Yapily has closed a $13m investment round led by Revolut-investor Lakestar. The open banking startup will use the cash injection to strengthen its grip on the European market.
Apart from Revolut, Lakestar was also an early backer of Skype, Spotify, Airbnb and Facebook.
Yapily’s Series A round also saw the return of its existing investors HV Holtzbrinck Ventures and LocalGlobe, both of which supported the company’s $5.4m seed round in 2019.
Both contributed to the new Series A round alongside a smattering of angel investors including TransferWise’s co-founder Taavet Hinrikus, Twilio’s CTO Ott Kaukver, the former deputy CEO of UniCredit Roberto Nicastro, and Frank Strauss, former CEO of Deutsche Postbank.
In the six months leading up to the announcement, the London-based FinTech saw its monthly recurring revenue has grow by over 500% and quadrupled its headcount in London to 45.
The startup also expanded into Italy, Ireland and France during the period.
The news about the raise also comes as the European financial sector is set to change in a significant way as over 6,000 banks across the continent have been affected by the updated Payment Services Directed (PSD2) officially coming into force in 2019.
Although, the strong customer authentication part of the regulations saw its deadline extended to December 31, 2020 after several banks and financial institutions said they were unprepared for the changes.
As part of the new new regulations, banks will have to share their customers’ financial data with third-party providers through application program interfaces (API) solutions. Many banks are now rolling out their APIs.
Yapily’s new funding round comes against this background, which the startup aims to leverage to consolidate its position as the European backbone of open banking.
“We believe open banking is a force for good,” said Stefano Vaccino, founder and CEO of Yapily. “Using our API and infrastructure, we’re not only providing our partners with strong and powerful connectivity to boost their user experiences. But we’re also giving their customers, whether they be consumers or businesses, greater control of their finances, through the creation of products and services which can fuel greater financial management and accessibility. Something that’s more essential than ever during this period of uncertainty.
“The UK is at the epicentre of the world’s open finance movement, with the industry setting the rules as the world begins to embrace their own open banking positions. We’re pleased to be at the centre of this growth – we’re backed by experienced investors and we’re the only technical provider trusted and chosen by regulators and technical committees. With this funding we intend to drive open banking adoption and its benefits, ensuring benefits are far reaching within the likes of payments, accounting, lending and beyond.”
However, the investment also comes at a time when the world is in the midst of the coronavirus outbreak, which has already seen markets crash, heightened the risk of cyber attacks and wreaked havoc on the FinTech sector.
Researchers and market stakeholders have warned that the pandemic could make it particularly difficult for early-stage startups and FinTechs looking to exit.
“With pressure placed on the world’s economy due to the COVID-19 outbreak, we believe investors have an important role to play in continuing to support innovation to fuel business growth,” said Stephen Nundy, partner at Lakestar, “Now has never been a more important time to drive financial wellbeing and goodwill, and Yapily’s infrastructure is best placed to enable and encourage this across the financial ecosystem.
“With Yapily, we’re investing in market leading technology that is ahead of the competition, both in terms of seamlessness to the end user, and in security and control. Their ‘Open API first’ approach, with no screen scraping or reverse engineering of functionality, ensures all parties are getting the performance, scale, and security expected of such a critical piece of API infrastructure. Stefano and his growing team have deep technical and regulatory expertise, they’re very ambitious, and we look forward to accelerating Yapily’s business growth.”
Not everyone is impressed by the progress made to introduce open banking so far. “The positive effect of open banking on innovation has been nil,” Tom Blomfield, founder and CEO of UK challenger bank Monzo, said recently. “I don’t see any businesses based on open banking in Europe whatsoever.”
He argued that so far, the only companies to have benefited from open banking are big traditional players who have stalled their introduction of API. For new startups, such as neobanks, Blomfield argued that it has so far just been a costly exercise to introduce solutions that “nobody uses.”
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