Tag: Bank

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Nymbus lands $70M to help banks digitally transform

Nymbus, a startup that partners with banks to migrate their legacy stack and launch neobanks to attract new customers, today announced that it raised $70 million in a Series D round led by Insight Partners. The Banc Funds Company and Mendon Venture Partners participated also, as did Nymbus clients ConnectOne Bank and PeoplesBank.

According to CEO Jeffrey Kendall, the new capital will be put toward investing in scaling Jacksonville-based Nymbus’ various products and services, particularly its core transaction processing engine and platform for commercial banking,

“While banks and credit unions require a robust technology stack to support operations, the market is limited to options that are often over 30 years old,” Kendall told TechCrunch in an email interview. “In 2015, Nymbus launched its cloud-based core banking platform for financial institutions to provide a robust option for replacing legacy technology and reducing technical debt. The solution has grown over time to streamline operations, offer new routes to growth and enhance the overall customer experience.”

Co-founded in 2015 by Alex Lopatine and Scott Killoh, Nymbus emerged at a time when millennials and Gen Z banking customers began looking to online alternatives to traditional banks — spurred in part by a desire to find better rates. According to a survey from GOBankingRates, nearly 30% of Americans ages 25-34 now use online banks, while 21% of Americans of any age have adopted them.

Banks, unsurprisingly, are feeling the pressure to adapt to a changing world by modernizing and digitizing both their operations and products. But most of them aren’t equipped to do so. According to a 2021 McKinsey study, only 30% of banks that’ve undergone a digital transformation report successfully implementing their digital strategy, and the majority fall short of their stated objectives — whether because of technical debt, siloed IT architectures or an unbridgeable gap between the business and IT departments.

Nymbus aims to boost the success rate with a cloud-based banking solution that offers traditional banks features like API access, event-driven alerting and features, robotic process automation and more. Banks and credit unions can integrate the functions they require to expand their digital capabilities, enhance their back-office processes or introduce new products.

There’s a number of companies that offer this type of “banking-as-a-service (BaaS),” like NovoPayment, a startup based in Miami that’s largely been focused on offering its API platform to customers in the Latin American market. There’s also Bud, which recently raised $80 million to expand its AI-based open banking platform, frequently used by banks to power lending tools.

BaaS has become the industry norm, in fact. A 2022 Finastra poll of U.S. financial institutions and banks found that 86% agree BaaS is already expected by customers, while almost half (46%) have improved or deployed a BaaS solution in the past year. According to one estimate, the BaaS market was valued at around $20 billion in 2021 and could grow over 16% from 2022 to 2030.

But Nymbus stands out for its ability to deliver a “fully managed digital bank,” Kendall says, which includes a “unified data stream” that can be used for data analysis, decision-making and strategic planning. The modular nature of the platform, moreover, can reduce costs without sacrificing “operational excellence,” in Kendall’s words — making it cost effective.

“Nymbus’ product suite, which includes core processing, loan origination, account opening and digital channels, coupled with operational resources, empowers financial institutions of all sizes to tap into new market segments and drive growth,” he said. “Ease of maintenance and speed to market are key for the CIO and this is what the Nymbus solution delivers.”

That’s certainly a lot to promise. And Nymbus, when asked, declined to say how many customers it’s currently serving and its projected recurring revenue, which tends to be a predictor of success (albeit not a foolproof one). Still, despite his reluctance to peel back the curtains on the company’s operations, Kendall asserted that Nymbus — which has around 200 full-time staffers and contractors, currently — is well-positioned to weather headwinds in the coming months.

“The general economic uncertainty and slowdown in tech funding has made securing resources for expansion and innovation more difficult,” he said. “But we have solid solutions in our portfolio to support the growing need of banks and credit unions to modernize and meet their customers where they are — in the digital realm. We believe that as banks increasingly realize the importance of modernization, there will be a continued demand for our services.”

Nymbus lands $70M to help banks digitally transform by Kyle Wiggers originally published on TechCrunch

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SBM Bank India, building BaaS platform, seeks funding at $200 million valuation

The Indian arm of SBM Bank, one of the banks that has aggressively worked with fintech startups in the South Asian market, is engaging with investors to raise capital and pitching the vision of becoming one of the top banking-as-a-service providers in the country, according to a source familiar with the matter.

