London-based fintech Chip raises £7.3 million through angel and crowdfunding

Chip, the London-based fintech that created an automatic savings account, has raised £7.3 million, with £3.8 million crowdfunded by customers and the remainder from unnamed angel investors. The campaign ran for three weeks in September and is currently Crowdcube’s most participated-in crowdfund, with 7,182 investors.

The startup provides a free app “to make saving as easy as spending.” The AI-driven system calculates how much a user could save, gives the option to decline it, and then automatically transfers the amount to user’s Chip account. Chip has saved over £85 million for its users to date.

CEO Simon Rabin commented: “The most powerful way for Chip to grow is to have thousands of investors advocating for the product they believe in. It’s amazing to have this many Chip savers as investors in the company. We’ve proven there’s a big demand for Chip, and we’re ready to scale – we’re going to use our investment to grow and deliver a product that will fill a huge gap in the market. Many of the other big names in fintech are focussed on making spending easier. Monzo have the current account, Curve are disrupting credit cards, Revolut have the travel card, but Chip… Chip is for saving.”

The fintech will use the funds to increase the app’s capacity for large volumes of users, refining the infrastructure and expanding the team. THe plan is also to expand the product to offer access to FSCS protected accounts and deliver an in-app marketplace for returns products.

Already the company has made a number of senior hires, all fintech veterans: David Kavanagh (CTO), former CTO of Purplebricks; Sharon Miles (COO), former innovation director of B2B fintech unicorn Deposit Solutions, as well as Barclays and LeasePlan; Gerard Hurley (CCO), former compliance lead at Funding Circle and an ex-FCA regulator; Gary Dolman (Board Advisor), co-founder and recently retired CFO of Monzo.

New CTO David Kavanagh said: “The savings market is archaic, broken and ineffective. People want more from their savings accounts, so they are voting with their capital. Chip has raised VC-levels of funding from its users and supporters, demonstrating that what customers want is a market-changing product that is easy to use, helps them save, and offers the best possible rates in the market. It’s an incredibly exciting time for the company and I’m delighted to have joined it as such a pivotal stage. I look forward to working with the team at Chip to help set a new standard for savings apps.”

Source. Tech.Eu,. Annie Musgrove, November 6, 2019

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Ebury nabs £350M for foreign exchange and currency services for SMEs, Santander takes 50.1% stake

As the UK continues on its slow march to leave the European Union, a London-based startup that enables companies to work internationally has raised a huge round of funding from a strategic backer to expand its business. Ebury, which provides foreign exchange, money transfer and other currency services to small and medium businesses and their banking partners, has picked up £350 million (about €400 million, or $452 million) led by Spanish banking giant Santander. With the deal, Madrid-based Santander will become a majority shareholder at 50.1% but notes that Ebury will continue to operate as an independent entity.

Ebury and Santander said that the funding will be used to support Ebury’s growth, and specifically to scale its customer base in Latin America and Asia, while at the same time bolting on more modern services to Santander’s offerings as it seeks both to expand its revenues from existing customers and take on new ones.

Santander said that it has 4 million SME customers globally, and currently more than 200,000 of them do international business, while Ebury is already operating 19 countries and covers 140 currencies, with annual revenue growth of 40% in each of the last three years.

But putting to one side 4 million businesses, even providing services to 200,000 customers would be a big step up for Ebury: the company said that last year it processed £16.7 billion in payments for just 43,000 clients.

Santander said that its investment gives it a 50.1% stake in the company, but it is not disclosing total valuation. On a straight percentage, it would work out to about £700 million, or $902 million, but it sounds like the deal includes both primary and secondary investment — “£70 million will be new primary equity (approximately €80 million) to support Ebury’s plans to enter new markets in Latin America and Asia,” the companies note — and that could change the numbers. Santander is optimistic and said it expects a return on its invested capital in Eubury of higher than 25% in 2024.

Ebury’s existing investors and co-founders and management will also invest in the transaction. Past backers include 83North (formerly Greylock Israel) and Vitruvian Partners, among others. 

Founded in 2009, it has to date raised $134 million.

Services that Ebury currently provides include currency transfer and exchange, but it looks like there will be  more down the line. Just last month, Ebury announced that it had acquired another fintech called Frontierpay, which specialises in international payroll solutions. The deal is still going through regulatory approavals.

Many have lamented the fact that startups out of Europe find it hard to scale and grow and need to look to markets like the US for that kind of funding and support — often relocating in the process. Fintech is one of the big areas that bucks this trend.

Adyen built and still operates its successful online payments business out of the Netherlands; Revolut, Monzo and a wave of other so-called ‘challenger banks’ are revisiting what it means to provide banking services to consumers and businesses; and TransferWise — itself a major player in currency transfer services focusing both on individuals as well as businesses — are among the many that have scaled internationally out of Europe and have valuations in the billions.

