Phrenology brain. Unknown.


#1: A Healthier Gambling App

What happened?

A new neobank offering prize-linked savings accounts (PLSAs) raised a seed round:

Layup, a challenger bank offering prize-linked savings accounts for sports fans, today announced a seed fundraising round of $2.3 million. The company will use the funds to expand product capabilities, recruit top talent, and market its unique game-based savings application to sports fans and other end users.

Layup has created the next evolution of PLSAs by offering competitive, chance-based sports games. Fans are rewarded for saving through increased opportunities to participate in equal odds sports-based games. Layup’s product provides the excitement and feel of sports betting without the downside, promoting savings instead of losses. Layup users never risk their hard-earned cash. The end result: Layup users get a stake in the game while saving for their future.

So what?

I’ve written about prize-linked savings accounts before. Yotta is one of several fintech companies leveraging PLSAs as their wedge product. 

The twist with Layup appears to be its focus on tying the lottery/gambling element of PLSAs specifically to sports betting, which is an industry that has absolutely EXPLODED in the last few years. Indeed, the founders of Layup see their mission not as building a better bank, but rather as building a healthier gambling app:

“We’re not building a better bank. We’re building a sports entertainment product that promotes positive and healthy financial habits,” [Owen] Monagan [co-founder and CEO of Layup] noted. “We don’t see ourselves as offering a competitive interest rate, we more see ourselves as competing with these sportsbooks or fantasy sports, for attention. And we think we can grasp that attention because we have a simple solution, and people don’t have to risk their money.”


I actually think the timing here might be really good. It seems almost impossible that our society’s current obsession with sports betting won’t lead to a hangover for the entertainment companies and sports leagues that are feeding that obsession. There is a reason that professional sports have traditionally stayed away from gambling. It leads to bad outcomes for fans, and those bad outcomes tarnish the leagues’ brands. When that happens, I could see companies being suddenly interested in a healthier alternative. Layup sees the same opportunity:

it comes down to the overnight shift from sports betting being an underground product that was frowned upon to having every halftime show featuring segments about betting lines. It’s all of the signs of a perception bubble, our positioning just makes sense. Regulators and fans will change their opinion on betting as the horror stories come to light, and that’s where we come in. Layup is the only sports entertainment company that is actually trying to help fans, instead of taking from them. 

#2: On Trend

What happened?

A fintech infrastructure company raised a Series A: 

Vero Technologies, a wholesale financing technology and loan servicing platform, today announced the close of its $8.5M Series A funding round. … Vero will use the capital to accelerate the growth of its lending-as-a-service (LAAS) offering, giving banks a digital solution for the financial processes that stand in the way of their expansion in the wholesale financing space. 

So what?

In my essay last week, I wrote about a number of fintech trends, including fintech becoming more boring and banks finally finding ways to harness fintech innovation.

Well, here is a perfect example.

Vero provides a lending-as-a-service solution that enables community banks to get into “floor plan” financing, which is lending that enables manufactured goods dealers (auto, powersports, agricultural equipment dealers) to acquire inventory from manufacturers and suppliers. This is more difficult than it sounds because of the specific challenges associated with originating, servicing, and monitoring the assets that these dealers are acquiring. Vero provides an out-of-the-box platform that allows banks to provide this type of financing to dealers in their communities.

Very boring!

And Vero’s lead investor for this funding round is BankTech Ventures, a VC firm founded to channel fintech innovation into the community bank space!  

Join Fintech Takes, Your One-Stop-Shop for Navigating the Fintech Universe.

Over 36,000 professionals get free emails every Monday & Thursday with highly-informed, easy-to-read analysis & insights.

This field is for validation purposes and should be left unchanged.

No spam. Unsubscribe any time.

#3: Will the CFPB be Ready for the Next Gemini Earn?

What happened?

Gemini Earn users may finally get their money back:

Cryptocurrency lending operation Genesis and its parent company Digital Currency Group (DCG) say that over 230,000 retail creditors who used Gemini’s Earn program stand to be made “nearly whole” under a proposed remuneration deal to be voted on later this year.

Earn was offered to customers of the Gemini crypto exchange, but Genesis supplied the financial infrastructure that ran the program. That turned into a problem for Gemini customers when Genesis was forced to halt withdrawals and then filed for bankruptcy protection.

So what?

OK, I’m happy that Gemini customers are getting their money back. And I could not be more apathetic about what this means for the drama between the Winklevoss twins and Barry Silbert (which is like The Social Network, but terrible).

The thing I really care about is making sure that products like Gemini Earn never see the light of day again.

Earn (and all of the similar crypto lending products that were launched by other consumer-facing crypto providers) was presented like it was a bank deposit product. The marketing materials for it included words like “earn”, “interest”, and “APY”. It explicitly compared itself to bank deposit products by claiming that Earn customers would “receive more than 110x the average national interest rate”. When customers asked if their money was safe, Gemini misleadingly referenced FDIC insurance:

In correspondence with Earn customers reviewed by Axios, Gemini’s discussion of FDIC insurance appeared to reference the firm’s deposits at outside banks — not its own products. But customers said they did not appreciate that distinction. Plus, the safety claims concern its stablecoin, GUSD — but not the yield-bearing Earn product itself.

The New York Department of Financial Services reportedly investigated Gemini over this, but it’s unclear if anything ever came of that, and, as far as I can tell, no federal regulators ever got involved in this or in other, similarly confusing crypto lending products. Not the FDIC or the FTC or the CFPB.

And my question is, why not?

Let’s put aside the potential false claims of FDIC insurance, which is a very narrowly defined problem that the FDIC is very focused on. Where is the CFPB when it comes to crypto and UDAAP? There is egregiously deceptive stuff happening [gestures wildly] everywhere in crypto. Where are the enforcement actions? When President Biden issued his Executive Order on digital assets, he specifically asked the CFPB (and other agencies) to protect customers from any “unfair and abusive acts or practices” that may result from digital assets and distributed ledger technology.

Crypto lending products are, for the moment, dead. But we’re fooling ourselves if we think that a similarly risky and confusing bank-account-like product isn’t going to pop up at some point in the future. I’m hoping that the CFPB and other federal regulators are going to be ready when that happens.        


#1: Fintech Fuels Global Payments (by a16z)

The good folks at Andreessen Horowitz have put together the most comprehensive collection of resources and insights on the fintech innovations that are slowly revolutionizing the ways we move money across borders that I have ever come across.

Bookmark this one.  

#2: The Reading Unlock (by Trung Phan, SatPost)

I realized the other day that most of the interesting bits of general knowledge that I share with the people in my life are sourced from Trung’s SatPost newsletter. It’s incredible how much I enjoy this newsletter (and the Not Investment Advice podcast).

This one was especially interesting. An overview of entrepreneurs being inspired by specific books and articles that they’ve read. 


What are the fundamental limitations in loaning money to small businesses (acquisition, underwriting, servicing, etc.)? And how much further, if at all, can we push on those limitations using technology?

Alex Johnson
Alex Johnson
Join Fintech Takes, Your One-Stop-Shop for Navigating the Fintech Universe.

Over 36,000 professionals get free emails every Monday & Thursday with highly-informed, easy-to-read analysis & insights.

This field is for validation purposes and should be left unchanged.

No spam. Unsubscribe any time.