The Indian arm is in advanced stages of deliberations to raise between $50 million to $75 million at a pre-money valuation of about $200 million, the source said, requesting anonymity discussing private matters. The round hasn’t closed, so terms of the deal may change, the source said.

The firm sees its deep partnerships with fintech startups such as Bengaluru-headquartered fintechs Razorpay and Slice as a key growth pillar, according to an investor presentation seen by TechCrunch.

SBM Bank India declined to comment.

The bank has actively courted fintech startups as customers, offering them co-branded cards and powering their neobanks, as it sought to differentiate itself from the large competitors that for years avoided engaging with the younger firms.

Banks have long been a favorite investment for retail investors. Value of 100 rupees invested in HDFC and ICICI Bank shares on January 1, 2010 surged to — including with dividends — to over 1,039 and 672 rupees as of late last month, respectively, according to an analysis by Bernstein.

Some venture investors have also shown appetite to invest in banks in recent months – Accel and Quona recently backed Shivalik Small Finance Bank, for instance – but a growing number of other banks including RBL and Federal Bank have employed a similar strategy as SBM and courted many startups in the past two years.

Giant banks including HDFC and ICICI, at the same time, have have also somewhat reversed the course and are now not as hostile to startups anymore.

With the mounting pressure and local FDI rules (and investor requiring central bank’s approval to take a stake of 5% or more), SBM India’s funding ask may rest on investors being convinced that it’s able to retain its business clients, their continued growth and it deepening its partnership with them to provide additional offerings.

The India arm generated a net revenue of $62.7 million in the financial year ending March this year, according to the presentation.

SBM Bank India, building BaaS platform, seeks funding at $200 million valuation by Manish Singh originally published on TechCrunch

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Daylight, the LGBTQ+ neobank, raises cash to launch subscription plan for family planning

A day after a bill that would codify same-sex marriage in the U.S. cleared a key hurdle in the Senate, Daylight, a digital bank that pitches itself as LGBTQIA+-friendly, closed a $15 million Series A round led by Anthemis Group with participation from CMFG Ventures, Kapor Capital, Citi Ventures and Gaingels.

Daylight Co-founder and CEO Rob Curtis says that the new capital will be used to, in his words, “build the financial products and services to help queer people live their best lives” — starting with a subscription plan called Daylight Grow designed to help prospective queer families with financial planning.

“There are over 30 million LGBTQ+ Americans with a spending power of around $1 trillion and yet the community lacks access to the suite of products and services they need to live their best lives,” Curtis told TechCrunch in an email interview. “Daylight was created with a single mission: to build the financial products and services to help queer people live their best lives.”

Curtis co-launched Daylight with Billie Simmons, a trans woman, and Paul Barnes-Hoggett in early 2020. Prior to starting Daylight, Curtis worked for several organizations supporting the LGBTQ+ lifestyle and causes, including Gaydar, a dating site for gay and bisexual men. He also co-founded Squad Social and Helsa Helps, startups aiming to improve access to mental health for members in the LGBTQ+ community.

Daylight is a part of wave of recent neobanks — bank-like fintech companies that operate online, without physical branch networks — organized around aspirational causes and missions. Rapper Killer Mike’s Greenwood aims to help Black and Latinx communities build generational wealth. Majority, which launched the same year as Greenwood (2020), seeks to build banking tools and resources for immigrants. Purpose Banking, Aspiration and One all promise to never let deposits fund fossil fuels.

Daylight

Image Credits: Daylight

With the wealth of ethics-forward fintechs out there, why found a neobank for LGBTQ+ people? According to Curtis, most mainstream banking products simply weren’t designed with U.S.-based queer folks in mind. (Pride Bank, a neobank with similarly queer-forward branding, is based in Brazil.) For example, Daylight provides debit cards with customers’ chosen names, which aren’t always the same as what’s on their ID. It offers members 10% cash back every time they spend with a queer and allied business that Daylight has partnered with. And it offers guided goals for gender-affirming procedures like top surgery and facial feminization.

Beyond cash management features like a checking account, free ATMs and the ability for members to get paid two days early, Daylight hosts communities where customers can ask questions around “queer financial literacy,” such as family planning, in what Curtis claims is a safe and supportive environment.

“At Daylight, our mission has always been to break down the financial barriers that hold LGBTQ+ people back … In this post-Dobbs world, Daylight’s commitment to supporting queer families has never been more necessary,” Curtis said, referring to the Supreme Court case that legalized abortion bans in the U.S. and opened the door to legal challenges of marriage equality.

