As COVID-19 continues to wreak havoc in the global economy, FinTech companies have continued to raise capital. Here’s what the rounds from the past seven days tell us.
The global pandemic is changing the world rapidly. This is true for every industry on the planet, including the FinTech and RegTech space. In the months to come, researchers suggest that the startups in these sectors could struggle to raise capital at pre-crisis levels and at the same terms. Therefore, taking a bird’s-eye view at the rounds that do happen could provide plenty of insights for people wishing to understand the trends of the industry.
The biggest round we noticed last week was online banking platform Varo Money’s $241m Series D round. While it, much like most other companies raising money, would use the cash to grow and to develop its solutions, it also highlights a key hurdle for challenger banks to overcome in the US: being approved for a national banking charter.
Smashing that obstacle would enable the FinTech firm to offer credit cards, loans, and additional savings products more independently. But getting one can be tricky. As FinTech Global has reported in the past Varo Money may have received preliminary approval for a national banking chapter in 2018 but has not – even though it is certainly working on it – yet secured a full licence. Moreover stock-trading app Robinhood withdrew its application in November 2019.
And it is clear that the race to get a licence and a stronger foothold in the US is picking up steam among neobanks. In April, UK rival Monzo applied for a US banking licence at the US Office of the Comptroller of the Currency, which marked a serious effort for the challenger banks to launch its services in the country. Of course, that was before reports about the the company being forced to lay off 120 more of its employees and it having to seek out a new funding round between £70m and £80m but at a 40% valuation reduction from previous rounds.
Another interesting thing to note is that J.P. Morgan played a role in both cloud-based communications platform Cloud9 Technologies’ and Varo Money’s raises this week.
Similarly, Barclays also played a role in several rounds this week, by supporting both Cloud9 Technologies’ Series B round and operational resilience platform Cutover’s Series A round.
As what has become a common refrain in these roundups, this week also saw several cybersecurity and digital identity companies raise capital, highlighting the need for compliance and security solutions on the troubling days of COVID-19. That does not mean that it will be smooth sailing for these ventures through the global pandemic.
In fact, as we have reported in the past few weeks, it will probably take another couple of months to see exactly how affected the RegTech space has really been by the coronavirus. Part of that reason is that many of the rounds we have seen in the first two quarters of the years had already been in the works long before the outbreak really took off. Another reason for why the effects may take a while to manifest is because most RegTech investment rounds are still made in North America and in Europe. Both continents didn’t really feel the contagion until the end of February and the beginning of March, meaning that there was plenty of time for investors and entrepreneurs to agree on new deals.
Until then, what the impact of the coronavirus on these industries has truly been is anyone’s guess. Although, we hope that taking a closer look at the 24 funding rounds that caught our eyes over the past seven days could provide some clues.
Varo Money bags $241m in its Series D round as it’s getting closer to becoming a bank
Mobile banking platform Varo Money has nabbed $241m in its Series D round, as it moves through the final stages of its national bank charter application.
The round was co-led by first time Varo backer Gallatin Point Capital and previous investor investor The Rise Fund. Varo’s new funding was also supplied by HarbourVest Partners and Progressive Insurance. J.P. Morgan acted as the sole placement agent for the deal.
Varp will use the cash injection to grow and help create new tools for the platform.
The digital bank initially launched in 2017, offering premium banking products through The Bancorp Bank, to give Americans bank and saving accounts that have no minimum balance.
However, moving through the final stages of a national bank charter application that Varo Money received preliminary approval for as early as in 2018 could become a huge step forward. If it receives this approval, it will be able to offer credit cards, loans, and additional savings products. The national charter application is pending completion of the conditions of the OCC, the FDIC and the Federal Reserve, the bank expects to have approval by summer 2020.
INKY Technology Corporation closes $20m Series B round
Anti-phishing venture INKY Technology Corporation has scored $20m in its Series B round.
The investment was led by Insight Partners. With the close of the round, the company will look to accelerate the enterprise adoption, expand globally and bolster its innovation roadmap.
The investment comes less than a year since INKY closed a $6m round from ClearSky Security and Gula Tech Adventures. INKY has raised a total of $31.6m in funding since it was founded.
Originally, the company launched in 2012 with the plan to improve email inboxes, to make them more manageable essentially. However, the scaleup pivoted away from its email improvement efforts in 2018 to focus on its cloud-based anti-phishing technology.
