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🌊The Fintech Wave #55
hope you all had a great Thanksgiving🦃 and are ready to kick off the week. Super interesting week both in the USA and Europe. UK-based digital banks raised money and published financial reports although they are private companies - a rare occasion to get some insight into a private digital bank. BlockFi is filing for immediate bankruptcy. Startup Pipe could be in problems - all founders are stepping down. On the other side, a similar startup for the European market raised more money. We have some great tweets at the end.
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European News and Funding
Revenue-based financing startup from France is ramping up💳
Same as the other competitors, businesses can fill in some information, request money from Karmen (from €10,000 to €5 million), and get it approved within 48 hours. There are more than 10 players in the European revenue-based financing market and it will be interesting to see how will raising interest rates impact this business model.
Atom Bank⚛️raises £30M
UK-based digital bank, Atom Bank, raised a new round and postpone its IPO until 2024. This makes sense considering the current market situation. Apart from other digital banks that only offer savings accounts and debit cards, Atom is also offering mortgages to its customer. This is what were are talking about all the time - in order for digital banks to reach profitability, they need to enter into lending products.
Although the bank is still private, they publish its financial report, which is great. It gives us some interesting insights. The bank has 123.000 customers and £3.2B in savings balances. In terms of finances, the bank has £46.8M of revenue and a loss of £9.1M which is not that bad. You can find the report here.
Americas News and Funding
Pipe’s leadership is stepping down🏃
It looks like there could be problems in the fintech startup - Pipe. The company was the fastest fintech to reach a $2B valuation after it raised $250M last year. Pipe is the marketplace where SaaS companies can trade their future revenue for upfront capital. Problem is, SaaS is hit hard by the current crisis and probably some of the companies cannot return money to Pipe. In the lending business is easy to lend money, but it’s hard when you need to get it back.
All co-founders are stepping down, and announcing that they will look for a new CEO.
Of course, the rumors started on Twitter and it turns out that the founders sold secondaries and cash out tens of millions of dollars. A secondary market transaction in venture capital is when shareholders in a private VC-backed company sell their stock to an investor. Other rumors say that Harry Hurst (now ex-CEO) invested $80M into a bitcoin mining company without telling the board.
Tweet that contains rumors is now deleted and CEO wrote a Twitter thread explaining that everything is fine with the business and these were false accusations.
Digital bank for small business🏦raised Series B
Novo, US digital bank focused on small businesses raised $35M led by GGV Capital. Novo offers a free checking account, debit card, and app marketplace with apps for money management, invoicing, etc. The bank claims that already over 175,000 small businesses are using it. Pretty impressive for a 4-years old startup.
FTX story is getting more surreal
We are closely following the FTX situation, so we can share the highlights.
Turns out SBF's (FTX CEO) parents bought $120M worth of properties in the Bahamas, with FTX money. But it’s getting even crazier. Turns out FTX invested $11.5M in a rural bank called Farmington State Bank, the 26th smallest bank in the country with only 3 employees with a net worth of only $6M. No internet banking, and no ATM.
The $11.5m was for 10% of the bank (valuing it at $115m when deposits were $10m). Before the acquisition, the bank’s deposits had been at a steady $10 million for a decade In the 3rd quarter of this year, the bank’s deposits jumped nearly 600% to $84 million Nearly all of that increase, $71 million, came from just four new accounts. Some shady business was done there.
Also, turns out that FTX donated $70M to politicians for the elections. $70M of money that their customers will never see again.
BlockFi files for bankruptcy📉
Crypto trading platform, BlockFi, is going bankrupt. It’s one of the most popular crypto apps with over half a million users. The company is well-known for its BlockFi Rewards Visa® Signature Card which allows users to earn 1.5% back in crypto on every purchase.
There could be over $10B of customers’ assets under BlockFi.
Tweets and Threads of the Week
She thinks BTC will be worth $1M per coin and her company, Ark Invest, is continuing to buy BTC👇
Something to think about👇
If you are investing, this will be an interesting observation👇
Airbnb in the early days👇
Its hard to build a fintech