Certainly, members of the LGBTQ+ community face fiscal challenges that many cisgender, straight adults never do. Some suffer the consequences of being kicked out of their homes by unaccepting parents. Others find themselves on the hook for HIV/AIDS treatment, hormone therapy and fertility procedures. Most queer people gravitate toward pricey metro areas because they’re more accepting and progressive, and many queer people lack a safety net — whether because they lack family support or don’t have children who can take care of them.

For those reasons and others, LGBTQ+ people frequently earn less, live in poverty and have less in pension savings than their cisgender counterparts. The situation for transgender people is particularly dire, with the poverty rate for the transgender community in the U.S. averaging around 30% — close to double the rate of cisgender adults — according to a 2019 study from the UCLA School of Law’s Williams Institute. Transgender people are also twice as likely to be unemployed and four times as likely to have a household income below $10,000; the 2021 U.S. federal poverty was $12,880.

The aforementioned Daylight Grow isn’t a cure-all, but targets the major hurdles many queer couples encounter in starting a family. This is a significant portion of Daylight’s customers. A recent poll by the Family Equality Council found that nearly two-thirds of LGBTQ millennials — 63% — are considering becoming parents for the first time or expanding their family.

Daylight

Image Credits: Daylight

When the product launches in early 2023, Simmons says that Daylight Grow will offer a personalized “family creation plan” covering financial, legal and logistical milestones tailored to individual states and needs, “family planning concierges” to provide financial advice and logistical support, a “family-building marketplace” with vetted family attorney networks and recommendations for IVF and surrogacy clinics, and in-person financial and fertility education events.

“Family creation is a major life event for queer people and the challenges we face are increasingly more complex than those for non-LGBTQ people,” Simmons told TechCrunch via email. “The launch of Daylight Grow will help queer people navigate through the complex legal and financial challenges involved with starting a family, making it faster and easier to start a family, and unlocking critical intergenerational wealth for our community.”

Daylight Grow will also offer access to family-building loans, a potential game-changer for queer customers who’ve dealt with discrimination from traditional banks. According to a 2019 study, same-sex borrowers were 73% more likely to be denied a mortgage or be approved for a mortgage at a higher-than-average interest rate.

Daylight plans to offer hundreds of free Grow subscriptions to low-income, marginalized families in states where LGBTQ+ rights are under significant legal attack, Curtis said. Which states — and Grow’s pricing — are still being decided.

Daylight has raised $20 million in capital to date. Curtis wouldn’t answer questions about revenue and hiring plans, preferring, at least for now, to keep the focus on the company’s core mission.

Daylight, the LGBTQ+ neobank, raises cash to launch subscription plan for family planning by Kyle Wiggers originally published on TechCrunch

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Allocations just got valued at $150M to help private equity funds lure smaller investors

Interest in alternative investments such as private equity, real estate and crypto continues to surge, and Miami-based fintech startup Allocations is riding the wave. Less than three years after its founding, the company, which provides APIs to help private fund managers streamline processes, has crossed $1 billion in assets under administration on its platform, its CEO and founder Kingsley Advani told TechCrunch in an interview.

It has also raised $5 million in funding from investors including Flex Capital, Genesis Accel, Digital Horizon, Whatif Ventures, Garage Syndicate, W5 Group, Edoardo Ermotti, Peter Ko and others, all of whom are Allocations customers, at a valuation of $150 million. The latest round brings its total funding raised to $12 million, according to the company.

As for performance metrics, Advani noted that the company had reached a $6.25 million revenue run rate in July this year, which is up from $4.6 million last June according to a prior TechCrunch article.

Fintech Allocations' founder Kingsley Advani headshot

Allocations founder and CEO Kingsley Advani. Image Credits: Allocations

Advani started Allocations in 2019 as a response to challenges he faced in trying to set up his own investment funds and realizing that none of the tools available to him at the time could help him spin up funds quickly enough to stay competitive in the increasingly fast-paced private markets. Allocations’ core products help fund managers create special purpose vehicles (SPVs), which allow them to raise capital from a single investment from pooled sources. At a time when it is especially in vogue for venture investors to leave their firms to start their own solo funds, Allocations’ value prop looks increasingly appealing.