Cloud9 Technologies collects $17.5m in Series B round
Cloud-based communications company Cloud9 Technologies has bagged $17.5m in a new investment round as it moves to meet the demand for flexibility for financial firms. The Series B funding round was led by a strategic investment from UBS, with participation from existing investors including J.P. Morgan and Barclays. Both those two also supported Cloud9’s previous Series B round in 2018 that saw the company bag $14m in new capital.
Cutover scores $17m in its Series A round
Cutover, a work orchestration platform to improve operational resilience, has received $17m in its Series A round from Barclays and Index Ventures.
The company hopes the fresh capital boost will increase its development capability to expand into new verticals. Furthermore, the company will use the funds to help with migrating to a hybrid cloud model, having wider digital transformation, automating and evolving operational resilience practices and managing ongoing tech change without failures.
RiskIQ closes huge Series D round
Attack surface management company RiskIQ has raised $15m in a Series D round to spread the usage of its solutions.
RiskIQ will use the money to bring its cybersecurity capabilities to critical infrastructure industries, which face a host of unique security challenges entering the new decade.
National Grid Partners (NGP), the venture and innovation arm of British multinational utility company National Grid, was behind the investment.
Data privacy solution 1touch.io closes its Series A round on $14m
Data discovery and privacy platform 1touch.io has closed its Series A round on $14m to help increase its market presence.
The investment was led by National Grid Partners and Jerusalem Venture Partners. Additional contributions came from Connecticut Innovations, Mindset Ventures, and Ocean Azul Partners.
Mortgage comparison platform nesto closes $11.5m in its Series A
Canada-based mortgage comparison platform nesto has closed its Series A round on $11.5m, coming at a time of increased activity on its platform.
The FinTech managed to attract the new influx of capital from several of its partners, including Diagram and Investissement Québec, according to Private Capital Journal.
Latin American FinTech Belvo secures $10m in new investment round
Having bagged $10m from Founder Fund and Kaszek, Belvo is now looking to strengthen its open banking offering for companies in Mexico and Colombia.
Launched in May 2019, the company connects customers’ financial information to mobile phone banking apps.
Founders Fund and Kaszek co-led the $10m round, according to TechCrunch. Founders Fund has previously backed companies Arceo.ai, the cyber risk analytics and insurance platform provider that secured $37m in September 2019.
InsurTech startup Betterview closes funding round on $7.5m
Betterview, which builds predictive analytics for the property insurance space, has closed its new funding round on $7.5m.
ManchesterStory led the investment, with additional commitments coming from Nationwide, EMC Insurance Companies, MaidenRe, Guidewire, Compound, Winklevoss Capital and Chestnut Street Ventures.
The capital from the round will be used to expand its capabilities within the remote property intelligence space.
Brazil-based Accountfy said to bag $6.5m in funding
Brazilian accountant platform Accountfy has reportedly secured $6.5m in its latest funding round which was led by RedPoint eventures and HDI Seguros.
The platform, which is available in Brazil, Mexico, Uruguay, Chile and Colombia, is looking to use the capital to expand into Europe, according to a report from Coverager.
Accountfy aims to help businesses optimise their financial performance with tools that help them to better understand their figures. Its technology supports accounting, planning, management and finance collaborators.
Automated documentation platform Anvil closes its Series A on $5m
Paperwork automation company Anvil has closed its Series A round on $5m, as it looks to help business streamline their processes.
Google’s AI-focused investment division Gradient Ventures led the investment, with additional support coming from Citi Ventures, Menlo Ventures, Financial Venture Studio and 122 West.
The company offers a paperwork automation solution that helps businesses to streamline workflows. Its technology is used by financial services, human resources, technology and healthcare companies.
Australian RegTech Kyckr to raise $6.75m to fund its growth
Aussie customer identity verification company Kyckr is looking to leverage the tightening of anti-money laundering rules and grow on the back of a new funding round.
The venture is looking to raise AUS$8m ($5.4m) before costs via a new share placement to institutional and sophisticated investors.
Magic launches from stealth after close of seed round
Magic, a passwordless authentication platform, has come out of stealth mode after closing a $4m seed round.
The investment was led by Placeholder, with additional support coming from Lightspeed Ventures, SV Angel, Social Capital, Cherubic Ventures, Volt Capital, Refactor Capital, Unusual Ventures, Naval Ravikant, Guillermo Rauch and Roham Gharegozlou.