Indeed, it’s competition from the likes of TransferWise that may have spurred Santander to invest in Ebury.

If bringing Ebury’s technology to the Santander platform will give the legacy bank a better way of competing in a market that’s seeing a lot of challengers at the moment, it also gives Ebury a stronger underpinning for those skeptical of doing business with a newer startup.

“Combining a big bank with nimble fintech means we can offer our clients the best of both worlds: they can benefit from our technology and high- quality service safe in the knowledge that they are counterparty to one of the world most important financial institutions,” said Juan Lobato and Salvador García, co-founders of Ebury, in a joint statement. “It is an exciting time for Ebury, we have just completed our first acquisition, and the new capital from Santander and our existing shareholders will allow us to invest in new ways to serve SMEs trading internationally and continue the growth in our business while keeping our entrepreneurial culture.”

Santander is not a stranger to making strategic investments in financial technology startups to grow its business, specifically by integrating or co-marketing those services alongside its own. It made an early strategic investment in Sweden’s iZettle, a Square competitor, that brought the startup into Latin America, and specifically as a co-provider of services to Santander’s customers in the region. Although it looked like iZettle could eventually get gobbled up by Santander, in the end, it was acquired by PayPal for $2.2 billion.

As with the iZettle investment, the focus for Santander here is on providing more services for SMEs, a huge sector that is fragmented and often overlooked and underserved against the bookends of mass-market consumer services and high-touch, high-end large enterprise services. The gap in turn becomes an opportunity.

“Small and medium-sized businesses are a major engine of growth around the world, creating new jobs and contributing up to 60% of total employment and up to 40% of national GDP in emerging economies,” said Ana Botín, Group Executive Chairman of Banco Santander, in a statement. “SMEs are becoming increasingly global and Santander is the best positioned bank to play a leading role to help them access global trade finance. By partnering with Ebury, Santander will deliver faster and more efficient products and services for SMEs, previously only accessible to larger corporates.”

Source. TechCrunch, Ingrid Lunden, November 4, 2019 

 

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Galileo Financial raises $77 million for its fintech services that were 19 years in the making

Clay Wilkes had already been retired for six years when he launched Galileo Financial Services in 2000.

The serial entrepreneur, who had been an early pioneer in telecommunications technologies (like voice over internet protocols), saw the need for better connectivity between secondary services and financial institutions 19 years ago, just as new digital services around payroll processing, transit vouchers, store cards and other services were launching.

Now the company runs the backend integrations with financial institutions for some of the biggest names in financial technology and has just raised $77 million in financing from Accel Partners.

Not that Galileo necessarily needed the money. The company has been profitable for years since its bootstrapped beginnings and counts fintech giants like Chime Banking, Robinhood, Monzo and TransferWise among its customers. In fact, the debit and credit card service provider will process nearly $26 billion in financing by the end of the year, according to the company.

For financial services companies that are launching these days there are a few ways to get to market quickly. One is to partner with a financial institution that will handle the money for them in accounts that are FDIC assured; the other is to become a financial provider that’s fully regulated themselves.

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Most companies have opted for the second route, and when they do, they need to find a way to hook into a bank’s financial system and the payment technologies that form the backbone of transaction processing through the debit and credit cards that a huge portion of the world relies on to buy things.

Accel partner John Locke, who is joining the Galileo board of directors, calls the company almost the flip side of the Braintree and Stripe investments that power transactions for most online merchants.

Rather than focus on the companies that are taking online orders and processing payments, Galileo deals with the consumers who are spending the money and powers the ways in which companies are trying to offer new services to get those consumers to switch from traditional banks to their upstart challengers (ironically still mostly powered by traditional banks).

“Through the API what they’re doing is creating and managing accounts, authorizing merchant transactions, monitoring fraud, initiating disputes and chargebacks, being able to configure products and a wide variety of product,” said Wilkes. “We support [direct deposit accounts] and we do credit products… all of these capabilities are capabilities that fit on our platform.”

Wilkes wouldn’t talk about the company’s valuation except to say that it’s worth “a substantial amount.”

What he will talk about is how Galileo will use the money it has raised. The Salt Lake City-based startup is planning to greatly expand its geographical reach beyond North America. It’s “actively pursuing opportunities in Brazil and Colombia and Argentina,” according to Wilkes. In fact, the company plans to open an office in Mexico City in the coming months to service new Latin American business.

Meanwhile, it already has something of a stranglehold on the market in the United Kingdom. “The top five largest fintechs in the U.K. are all clients today,” Wilkes said.

Unlike other companies in the market that take a fixed percentage of transactions, Galileo charges a variable amount of a few cents for every transaction that it processes to connect a startup with its banking back end. 