Its customers are asset managers looking to offer these alternative investment opportunities to their private wealth clients, who tend to be high-net-worth individuals that meet regulatory accreditation requirements applied to many alternative assets, Advani explained. The company is betting that retail investors will continue to show strong demand for alternative asset classes that have typically been dominated by institutions.

Allocations serves a broad range of managers, ranging from family offices to angel investment groups to venture capital funds, representing 10,000+ private wealth clients today. Its website lists funds such as Backstage Capital and Vitalize Venture Group as customers. The startup is also “in talks with some of the larger platforms” to provide high-volume, API-driven fund administration support, he added.

In addition to increasing deal speed, Advani said another benefit of using Allocations is that managers can offer their clients lower investment minimums.

“Traditionally, retail investors, if they go to their bank, their minimum to invest [in alternative assets] is really high, like $5,000 to a million dollars, but on Allocations, you can have any minimum,” Advani said. He shared the example of an SPV into an African startup on the platform that represented $10,000 in total investment, which he believes to be the world’s smallest SPV.

Private equity API provider Allocations' interface

Allocations’ interface. Image Credits: Allocations

Lowering check sizes is crucial to the mission of broadening access to the asset class. Private equity firm KKR made headlines earlier this week when it decided to tokenize part of one of its funds, which it says was to streamline administrative processes, allowing it to take smaller checks from investors. Without finding ways to make fund administration more efficient, it’s not always worth a manager’s while to take in a small check because the smaller fee amounts associated with it may not adequately justify the costs the manager has to incur to go through the necessary administrative processes.

With the latest funding, Advani plans to double down on the firm’s API offerings, which he said are a huge step up in terms of the level of automation they offer compared to popular legacy software systems like Assure.

“The most interest we’ve been getting recently is from these midsize asset managers that are running up to thousands of SPVs a year and need more automation,” Advani said. He added that he also hopes to allow for more customization of funds as the products evolve.

Taking a page from KKR’s book, Advani said Allocations is in the early stages of exploring a blockchain offering as he thinks the technology can help meaningfully streamline fund administration.

“We have about $13 trillion in alternative assets under management in the world, and this is expected to go to $23 trillion by 2026,” Advani said. “So if you imagine all of the liquidity requirements, all of the administration, a lot of it is siloed. If you can put it on-chain, you open up a huge amount of capital markets, in terms of matching, in terms of liquidity, in terms of setup, that is not available in siloed places.”

Investment clubs are cool again, and maybe community is, too

Allocations just got valued at $150M to help private equity funds lure smaller investors by Anita Ramaswamy originally published on TechCrunch

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Majority, a mobile bank for migrants, closes third venture round in just over a year

Nine months after raising a Series A round, Majority has raised tens of millions in both equity and debt financing for its mobile bank for migrants. The fintech announced today that it has raised a $37.5 million Series B, $30 million of which is in equity financing led by Valar Ventures and other existing investors, and the remaining $7.5 million in debt financing from an undisclosed U.S. based commercial bank.

In a little over one year, Majority has raised a $19 million seed, $27 million Series A and now a $37.5 million Series B round. Yet, today’s round – mostly fueled by existing investors – feels a bit different, according to CEO and co-founder Magnus Larsson.

“We didn’t plan to raise now,” he said. “Getting an offer to actually do a round when everything around is shaky, and gives you the opportunity to just focus on what you want to do makes it quite an easy choice.” The founder pointed out that tons of companies have needed to downsize over the past few months, a shuffling that could help Majority build a better team in the future.

Majority makes money through a $5.99 per month membership fee. It offers bank accounts, debit card, community discounts, free international money transfer and discounted international calling. The company did not share specifics on revenue, beyond noting that revenue has increased 5X, and monthly transaction value has increased 4X, over the past year.

“One of our conclusions was that we’re building a product that people want, that people are ready to pay for,” he said.

Building an immigrant-focused service is as in demand as it is challenging. The startup has swaths of well-funded competition, including – but not limited to – Fair, TomoCredit and Welcome. Unlike Welcome, which initially is just focused on the Hispanic community within the United States, Majority is focused on all migrants.

Furthermore, access for the unbanked continues to be a difficult area to disrupt. Earlier this year, Majority announced that users can register for an account without needing a social security number or U.S. documentation, and instead use an international government-issued ID and proof of U.S. residence – a move the startup says could make its services more accessible.

“We’re building a digital product solving a very analog or an offline problem today, from buying to sending money,” he said.