Powerlytics has secured $4m in new investment
Data provider Powerlytics has scored $4m in a funding round from FinTech-focused investor Brewer Lane Ventures.
In line with the deal, Brewer Lane Ventures founder John Kim will join the board of Powerlytics.
Founded in 2011, the FinTech helps banks, asset managers and insurance companies leverage anonymised financial information from publicly available US government sources.
Identity verification solution for the gig economy Vetty closes pre-Series A
AI-powered employee verification platform Vetty has scored $4m in its pre-Series A funding round, which was led by existing backer 3Lines Venture Capital.
In conjunction with the investment 3Lines general partner Krishna Kunapuli has joined the Vetty board of directors.
Vetty is an AI-backed employee verification solution which is designed for the gig economy. Companies can access a dashboard which streamlines the process of onboarding new staff and the compliance processes such as document checking and identity verification.
Crypto exchange CoinDCX bags $2.5m in funding to support adoption of digital currency in India
CoinDCX, a cryptocurrency marketplace, has secured $2.5m in a strategic investment led by Polychain Capital.
Additional support to the round came from Coinbase Ventures, which is the investment division of fellow cryptocurrency marketplace Coinbase.
With the fresh backing, the FinTech will bolster its #TryCrypto initiative, which aims to boost cryptocurrency adoption in India. In the initiatives first phase, it managed to get more than 50,000 new signups.
Floating Point Group collects $2m for its seed round
Floating Point Group (FPG), which designs algorithmic systems for cryptocurrency trading, has collected $2m in its seed round.
The investment round was backed by AngelList & MetaStable Capital founder Naval Ravikant, pif.vc, Algorand’s CEO Steve Kokinos, BoxOne Ventures, Seabury Global Markets and several asset management executives.
PolicyStreet bagged $1.8m in new Series A round
Malaysian InsurTech startup PolicyStreet has reported raised about $1.8m in a Series A round led by KK Fund.
According to Beamstart, the round was the biggest funding round raised via equity crowdfunding in Malaysia. It was raised on the crowdfunding platform PitchIN.
Ironchip collects €1m from the VC firms Inveready and Easo Ventures
Cybersecurity startup Ironchip is set to grow internationally after securing €1m in a new round from Inveready and Easo Ventures.
The Spanish venture provides a location-based authentication solution. It was founded d in 2017 by a team of two telecommunications engineers who began by developing a secure investment platform for an American broker. They now have a staff of eight technology experts, who create innovative security solutions based on their technology.
Spaced Ventures has reportedly raised $150,000 in a pre-seed round
Public investment platform for the space industry Spaced Ventures is said to have picked up a pre-seed round.
According to Crunchbase, the startup, launched in March 2020, has picked up $150,000 in a new raise. However, there were not many more details about the round or who the investors were reported.
Seaquake said to have raised a seed round
Crypto startup Seaquake has reportedly raised an undisclosed amount in a seed round led by SOSV, the venture capital firm.
The round also saw participation from VC firm Artesian VC and the Shanghai-based startup accelerator Chinaccelerator, according to Crunchbase.
Papaya Global receives strategic investment from Group11
Global payroll and payment platform Papaya Global has received a strategic investment from Group11.
The investment was completed through the purchase of secondary stock from existing shareholders.
Last year, Papaya completed a $45m Series A funding round led by Insight Partners. Additional contributions came from Bessemer Venture Partners New Era Capital Partners and Dynamic Loop Capital.
MagicCube closes strategic investment from SIF
MagicCube, which offers a software trusted execution environment platform, has closed a strategic investment from Sony Innovation Fund (SIF).
SIF joins MagicCube’s investor group which include Azure Capital, Bold Capital, Epic Ventures, NTT Data and Visa.
MagicCube aims to replace the single-function card-acceptance devices with apps secured on its platform. The company offers APIs which can easily integrate with existing infrastructure and ensures hardware-grade security.
SME lender a55 picks up investment from Santander InnoVentures
As the Latin American FinTech space is going from strength to strength, a55 has bagged a round of investment from the Santander Group’s venture capital fund.
a55 provides liquidity solutions to recurring revenue companies in Brazil and Mexico. In other words, the Latin American company is an income-secured alternative SME lender. Essentially, a55 underwrites SMEs through a technology platform connecting bank accounts, escrow solutions, billing, payment means and credit intelligence.
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