Illustration of fishing from Sporting Sketches (1817-1818) by Henry Alken.

3 Fintech News Stories

#1: Fintech’s New Favorite Customer  

What happened?

A UK-based fintech company focused on payments operations raised a seed round:

Payable announced a new $6-million seed round on Tuesday.

The company is a platform designed to streamline payment operations and automate business ops.

The round was co-led by CRV and Earlybird Venture Capital, with participation from Conversion Capital and Clocktower Ventures.

So what?

I think we may have over-indexed a bit, over the last decade in fintech, on building infrastructure for engineers and product managers. 

I mean, I get it. Software is eating the world, and we all wanted to hitch our wagons to the folks that were shipping the software. 

The problem is that we work in financial services. And when we make it easy for a company’s engineers and product managers to embed payments and other financial services into their own products, we are inadvertently creating a ton of additional work for that company’s finance team.

And the way that companies tend to deal with this burden is, believe it or not, by throwing more people at it:

Companies expend huge amounts of effort and money building payment operations. Today, treasury and finance teams have to become quite large to manage their payments.

This is not just a problem for traditional organisations; we’ve heard this is happening everywhere from listed companies to start-ups. They are using a tangled web of spreadsheets to track and make payments. That’s insane.

Look, there are 8k+ Payment Operations Jobs just in the UK, and 80 added every week.

There is a huge opportunity to help finance teams deal with this problem using software.  

#2: TripActions Tops Up its Fuel

What happened?

TripActions raised more money:

TripActions, a corporate travel and expenses company, has raised a combination of equity and debt at a post-money valuation of $9.2 billion, up from its prior valuation of $7.5 billion. The funding is a $154 million equity round from investors, including returning investors Andreessen Horowitz and Premji Invest, and a $150 million structured financing deal from Coatue.

The deal comes weeks after the Palo Alto-based company was said to have filed confidentially to go public in the second quarter of next year at a $12 billion valuation. Totaling $304 million, the Series G financing has been in the works since at least May, confirming earlier Bloomberg reports that the travel company was seeking financing at a higher valuation. 

So what?

Three things here.

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1.) Raising money in advance of an IPO isn’t unheard of or a sign that the plan is changing, as TechCrunch noted:

Why the deal now, ahead of a looming IPO? TripActions didn’t comment on any public listing plans, but it’s not unique to see a company raise ahead of a financial event of that scale. IPOs take a long time, and are expensive; so TripActions could be bringing on strategic investors to help guide the process, or just land cash to give it buffer room in case its timeline change due to market volatility. 

2.) If you haven’t been paying attention to TripActions and you are maybe a bit surprised at how well the company seems to be doing (especially in the current economic environment), take a listen to this episode of my podcast – The Fintech Factor – featuring Michael Sindicich, EVP and GM of TripActions Liquid (the company’s corporate card and spend management product).

3.) As part of this latest round of funding, Coatue Ventures’ Dan Rose will join as a board observer at TripActions. This is interesting because Mr. Rose is already a board observer at Ramp, which is, since the launch of Liquid, a competitor of TripActions. Hmm. 

#3: A Misstep

What happened?

Step, a neobank focused on teens and young adults, borrowed some money and launched a new product feature:

The company just launched a crypto investing feature to the nearly 4 million users on its platform, CEO and founder CJ MacDonald told TechCrunch in an interview.

Step also announced today that it has borrowed $300 million in a debt financing led by Triplepoint Capital and Evolve Bank & Trust. The new funding represents a substantial portion of the $500 million total Step has raised to date, most recently in a 2021 Series C equity round from investors including Coatue, Stripe and angels such as Charli D’Amelio and Jared Leto.

So what?

OK, first, and this isn’t a big deal, but I’m in the mood to rant, so … why is it important that we keep mentioning the names of celebrities that have invested in fintech apps? Did we all unknowingly sign a contract requiring us to do this in perpetuity? Are Charli D’Amelio and Jared Leto actively involved in the day-to-day operations of Step? Do they sign off on every product roadmap change? Also, I know Charli D’Amelio is kinda the spokesperson for Gen Z (at least on TikTok), but why is Jared Leto relevant to Step’s target customers? Dude is 50 years old.

Anyway, the thing I actually wanted to rant about is this:

The company chose to launch its crypto offering before a stock investing feature, the latter of which MacDonald said is currently in the works for Step customers and will likely launch before the end of the year.

Nope nope nope nope nope nope. I’ve written about this before, and I’ll keep saying it – if you actually care about helping young adults learn about finance, establish good habits, and start building wealth, you do not introduce crypto investing before stock investing.

2 Fintech Content Recommendations

#1: Faster Payments with FedNow (by Jared Franklin, Costanoa Ventures)

Jared, an investor at Costanoa Ventures and long-time fintech operator, is brushing up on various fintech topics and is, much to our collective benefit, sharing his learning in public!

This piece is a great overview of where we’re at (and where we might be heading) with faster payments in the U.S. It’s a wonderful starting place for anyone who is curious about the topic.

#2: Will the Metaverse Replace PCs? (by Nathan Baschez, Divinations)

First, I gotta say that I find the haterade that has been getting heaped on Mark Zuckerberg’s efforts to pivot Facebook into the metaverse to be slightly misplaced. Isn’t this exactly the way that we want executives at large companies to act? Not resting on their laurels, but making big bets on the future and risking everything to disrupt themselves before some startup can? Isn’t that what we kill big bank CEOs for not doing?

Of course, if you are the CEO of a big company and you are putting all your chips down on a bold bet to secure your company’s future, you have to be right … and I’ve never really thought that the metaverse was a great business idea.

Nathan does a great job in this essay explaining, with very detailed and sound reasoning, why it’s probably unlikely that VR and the metaverse becomes the next big computing platform.

1 Question to Ponder

Which early-stage fintech companies (less than $20 million raised) are the best storytellers (either about themselves or the industry or both)? And what makes them so good?

If you have thoughts on this question, hit me up on Twitter or LinkedIn!

Alex Johnson
Alex Johnson
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