The financial services startup has found opening up physical locations across Florida, in Miami, Hialeah and Orlando, and Houston, Texas. The locations help the team be closer to the communities that it is serving. Creating physical spaces has helped the Majority gain trust with consumers, Larsson explained, showing that the company won’t just show up, handle money, and disappear in a few weeks due to the volatility of startups. It’s a different playbook from how traditional banks are reacting to the wave of financial innovation; many traditional banks are shutting down physical locations and branches

“When you handle people’s money, they want to know that you’re for real,” he added.

Majority, a mobile bank for migrants, closes third venture round in just over a year by Natasha Mascarenhas originally published on TechCrunch

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3 investors explain why earned wage access startups are set to cash more checks

It always feels good to get paid, so it’s no surprise that a payroll model like earned wage access (EWA), which lets employees withdraw their accrued wages at any time, has exploded in popularity.

The pandemic certainly played a big role in helping people understand the benefits of being able to treat their accrued salaries like a small bank account. While wage advances and payday loans have been around for much longer, they serve a very different purpose. With EWA, since you’re only accessing money you’ve already earned, there’s no risk of accumulating debt, and workers can better manage their finances.

The potential for this model is huge, but the industry is still very much in its early stages. Several countries don’t yet have an EWA provider, and in most others, providers are still taking their first steps.

Jennifer Ho, partner at Integra Partners, is confident that the EWA industry is going to keep growing after positive early interest. “In 2021, over $1.13 billion was raised by startups offering EWA products. Due to changing lifestyles, rising costs of living and the residual impact of COVID-19, many small and medium-sized enterprises have grown dependent on EWA,” she said.

That’s not to say there aren’t some issues. Most EWA providers are still experimenting to find out what works, and the business models vary widely, which is a symptom of an industry trying to find its footing. Two of the more prominent models involve either charging the employer a flat fee or charging employees per transaction.

Aris Xenofontos, partner at Seaya, believes an employer-paid model is the way to go for two reasons: social impact and long-term viability. “From a social impact perspective, would you want the party that needs the money the most, the employee, to pay for the services? And from a long-term viability perspective, offering the service for free to employees helps drive better adoption — often 2x-3x the adoption you get when employees pay per transaction,” he said.

“EWA companies are typically B2B2C businesses and face the same challenges that many B2B2C businesses face: The decision-maker and the consumer have different incentives and priorities.” Jennifer Ho, partner, Integra Partners

“Taking into account that the purely EWA business model is not among the strongest in the fintech world, choosing the model that helps drive better adoption leads to more cross-selling opportunities, and eventually, better economics.”

To get a more in-depth look at the state of the EWA industry, how it should be classified and where the money is going, we spoke to a few active investors in the space:

EWA is already prevalent in the U.S. in industries such as retail and fast food, so how difficult will it be for startups to bring the technology to new sectors? Which sectors are the most ripe, and which ones offer the most resistance?

Jennifer: EWA works in any sector where wages are not paid instantly, and it works best when they can serve large pools of financially underserved employees. The less savings people have to finance their day-to-day ahead of wage disbursement, the more valuable EWA becomes.

In developed markets, this typically means sectors that have a large blue-collar workforce. However, in emerging markets like Southeast Asia, where financial literacy remains relatively low, and large segments of the middle class remain financially underserved, EWA can have a far broader impact.

Aris: We have been observing recently a penetration of EWA in two dimensions: vertically and horizontally.

From a vertical perspective, retail and fast food are indeed some of the first ones to come to mind, but other sectors are seeing growing penetration as well. Especially those where the headcount is blue collar dominated, such as manufacturing and transport.

From a horizontal perspective, we see EWA penetrating nearly every sector at the lower compensation/entry-level employees point. This is for sectors where the proportion of permanent full-time employees is high.

We believe the cost of living crisis that started in 2022 and will presumably last for some time is likely to promote this horizontal penetration.

Aditi: The best way to roll out EWA to new sectors is by distributing through payroll providers. One sector where EWA is viewed favorably is the nursing/medical industry.

Earned wage access is still a fairly new service, and we see multiple models, with some charging employers and others charging employees. Which earned wage access model is the strongest? Why?

Jennifer: From a financial inclusion perspective, models where the employer — rather than the employee — bears the cost have the stronger social impact case. What we’ve found is that EWA startups typically service a mix of customers across both models, where the employer pays in some cases and the employee pays in others.