“We’re in a golden era of fintech innovation and Galileo has quietly built the API infrastructure layer powering the industry’s most innovative products,” said Locke in a statement. “Clay and his team have built a very impressive business with many parallels to companies like Qualtrics and Atlassian: bootstrapping first to build a quiet, profitable powerhouse and now, ready to go big globally. We’re excited to help Clay and team take Galileo to the next level.”

Source. TechCrunch, Johnathan Schreiber October 16, 2019

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Mortgage Lender Better.com Grows Series C Funding Round to $160M

After initially securing $70 million for its Series C round in January and raising another $25 million in add-on funding this past spring, online mortgage lender Better.com has officially closed off the Series C with a total of $160 million raised, Fortune has learned.

Activant Capital led the latest influx in funding and was joined by Ping An Insurance, Ally Financial, Citigroup, AGNC, American Express Ventures, and Healthcare of Ontario Pension Plan (HOOPP), as well as existing investors Goldman Sachs, Kleiner Perkins, and Pine Brook. The $160 million round takes the New York-based company’s total funding to $254 million to date and brings its valuation to north of $600 million, Better.com said.

The capital will be used to further scale the mortgage lender’s operations and grow its product offerings, founder and CEO Vishal Garg told Fortune. Garg noted that Better.com has tripled its growth year-on-year since launching in 2016; while the company is at $5 billion in originations to date, Better.com financed $1 billion worth of mortgages in the second quarter of 2019—more than in all of 2016 and 2017 combined—and is on track to lend more than $4 billion in 2019.

“The way things are going, we’re going to be at $10 [billion] to $15 billion of originations next year, which would make us the largest fintech in America,” according to Garg. “We had a lot of strategic investors who weren’t able to make the first close and were really interested in the company. To accommodate them, and considering the growth rate we’ve had this year and our need for further investment capital, we decided to extend the round... We just needed to be way more capitalized.”

The startup is also growing its headcount at a prolific rate; it has expanded from around 200 employees last year to more than 700 people currently, and plans to hit 1,100 employees by the end of the year, Garg said. The company also recently opened its fourth U.S. outpost in Charlotte, N.C.—home to a fervently expanding fintech scene—to go with its offices in New York, Oakland, Irvine, Calif., and Gurgaon, India.

Better.com is part of a wave of fintech startups targeting the home-buying market via tech-oriented platforms that appeal to millennials, who now account for most new mortgages in the U.S. As Fortune has reported, home-buying tech startup recently Flyhomes sealed $141 million in new financing last week, while the mortgage and consumer lending fintech firm Blend raised $130 million in new venture funding earlier this summer.

Garg founded Better.com after experiencing a “terrible” mortgage application process of his own several years ago, which led to he and his wife losing their desired home to an all-cash buyer. The startup’s platform aims to digitize and streamline that process to allow buyers to close a typical mortgage in half the time it usually takes (21 days, versus an industry average of 42 days).

It also deploys a commission-free, fee-less business model that it claims saves borrowers thousands of dollars in costs—with the company generating revenue from originators who “pay us a premium because of the quality of the loans and the loan performance,” Garg said.

“We’re not a balance-sheet lender,” he noted, adding that Better.com has more than 30 investors—including major mortgage originators and financial institutions—who have committed more than $700 billion in financing capacity to the company. The startup is presently active in 40 states, with active applications that would see it expand to all 50 states in the U.S., Garg said.

Activant founder and partner Steve Sarracino, who is now on Better.com’s board, told Fortune that the startup’s “tech-enabled, end-to-end mortgage manufacturing process” allows it to save costs and pass those savings down to consumers. In turn, Better.com has been able to carve out a ever-larger niche for itself in the U.S.’s $15 trillion mortgage market.

“The [mortgage] process is so unbelievably broken, and it all costs the consumer more in terms of APR,” Sarracino said. “Better is the first company that’s looking to fix it end-to-end. It’s not cheap to manufacture a mortgage, and by driving down that cost, it gets passed on to the consumer.”

Better.com also found a place on Fortune and Great Place to Work’s list of the 60 best companies to work for in New York this year—ranking 11th among small and medium-sized companies.

Source. Fortune, Rey Mashayekhi, August 19, 2019

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Kabbage Receives New $200M Revolving Credit Facility

Kabbage, Inc., an Atlanta, GA-based data and technology company offering automated cash flow solutions to small businesses, closed a $200m revolving credit facility.

The new four-year credit facility commitment is provided by a subsidiary of a life insurance company, managed and administered by 20 Gates Management, and Atalaya Capital Management.

The debt capital will support the company’s growth in the USA.

Kabbage provides small businesses access to lines of credit up to $250,000 by analyzing their real-time business data. With more than 2 million live data connections with its customers, the company provides small businesses access to capital in minutes.

To-date, it has provided more than 185,000 U.S. small businesses access to over $7 billion in capital.

