Uncle Sean's Update - 4/9/21

Happy Friday!!!
 
Here is the Uncle Sean Update for 4/9/21:
 

• This has been WIDELY circulated all week, but is worth mentioning again…..  Jamie Dimon (arguably the World’s most powerful banking leader as Chairman and CEO of JPMorgan Chase) released his annual letter to shareholders this week.  It’s a good read if you have the time (66 pages), but If you don’t’ have the time – I’ll break it down for you in 2 Key Takeaways: 1) A very bullish stance on the economy – “…with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” Dimon said. “This boom could easily run into 2023 because all the spending could extend well into 2023.”; and 2) A resounding alarm that incumbent banks are facing enormous competitive threats from virtually every angle -  “Banks are playing an increasingly smaller role in the financial system” citing the rapid growth of payment and fintech companies as well as Big Tech (specifically naming Amazon, Apple, Facebook, Google, and Walmart as JPM competitors).

 

• In case you missed it, Walmart may have given us a sneak peek of what their Ribbit backed fintech offering may look like through a trademark filing with the U.S. Patent and Trademark Office.  Say hello to Hazel by Walmart….  The trademark references a multitude of services that might be offered including (but not limited to): banking and financial services including issuing and processing of credit card, debit card and prepaid card services (including mobile payments), lending, electronic funds transfer, bill payment services, financial counseling, credit repair, foreign exchange payment processing, and virtual currency transaction processing amongst other services…..  Sounds like a bank to me, but I’m still a little confused as to why Arvest Bank (owned by the Walton family) isn’t leading the charge for Walmart financial services….

 

• Dwolla announced real-time payments (RTP) option through an integration with Cross River Bank (those folks at Cross River Bank are serious FI innovators).  So what???  It’s yet another “bank only feature” (i.e. protective industry moat) that has been breached by the US fintech / Neo bank space.

 

• SoFi is dipping their toes into the auto loan refinancing market through partnership with MotoRefi by connecting borrowers with auto loan refinancing options through Lantern by SoFi.  To me this feels like a basic referral model since Lantern is a product comparison site where consumers can shop for and compare financial offers from hundreds of lenders and funding sources.  I suspect some of this will change if / when SoFi obtains approval to acquire Golden Pacific Bank and obtains their own bank charter.

 

• And our Credit Union friends are making news again this week!  Check out this new VC fund called Curql.  For the love of everything that is Holy, please do not ask me how to pronounce that – LOL (just kidding – it’s actually pronounced “circle”).  They operate as a VC “gateway for FinTech access to credit unions” launched by leading credit unions of Members Development Company and managed by Next Level Ventures.  The flagship Curql Fund I announced its first funding close of $70M this week.

 

• But wait!!!!  Not to be outdone by CUs, take a look at JAM FINTOP Banktech who just announced a $150M investment fund (of which all 66 of the funds limited partners are community banks) designed to help accelerate technology adoption at community banks across the United States.  The JAM FINTOP Banktech investment team is “currently evaluating investments in B2B banktech (aka FI Fintech) companies with active deployments in banks and annual recurring revenue approaching or exceeding $1 million”.  Check them out at jamfintop.com.

 

• While widely reported as rumor over the last few weeks, Plaid confirmed this week that they raised $425M in Series D funding round at an estimated $13.4B valuation.  This comes just a few months after Visa and Plaid terminated their $5.3B merger after a year citing Department of Justice lawsuit on antitrust grounds.  Now to be fair, that $5.3B purchase price was set before the pandemic began (which greatly accelerated digital adoption and Plaid’s growth too).  Take a look at this Forbes article that claims Plaid grew by 60% last year and “annualized” revenue reached about $170M by Dec 2020 (citing anonymous source).  Considering a $225M 2021 total revenue model, that equates to 59x forward revenue multiple.  Yes, top line revenue multiple – not earnings…..  WOWZA!!!

 

• Another rumor was confirmed this week – Ramp (provides a Visa business charge card issued by Sutton Bank along with an expense management platform) announced that they raised $115M Series B round in two tranches.  The first of which, a $65 million investment led by D1 Capital Partners, valued the startup at $1.1 billion.  An additional $50 million investment led by Stripe (yes, the online payments giant) pushed the valuation to $1.6 billion.

 

• Online mortgage lender Better scores a $500M investment from SoftBank at a valuation of approximately $6B.

 

• Avant (fintech alt lender) has acquired Zero dba Level which now gives Avant full Neo / Challenger Bank status as they will be able to complement their existing consumer lending platform (Mastercard CC and Personal Loans sponsored by WebBank) with Level’s established interest bearing DDA with Visa debit card (issued by Evolve Bank & Trust) and cash back rewards in a mobile app.

 

• Fidelity, Square, and Coinbase launch a new bitcoin Lobbyist / Trade Group called Crypto Council for Innovation.

 

• Coinbase announced 1Q2021 "estimated" earnings ahead of next week’s highly anticipated direct listing.  Revenues increased about 9x (driven by the rally in the price of bitcoin) to $1.8B from $191M in the same quarter last year; and net income grew to about $800M from $32M a year ago.  You can check out their full S-1 Registration Statement if you really want to get into the nitty-gritty.

 
 
Random Uncle Sean Stuff:

• So I finally passed my 2 week incubation period from my 2nd Covid vaccination.  First thing I did was go see Davey and Tanner as its been about a year!!!!  WFH is cool and convenient, but there is a special refreshing energy that you can certainly feel when you are around others that are passionate and enjoying what they do.  I even got to spend an hour or so fishing with Dave (I caught more than he did – don’t let him lie to you about that – LOL)!!!!!
• Back by popular demand- here are a few quick Dad Jokes:
  • I feel a lot happier since I switched from coffee in the morning to orange juice.  Doc says it’s probably the vitamin C and naturally occurring sugars – but I’m pretty sure it’s the vodka.
  • Why didn’t they name the iPhone charger an Apple Juicer?
  • I ate a Kids Meal at McDonalds…..  His Mom was not impressed.
  • What’s the difference between empathy and apathy?  I don’t know and I don’t care…
  • And another instant family classic……..  Aunt Patty asked me to stop singing “I’m a Believer” by The Monkees because she found it annoying.  At first I thought she was just kidding………….  But then I saw her face!  LOL!!!!!

 
 
Have a GREAT weekend and please stay safe!!!
 
Uncle Sean
 
 
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at [email protected] | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | [email protected] #FedFisHasTheData FedFis
 
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.
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