3 investors explain why earned wage access startups are set to cash more checks by Karan Bhasin originally published on TechCrunch

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Boopos adds to its small business M&A lending pot with new investment

Six months after announcing $30 million in equity and debt, Boopos, a Miami-based lending platform for business acquisitions and growth, is back with an even bigger round, a $58 million Series A, again in a mix of equity and debt.

The latest round includes $8 million in equity and $50 million in debt, Boopos founder and CEO Juan Ignacio Garcia Braschi told TechCrunch. Fasanara Capital, which led the initial seed round, is participating again, this time with Bonsai Partners leading the round and additional participation by Noa Capital Partners. Actyus and K Fund are also in the investor group.

Garcia Braschi started the company in 2020 to cater to business owners, mainly company aggregators, leveraging acquisitions as a way to grow their companies. Most small business acquisitions don’t often qualify for bank financing, and help from Small Business Administration loans can be slow and require personal guarantees, he said.

“For many people, that’s just too much risk,” Garcia Braschi added. “They are willing to take the risk of buying a business and being a business owner, but not risking their own assets. So many cases, too, the buyer is not a U.S. resident, which is something that happens with online businesses, and the loan is based on tax returns.”

Founderpath secures $145M in debt and equity to help B2B SaaS startup founders avoid dilution

Boopos qualifies buyers through an application and by accessing their LinkedIn profiles to ensure they have the right skills and track record to succeed in business ownership.

The company is able to underwrite online businesses in less than 48 hours and provides facilities for funding up to 80% of an acquisition under a flexible, revenue-based schedule. And, even though owners might not want to risk their own assets, the company requires them to invest 20% into the deal to have some skin in the game. Boopos charges interest on the loans.

In addition, Boopos works with business brokers to pre-approve their marketplace listings, which has yielded, on average, the ability to close a sale in under 45 days. The company is adding around 100 new Amazon businesses, e-commerce and SaaS listings each month.

In February, the company had 200 qualified buyers on its waitlist, and today, that is now over 500. It also has partnerships with a group of business brokers that are transacting $3 billion annually, including EmpireFlippers, FE International or Quiet Light.

Following the company’s seed round, Adrián Yanes joined as chief technology officer and Sarita Bhatt as chief marketing officer to help Boopos scale to Series B and beyond, Garcia Braschi said. The company now has 25 employees and Garcia Braschi expects to double that in the next 12 months.

Meanwhile, the debt investment will help ensure there are funds to lend, while the equity portion will go toward building Boopos’ team and growing it.

Next up, the company will launch a mobile app, what Garcia Braschi called a “business owner dashboard,” to enable users to explore and decide what businesses to buy. Once they have made a decision and moved the businesses into their profiles, they have a portfolio view of how the businesses are doing in terms of revenue as it relates to valuation and how the debt is going down and is being repaid. Future features will be alerts to businesses that are for sale.

Though Garcia Braschi was not specific, he did say the company’s valuation is approximately double following this round than the previous seed round. It has grown revenue consistently by between 30% to 50% month-over-month since late 2021.

“Our portfolio is performing strongly despite the weaker macro environment and recent layoffs and difficulties or even pivots that competitors are experiencing,” he added. “We have adapted our credit policy and are being more conservative, lending lower amounts and being more selective. Our financing is still useful because M&A multiples have compressed, too, based on our database, at least by 20% to 30%.”

Debt-as-a-service provider Sivo wants to power the next generation of lending startups

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Solid banks $63M for easier deployment of embedded fintech products

Solid, which rebranded from Wise in 2021, raised a $63 million Series B round of funding to continue providing its fintech-as-a-service offering for companies wanting to launch and scale their own fintech products.

The San Mateo-based company works with fintech and vertical SaaS companies and offers banking, payments, cards and cryptocurrency products via easy-to-integrate APIs.

We last profiled the company in 2020, before its name change, and after it had picked up both a $5.7 million seed and a $12 million Series A.

Arjun Thyagarajan, co-founder and CEO at Solid, told TechCrunch that the company spent the last 18 months working with early customers on product-market fit.

Traditional fintech infrastructure was not built for the modern company, he explained, and that results in companies needing dozens of point solutions and often spending millions in upfront and ongoing maintenance costs, all before launching an actual product.

