Uncle Sean's Update - 6/3/22

​Happy Friday!!!
 
Welcome to June – I know, I can’t believe it either!!!  Short holiday weeks are always crazy as we try to cram our ordinary full hectic work week into 4 days while also wondering how it is possible for a three day weekend to go by at the speed of light, so let’s get to it.  Here is the Uncle Sean Update for 6/3/22:
 

• Okay – Uncle Sean goes “off the rails” here on FinTech valuation metrics and the market downturn.  As an old gray-haired finance superfreak, I feel marginally qualified to expand on this (insert the Farmers Insurance mantra – “we know a thing or two, because we’ve seen a thing or two” LOL)…
  • Plenty of folks saw the a16z chart being passed around recently showing in graphic form (pun intended because it is a train wreck) FinTech multiples getting crushed from a high of 25X just last October to about 4X in May ’22 - that’ll make anyone squirm!  However, there is so much more to that story.  Please do yourself a favor (especially if you are dependent on additional outside funding for cash flow) and read the a16z article, A Framework for Navigating Down Markets (and yes, it’s the one with the terrifying FinTech multiples graph).  It gives solid advice on managing to your cash flow; knowing your valuations; and gentle reminders about timing including the cautionary tale of keeping plenty of dry powder on hand - “raising capital with less than 12 months of runway sends a negative signal to the market and makes it harder to have a good fundraise.” 
    • Massively important for everyone, not just FinTech, as we navigate somewhat turbulent waters going forward with continuing pressures surrounding the “R” word (rhymes with “procession”).  😊
  • Now on to the rest of the Uncle Sean Update:

 

• Affirm (BNPL platform, Nasdaq: AFRM) announced a strategic partnership with Stripe enabling Affirm’s Adaptive Checkout™ to be available to Stripe users in the U.S. for BNPL option at checkout.
  • Pretty cool, but you already knew that if you were checking out Stripe Sessions 2022 last week that highlighted global BNPL agreements with Afterpay, Klarna, and Affirm (listed as coming soon) – including how to choose a BNPL provider.

 

• And as the BNPL wars continue to heat up, Klarna announced the official launch of the Klarna Card in the U.S. (touting an existing waitlist of 1M U.S. customers) enabling consumers to “Pay in 4” for any store or online purchase without the need for merchant signup.  The Klarna Card is a Visa card issued by WebBank and powered by Marqeta's modern card issuing platform.
  • A little more digging…  Free for the first year, then $3.99 per month to keep your card active.  Interest free payments are made every other Friday with nothing up front.  Soft credit pull with one of the requirements being you must have purchased through Klarna at least once and paid on time.  Attach your debit card as a funding source and enroll in Autopay or make payments manually every 2nd Friday.  Late fees apply in the event of missed payments (think consumer charge / payment card with 60 day terms).

 

• Webster Bank makes headlines again this week as the exclusive bank partner for Save's Market Savings Program.

 

• Some very exciting personnel movements this week:
  • Former PayPal Ventures exec, Peggy Mangot joins JPMorgan Chase as Head of FinTech Partnerships, Commercial Banking.
  • Former Visa Payments exec, Shawn Sinner joins MOCA Financial as President and Chief Revenue Officer.

 

• Couple of CU acquisitions of banks this week (and both were in Illinois):
  • NuMark Credit Union (Charter 61447; $624M Total Assets) announced an agreement to acquire Pioneer State Bank (FDIC 11726; $135M Total Assets).
  • Credit Union 1 (Charter 68727; $1.2B Total Assets) also announced an agreement this week to acquire NorthSide Community Bank (FDIC 34416; $312M Total Assets).
    • This marks 9 such acquisitions of a bank by a CU so far for the year.  This compares to 13 in 2021, 7 in 2020, and 16 in 2019 (Source: FedFis).

 

• Fundbox (working capital platform for small businesses) announced the launch of the Fundbox Flex Visa Debit Card issued by Pathward, N.A. (fka MetaBank who recently sold their naming rights to Facebook – err, I mean Meta, for a cool $60M).  Fundbox and Visa are also working on a BNPL option; and a push-to-card capability for instant funding via Visa Direct.

 

• Tillful announced the launch of the Tillful Card for small businesses to build credit via a secured card that reports to Experian (with plans to add Dun & Bradstreet and Equifax soon).  The card is a Mastercard issued by Sutton Bank and powered by Highnote.

 

• Notable FinTech funding for the week:
  • Onramp Funds (SMB e-commerce sales-based financing platform) raised $42M in capital.
  • Binance Labs announced a $500M Fund to invest in Web3 and blockchain.
  • Clear Street (modern infrastructure for capital markets) raised $165M in Series B funding round at a $1.7B valuation.  Since 2021, “Clear Street experienced a 220% increase in financing balances, and 510% growth in equity transactional volume. Today, Clear Street’s architecture processes more than $3 billion in daily trading volume.”
  • Setpoint (modern embedded RE proptech platform) emerges from stealth with $615M in debt capital to enable other proptech firms to offer their customers a frictionless home buying and selling options by powering “the ‘Buy with Cash’ and ‘Buy Before You Sell’ purchasing options that are trademarks of alternative real estate models, including ‘Power Buying’, ‘iBuying’, ‘Fractional Ownership’, and others.”
  • Tandym (private label card platform for smaller e-commerce retailers) launches with $60M in Seed funding.
  • Constrafor (construction finance and management platform for contractors) raised $106.3M in capital consisting of $100M in credit and $6.3M add-on from a June equity round that wasn’t previously disclosed.  Their main finance product is the Early Pay Program, which is akin to invoice financing, but this TechCrunch article references the company is “working on a beta program to provide a virtual bank account for contractors, via Stripe, that would include credit cards.”  Check them out at Constrafor.

 
 
Random Uncle Sean Stuff:

• Memorial Day Weekend at Tanner’s house was an absolute blast!  After several years of quarantine, lockdowns, and isolation, it was very nice to spend time with family and friends; and the fish fry was stellar.  On Monday, we went to the movie theater and watched, “Top Gun: Maverick” – definitely on the must see list!!!
• Queen Elizabeth’s Platinum Jubilee celebrations commence this week and tributes pour in from leaders all over the world.  The New York Times has some great pics.
• And here it is, the moment you have been waiting for – DAD JOKES:
  • I enjoy bacon so much that sometimes I eat it several times per day.  It helps me take my mind off of these terrible chest pains I keep having.  LOL
  • I once worked at a scaffolding company, but they couldn’t put up with me……
  • If life gives you melons, you might be dyslexic….
  • I prefer to die peacefully in my sleep like my Grandpa…  Not screaming and yelling like the passengers in his car.  😝

 
 
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.