All of the company’s U.S.-based loans are issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC.

Kabbage is funded and backed by leading investors, including the SoftBank Vision Fund, BlueRun Ventures, Mohr Davidow Ventures and others.

Source. FinSMEs, Staff, July 2, 2019

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Lendified Secures $15M in Funding

Lendified Holdings, Inc., a Toronto, Canada-based financial technology company, closed a $15m funding round.

Backers included CI Financial Corp., Windsor Private Capital Limited Partnership, FirePower Capital, Glenn Murphy, the founder of FIS Holdings and former CEO of Gap Inc. and Shoppers Drug Mart.

The company intends to use the funds to continue to expand operations.

Launched in 2015 and led by Kevin Clark, President, and led by Troy Wright, CEO, Lendified offers online loans to small businesses across Canada and a SaaS credit platform to financial institutions across North America (used by credit unions, community banks, and other financial services companies) featuring tools for managing cash flow, and advanced credit adjudication software to financial service providers across North America.
Through its lending business, the company offers loans up to $150k for terms up to two years.

Its advanced underwriting process is powered by Judi, its credit adjudication platform which enables users to assess, price, and monitor credit risk, and in-turn provide the best possible services to customers.

Source. FinSMEs, Staff, April 18, 2019

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Point raises $122 million to extend equity financing to homeowners and buyers

By Kyle Wiggers

Point, a Palo Alto startup that extends equity financing to homeowners and homebuyers, today announced that it has secured $122 million in new financing, $22 million of which was raised in a series B equity funding led by Prudential Financial and DAG Ventures, with contributions from new investors Financial Venture Studio and Enterprise Community Partners and existing investors Andreessen Horowitz, Ribbit Capital, and Bloomberg Beta. The remaining $100 million is in the form of a capital commitment from Kingsbridge Wealth Management (which also participated in the equity round), bringing Point’s total platform capital to over $265 million, following a $150 capital investment from Atalaya Capital Management in 2018.

CEO Eddie Lim, who cofounded the company in 2015 with Eoin Matthews and Andreessen Horowitz partner Alex Rampell, said that Point has raised $33 million in equity to date, and that origination volume has grown more than ten times year-over-year. Assuming all goes according to plan, he expects the company will fund “in excess” of 1,000 homeowners in 2019.

“We are witnessing the emergence of a whole new class of financial solution that is aligned with homeowners, and investors are taking notice,” Lim said. “2019 is proving to be a year of exponential growth for the company, and we expect that growth to continue as home equity investments open up critical liquidity for a lot more homeowners.”

In 13 states — California, Colorado, Florida, Georgia, Illinois, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Virginia, and Washington — and the District of Columbia, Point offers up to $250,000 over a 10-year term without interest rates or monthly payments for those who pass its five-minute online screener. (It applies a risk adjustment of up to 20 percent to offset declines in home value.) Point provides a provisional offer to preapproved applicants for between 5 percent and 20 percent of their home’s current value, and schedules an in-person licensed appraiser visit (for which it charges $500 to $700) before finalizing an offer. Then, it arranges a meeting with a notary, submits the necessary paperwork, and confirms the filings, at which point it releases the funds (minus escrow and processing fees).

Homeowners can buy Point out, refinance, or sell their home at any time — Point isn’t added to the title of the property. Furthermore, customers don’t need approval for renovations or home improvements outside of the house’s financing, and unlike a home equity loan or second mortgage, they aren’t on the hook for interest. A home worth for $1,338,200, for instance, would net a customer a $1,140,600 share and Point about $197,600, while a $750,000 home would be split $670,000/$80,000

It''s not a new idea — banks have experimented with equity in home financing for the better part of three decades. But Lim says Point’s smaller scope and proprietary platform make it a lot more scalable than it has been, and an increasingly attractive alternative to unsecured loans, Federal Housing Administration loans, and other established options.

“This type of initiative is only possible because we’ve built a proprietary technology platform which enables us to rapidly prototype and market-test new products based on the needs of homeowners,” said Lim. “Point’s emphasis on providing homeowners with an exceptional experience means we have to continue to build superior technology. Building great products that integrate finance and technology is what we do best.”

Lim says the latest funding round will fuel Point’s expansion to over 30 states (70 percent of U.S. homeowners) by 2020. Also on the roadmap: 30-year product offerings, which will come to market later this year.

“We know that many Americans are overburdened by debt, and too many households face impossible tradeoffs when it comes to prioritizing long-term investments like saving for retirement, paying for a child’s education, and buying a home,” Prudential VP of impact investments Miljana Vujosevic said of today’s news. “Our investment in Point is one more way we’re committing to helping consumers meet their goals and achieve lasting financial security.”

Source. Venturebeat, Kyle Wiggers, March 20, 2019