Wise raises another $12 million to double down on embedded business banking

Instead, by utilizing APIs and a few lines of code, customers can embed fintech products and get them up-and-running quickly.

“Customers aren’t looking for UI/UX, but really for DI/DX, that developer interface with a powerful dashboard that is self-service,” he said. “We understood what they were looking for — that demand for modern infrastructure. They work with banks, but those often don’t have tools for launching the fintech experience or the building blocks to make it easy to put together.”

It was also during that time that they decided to rebrand as they solidified their business-to-business focus. The new Solid name also resonated more with customers, Thyagarajan added.

Over the past year, Solid grew 10x in revenue, doubled its customers to 100 and became profitable. Year to date, the company processed $2 billion in transactions.

After being in sort of a stealth mode during the past 18 months, Thyagarajan said the company was now on a journey to get to 100 customers. To do that, he and co-founder Raghav Lal thought it was time to go after new funding. They started the process in May and closed the Series B at the end of July.

“We saw early signs of product market fit, so our thought process was to do the Series B when we were ready for hypergrowth, and now we have cash in the bank,” Thyagarajan said. “We are going after the mid-market, so we had to go back and fine-tune our product as we figured out what businesses need. The key was to build our technology from the ground up to own the complete experience so we could give customers what they want.”

FTV Capital led the new investment and was joined by existing investor Headline. To date, Solid has raised $80.7 million. Thyagarajan didn’t disclose a specific valuation with the new round, but did reveal it was 5x over Solid’s Series A valuation.

The capital infusion will help accelerate Solid’s entrance into some new verticals like travel, logistics, construction, healthcare, education and the gig economy. The company is looking at where money is moving and identified 40 to 50 different verticals where there is an impedance in how money moves, but they want to benefit their customers.

The company is also focusing on mid-market and larger companies, which is another reason why Thyagarajan said the investment was important.

“We are talking to Fortune 1000 companies and they feel more comfortable working with companies with a strong balance sheet,” he added. “A lot of work has been under the radar, so we are getting the brand out and showcasing we are the ‘AWS of fintech,’ a one-stop shop. Our goal is to be alongside them as a partner, not just a vendor.”

8 fintech VCs discuss the shifting investing landscape and how to pitch them in Q3 2022

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Animoca Brands’ Japan unit raises $45M at $500M valuation for NFT push

Asia’s crypto games and web3 investment powerhouse Animoca Brands is making inroads into Japan as its local unit picks up $45 million in financing at a $500 million pre-money valuation.

The investment, which was shelled out equally by the parent firm Animoca Brands and MUFG Bank, the largest bank in Japan with 360 years of history, comes at a time when the country is tightening regulations around the crypto industry.

Japan isn’t the most crypto-friendly country. Currently, it imposes a 30% corporate tax on profit from cryptocurrency holdings, including unrealized gains, a policy that has triggered a blockchain brain drain and pleas by local crypto startups to lower tax rates.

But with its troves of successful anime, manga, video games, movies, and musicians, Japan is still a place to be for NFT services scouring for IPs.

Indeed, Animoca Brands Japan, whose parent has backed the world’s largest NFT platform OpenSea, plans to use the fresh capital to “secure licenses for popular intellectual properties, develop internal capabilities, and promote adoption of Web3 to multiple partners, increasing the value and utility of their branded content while fostering the development of a safe and secure NFT ecosystem in Japan.”

MUFG, which was formed from a merger between Bank of Tokyo-Mitsubishi and UFJ Bank, isn’t the only financial group in Japan to have embraced NFTs. Banking giant Sumitomo Mitsui Banking Corp said in July that it plans to create a “Token Business Lab” that will provide consulting to institutional customers interested in NFT applications, with technical support coming from blockchain startup HashPort.

Japan’s domestic tech companies have been warming to NFTs as well. In April, Line launched its NFT marketplace in Japan, a plan that was announced last year. It’s an expected development given the Japanese messaging giant already has reaped millions of dollars from sticker sales and popularized a handful of sticker collections. Line’s 90 million users in Japan can now store their NFTs in their Line-powered digital asset wallet and trade NFTs with friends.

