Uncle Sean's Update - 7/23/21

Happy Friday!!!
 
Here is the Uncle Sean Update for 7/23/21:
 

• Special shout out and congratulations to Clair (embedded payroll platform with mobile banking including Mastercard debit card, savings, instant wage access, P2P, etc.) for completing their SOC 2 Type1 audit and certification!!!!

 

• Square announces the launch of Square Banking…..  Okay, so Uncle Sean has been making fun of the “Square Banking” announcements for a few months.  Since Square is now a regulated and chartered bank (Utah ILC), it is not overly surprising to me that a bank would eventually provide…  uh…  well…  um…  “banking products”…. LOL!!!  However, I certainly recognize that it is pretty cool when you look at the entire vertical.  Square started out as a solution for SMB’s to accept card payments and has evolved into a host of financial solutions (Cash App, Square Capital, etc.) and now has an FDIC charter.  Square Banking now allows SMB sellers using Square Payments to have a true holistic embedded finance solution via Square Checking, Square Savings, and Square Loans that in some instances allows for automated and instant updates for sellers to manage their finances.  Add in Square Payroll and you have the full SMB cash flow vertical from POS and integrated inventory management to payments, loans, payroll, and most recently Team Management via Square’s acquisition of Crew.  Yep – pretty cool.

 

• Mastercard announced they will enhance their existing crypto card program for cryptocurrency wallets and exchanges, making it simpler for partners to convert cryptocurrency to traditional fiat currency.  This will enable more banks and crypto companies to offer a card option to people wanting to spend their digital assets anywhere Mastercard is accepted.  Mastercard named a suite of partners that they are working with to enhance the existing crypto card program including Evolve Bank & Trust and Metropolitan Commercial Bank to issue cards, Uphold and BitPay to provide real-time crypto wallet technology, and i2c Inc., Apto Payments and Galileo Financial Technologies® to support processing and program management.

 

• Visa announced an agreement to acquire Currencycloud (the cross-border payments firm powering many fintech and challenger banks) for about USD $962M.

 

• Bill.com is on the hunt again (recall back in May when they acquired Divvy for $2.5B) with their latest announcement to acquire Invoice2go in a stock and cash transaction valued at about $625M.

 

• BlockFI received a cease and desist order from the New Jersey Attorney General.  The order calls for the company to stop offering its BlockFi Interest Accounts (DeFi) to new customers in New Jersey, effective Jul. 22 and contends that “BlockFi Interest Accounts are at least partly funded through the sale of unregistered securities, violating securities laws in New Jersey.”  This was followed by another cease and desist order by the Texas State Securities Board and a Show Cause Order by the Alabama Securities Commission. 
  • BankingDive reported that “the enforcement action comes amid growing concern for consumer safety as decentralized finance platforms offer elevated yields but represent a risk to users because losses are not insured by the Federal Deposit Insurance Corp. (FDIC) or protected by the Securities Investor Protection Corp. (SIPC).”
    • Hey – do you think they read the Uncle Sean DeFi rant from 7/9/21 (wait….  did I just plug my own blog in third person…  again???  LOL!!!)?

 

• Venmo finally removes global view – the public feed where you could see transactions not just between your friends, but those between complete strangers.

 

• Constrained by their Sponsor Bank (Hatch), HMBradley shifts to “invite only mode” and seeks additional Sponsor Banks.  Let’s look at a couple of points here:
  • HMBradley has brought in $375M+ in customer deposits over the last year (with a 300% increase since January) – that’s a lot for a startup in a short amount of time.
  • A quick look at the FedFis Bank Database platform (yessir – that’s another plug), Hatch Bank had $41M in deposits (period end balance) as of 3/31/20 and has grown to $233M in deposits as of 3/31/21.  They haven’t filed their June call report yet, but I can only imaging that deposits have swelled well beyond the March balances.
    • To be fair to Hatch Bank, there is such a thing as “deposit concentration risk” from a regulatory standpoint that many fintech companies don’t see / aren’t aware of.  This certainly seems to be the case here with HMBradley’s rapid growth, which in turn prompted Hatch to pump the brakes a little.  Unfortunately, pretty much all FI’s are flush with deposits right now so it’s difficult for Hatch to sell this excess liquidity as a mitigation strategy (Hatch is sitting on about $200M in cash as of 3/31/21 up from $12M YoY).

 

• Upgrade announced the launch of their Upgrade Bitcoin Rewards Card.  The Visa credit card is issued by Sutton Bank and bitcoin services and accounts are provided by NYDIG.

 

• Sezzle (BNPL Firm) launched “Sezzle Capital” enabling their merchant customers to obtain working capital loans of up to USD $10M.

 

• Facebook Pay is extending to third-party e-commerce sites as an online checkout payment option beginning with Shopify in August.

 

• Payveris announced that their MoveMoney platform now delivers a real-time P2P solution.

 

• This caught my attention as recent IPO filings increased considerably (especially on the bank side):
  • Finwise Bancorp (Utah-based digital bank and fintech Sponsor Bank) filed to become a publicly traded BHC (Nasdaq: FINW).  The preliminary Finwise S-1 shows they are looking to raise $50M.
  • U.S. Century Bank (regional commercial bank) targets $40M IPO listing (Nasdaq: USBC).
  • Southern States Bank filed to raise $35M IPO (Nasdaq: SSBK).
  • Robinhood filed their Amended S-1 disclosing that they are seeking to raise $2.5B with a share price of $42 representing a reported valuation of $35B.
  • MeridianLink sets terms for $300M IPO.

 

• Still no shortage of funding:
  • FTX (crypto exchange) raised a whopping $900M in Series B funding round with an $18B valuation – WOW!!!!
  • Titan (retail focused mobile-first managed investment platform) raised $58M in Series B funding with a valuation of $450M. 
  • Artis (API driven consumer installment loan / merchant POS solution platform) raised $7M in Series A funding round.
  • Dwolla (API enabled ACH and RTP payment platform) raised $21M in funding to be used primarily for international expansion and product development.
  • Bolt (on-line checkout service) raised $333M in Series D round at a $4B valuation (approximately 5X the valuation in December).
  • Paystand (Ethereum blockchain B2B payment platform) raised $50M in Series C funding.

 
 
Random Uncle Sean Stuff:

• 35 days until college football!!!
• I was fortunate enough to watch Jeff Bezos’ rocket-launched Blue Origin space flight live on TV this week.  It was really cool, but HOW DID BEZOS GET AHOLD OF TANNER MAYO'S HAT???  LOL!!!!!
• Happy Birthday to me and Aunt Patty this weekend!!!!  Little known fact that we share the same birthday.  Same year too – but don’t remind her that she is 8 hours and 39 minutes older than me – BWAHAHAHA!!!!!

 
 
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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