Group, Zhejiang United Investment Group and Eastmoney.com. Shengli develops financial software aimed at helping financial institutions to implement digital tools for securities, futures, exchanges, trading and more.
Bnext bagged another $13m in its Series A round
Spanish neobank Bnext first secured $25m in its Series A round in October. Now, or rather last week, it revealed that it had topped up its accounts with another $13m. Having led the round in October, DN Capital, Redalpine and Speedinvest returned this time around too. The raise is also supported by FinTech investor Enern, USM and Conexo. Bnext launched in 2018 and today boasts of having over 300,000 active users, processing more than €100m ($118.7m) in monthly transactions.
PropTech platform Zibo said to raise $10.5m in funding
The landlord payment and financial managment app Zibo has secured a $10.5m funding round. Canaan Partners led the round, with contributions also coming from QED Investors, Khosla Ventures and SVB Capital.
userlane netted €10m in a Series B round
Digital adoption software platform userlane has reportedly secured a €10m Series B round to support its European expansion. The investment was led by US-based venture capital and private equity firm Five Elms Capital, with additional commitments coming from previous backers Capnamic and High-Tech Gründerfonds.
JetClosing bags £9m in its Series B round
JetClosing is the second PropTech venture on this lis. The startup bagged a $9m Series B round last week, having the ambition to use the money to expand into new markets. T. Rowe Price Associates led the round. Pioneer Square Labs (PSL) and Trilogy Equity also participated. This investment brings JetClosings’ total capital raised to $35m.
Clarilis bags £6m in its Series B
Last week we reported that Clarilis, a document automation platform, collected £6m in its Series B round. The company will use the money to fund its international expansion plans. The round was backed by Mercia Asset Management and Northern VCTs which invested £2.5m to the Series. The remaining £3.5m came from growth equity investor Gresham House Ventures.
kompany bags almost €6m in new round
Back in August 2019 we reported that know you customer company kompany had raised an undisclosed amount to further its growth. Now, almost a month to the day, the startup is back, although this round it actually disclosed that it had collected €6m in its raise. The new round is the startup’s biggest to date and brings the total injected into the venture to €14m.
Money management app Sync. raises $5.5m in seed round
Account aggregation service Sync. has reportedly netted £5.5m in a seed funding round to support its European expansion. The company is already looking to raise its Series A round. Sync. allows users to manage all of their financial accounts in a single location, simplifying the transferring of money between accounts. Accounts all come with a Mastercard card. People can also transfer money to other Sync. users for free.
Orum bags $5.2m in new round
Orum has secured $5.2m in its seed round as it continues its journey to improve the real-time moving of money. There reportedly oversubscribed seed round closed on $5.2m and was led by Homebrew. Other contributors include Inspired Capital, Acrew, Bain Capital Ventures, Clocktower and BoxGroup.
Bill payment service Ayoconnect said to raise $5m in its pre-Series B round
Indonesia-based Ayoconnect has reportedly bagged $5m in its pre-Series B round to continue its goal of increasing financial inclusion. The round was supported by BRI Ventures, Kakaku.com, Brama one Ventures, Finch Capital and Amand Ventures.
TaxScouts said to raise $5m in its Series A round as it eyes European expansion
London-based tax support company TaxScouts has reportedly netted £5m in its Series A round, which was led by Octopus Ventures. Other contributions to the round came from existing TaxScouts investors SpeedInvest, Seedcamp and Finch Capital, according to a number of reports in the media. The round also saw Clocktower Technology Ventures join the round, TaxScouts’ first US-based investor.
Compliance solution for insurance AgentSync said to raise $4.4m in its seed round
AgentSync, a compliance platform for the insurance space, has reportedly bagged $4.4m in its seed round. The investment was co-led by serial entrepreneur Elad Gil and Caffeinated Capital. Other contributors to AgentSync were a range of Silicon Valley-based angel investors.
Eduvanz bags $3m in new investment round
Student loan startup Eduvanz has secured $3m in a Series A round led by Sequoia’s SCI Investment VI fund. The Mumbai-based startup also enjoyed a capital influx from Redwood Trust and QED Innovation Labs, Inc42 reported. The startup uses technology to help students get credit scores based on their socio-economic and demographic background.
Finndon raises £2m as it begins its aim of being the UK’s No. 1 challenger bank
Finndon, a new UK-based challenger bank looking to launch next year, has reportedly raised £2m from its founders. The capital will be used to support the creation of its infrastructure and the process of receiving authorisation from the Financial Conduct Authority to begin operations.
RegTech Thentia secures investment from Business Development Bank of Canada
Thentia, which helps companies meet their regulatory requirements, has bagged a Series A investment from the Business Development Bank of Canada (DBC). The value of the investment was not disclosed, but the capital came from the BDC’s Clean and Energy Venture Fund.
hey closes a Series E round to support the adoption of its technology
hey, which helps businesses in Japan create online stores and accept cashless payments in-store, has closed a Series E round led by global private equity investor Bain Capital Tech Opportunities. Other contributions came from PayPal Ventures, Goldman Sachs, YJ Capital, Anatole, and existing investor World Innovation Lab.
Switzerland-based AgAu.io closes seed round
Switzerland-based AgAu.io, a peer-to-peer (P2P) electronic money system, has closed an angel round of funding. This investment has been raised to support the launch of its product, which is set for launch later in the year. Former Arab Bank Switzerland CEO Nicolas Chikhani was among the investors of the round and has joined AgAu’s board.
Fundraising platform CrowdPouch closes angel investment round
India-based crowdfunding platform CrowdPouch closed off its first year of operations by announcing the close of an angel investment round. Elina Investments led the round. With the capital injection, CrowdPouch plans to increase its product development, bolster branding efforts and expand its team.
Siepe rakes in Series A funding to bolster the development of its platform
Data and analytics solution Siepe has closed its Series A round to help it bolster its cloud-based software-as-a-service offering. The capital injection will also help the company to improve its IT infrastructure service offerings, increase the size of its executive team and boost its sales and marketing efforts.
MenaPay secures funding as it hopes to continue growth in the MENA region
MenaPay, which aims to become the largest digital finance platform in the Middle East and North Africa (MENA) region, has closed a new funding round. CoinShares Ventures led the raise.
MenaPay is helping consumers purchase digital items like game codes, gift cards, or other digital items, even if they do not have a traditional bank account. Users can transfer money, maki instant payments, buy and sell cryptocurrency, and store and manage various digital assets.
The company’s goal is to become the MENAs first “SuperApp” which provides consumers with finance, entertainment, and social networking in a single app.
Copyright © 2018 RegTech Analyst