Japan’s gaming blockchain builder Oasys raises $20M in private token sale

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Ravel emerges from stealth with privacy-first data tools based on scalable homomorphic encryption

The world has gotten a lot more serious about privacy and data protection, but in many cases business models that rely on personalization of one kind or another have struggled to keep up. Today, a startup out of Paris called Ravel Technologies is emerging from stealth with an approach it believes could be the missing link between those two. It’s built a tool based on homomorphic encryption to keep personally identifiable information (PII) private from end to end without needing to touch the data itself. It’s launching first with a tool to enable “zero-knowledge” advertising services, and another for financial services.

The company has been around for almost four years and was initially bootstrapped, hiring a team of academics and advisors including Fields Medal Recipient Cedric Villani. Now it’s disclosing that Airbus Ventures has led a seed round of an unspecified amount. It has not disclosed any customer names but Mehdi Sabeg, the CEO who co-founded the company, said that it’s in advanced discussions with companies across both products. It notes that French bank BNP Paribas is among those running a proof of concept process.

Homomorphic encryption, as others have described it before, is something of a “holy grail” in the world of security. First conceived of by academics, the technique involves extensive algorithmic encryption of an organization’s data that lets it stay encrypted even as that organization collaborates with third parties to process the data and deliver their own services based on it — as you might, for example, encounter in an advertising network.

The holy grail aspect comes in because while the idea sounds great in theory, in practice it requires enormous computational resources to run, so much so that up to now a lot of efforts to put homomorphic encryption into practice have fallen short.

That’s led other companies who are attempting to build their own approaches to use either modified versions of HE, or to apply it to smaller, well-defined sets of data — approaches that we’ve covered used by the likes of Enveil and Duality, two other HE-based startups that have attracted some interesting attention.

Ravel’s big breakthrough has been a new approach that not only allows it to implement fully homomorphic encryption (FHE) for the first time among all of the others, but to do it at scale, across any-sized data set. Sabeg said that the speed at which Ravel works on data is on “four orders of magnitude faster” than the other HE-based solutions that have been rolled out by others.

Sabeg added that Ravel has put in patent applications on its approach. In general terms, it’s based around a fully encrypted SQL database — the first of its kind, he said — that enables encrypted queries over large volumes of encrypted data.

The current climate for data protection and privacy has created the vacuum that Ravel is hoping to fill.

Today, especially in certain jurisdictions, there are gateways set up over how that data can be sourced and subsequently used, with users able to opt out and essentially remove all personalization, rendering useless a lot of the adtech and other tools that have been created around that concept. Sabeg noted that for companies that adopt its tech — and in the case of the zero-knowledge ad tool, it would be using an API to run the service, and an SDK at the publisher’s end to implement it; while in the case of the financial services tool it would be the financial platform, and, say, a third party tool to execute trades — while something like GDPR gates would still be in place, companies would still be able to run their regular advertising services since the data they were using would no longer be PII-related.

Similarly, in the financial exchanges application, Sabeg said that the aim is to ensure confidentiality and “remove market biases” that come in plaintext data that might, for instance, come up in bidding, which is something that has come up in the context of blockchain exchanges.

It was the emergence of GDPR, in fact, that first led Sabeg, a mathematician by training, to considering how one could apply the concept of HE to the model of online advertising and how DSPs work.

“GDPR was about to be implemented and all the ad customers were complaining about the constraints of it,” he said. “I found GDPR interesting. In its essence, I loved the values it was defending but could understand the problem the ad industry was seeing. I thought we could bring an efficient tech answer. Thought that HE could be used as de-identification tech. A industry could collect and process data while never having to use PII.”

We’ve covered a number of startups looking for ways to apply homomorphic encryption to build more privacy-first data services, but they are not the only ones in pursuit of this idea, in some cases because of how central advertising and other data-heavy services are to them.

Facebook/Meta last year went on a hiring spree to pick up a number of key homomorphic encryption research specialists, including Kristin Lauter, a longtime Microsoft employee, to head up its West Coast AI research, and it’s publishing research on the topic. “It shows the importance they are giving to that technology,” Sabeg said. Others like Google have also dedicated some research into the area, and Apple is also applying it in some of its own privacy tools.

“Given the impressive, major algorithmic breakthroughs achieved by Ravel’s team, Ravel Fully Homomorphic Encryption is orders of magnitude faster than state-of-the-art FHE schemes,” noted Villani in a statement. “With the continual increase of personal and industrial data being processed globally, privacy, and confidentiality protection are of paramount importance. Ravel’s breakthroughs bring an efficient and scalable answer to critical data privacy and security challenges.”