Tag: EC Fintech

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Bend is taking on Brex and Ramp with a green twist and a $2.5M seed round

When the SEC announced that it planned to require companies under its purview to disclose their climate-related risks and emissions, plenty of companies started publicly clutching their pearls.

Tracking down the extent of their pollution would simply be either too expensive, too difficult or both, they said. No surprise there: Companies strike a similar tone every time a new regulation is proposed. The reality is that the requirement likely won’t be nearly as difficult as they claim, but what if tracking some of their most challenging emissions were as simple as swapping out their corporate spend cards?

“For most companies, 75 to 80% of their emissions typically are Scope 3 emissions, which is all the goods and services that they’re buying,” said Ted Power, co-founder and CEO of Bend. “And so what that means is that the best way for companies to reduce their missions is to address all of those goods and services they’re buying.”

Power and co-founder Thomas Moore started Bend to help companies tackle their Scope 3 emissions. The startup began by selling access to its API for carbon accounting, but the team soon shifted focus to the corporate spend market.

“The thesis is that by making it free and embedding it in a corporate card, there’s a much bigger addressable market, and we can engage more folks in what is essentially the same thing under the hood in terms of the carbon accounting,” Power said.

Like many other credit cards, Bend offers rewards, though not the usual cash back or points-based fare. Instead, it offers carbon offsets. The company is announcing a $2.5 million seed round, TechCrunch+ has exclusively learned.

Since it’s a small team, the company has piggybacked on a selection of projects from Frontier, the advanced market commitment created by Stripe, Alphabet, Shopify and others.

Carbon credits are transacted through Patch, the carbon market. That offers a few advantages compared with a DIY approach. For one, Patch has a relatively large market of vetted projects. And two, it offers a sort of insurance: If one of the projects goes bust or doesn’t deliver on its promises, buyers can swap credits for new ones. Bend only buys those that cost at least $100 per metric ton. “It’s investing in these very scalable carbon very sort of scientifically based carbon removal projects that, if successful, will come down the cost curve,” Power said.

Bend’s current roster of projects includes CarbonCapture, Charm Industrial and Living Carbon. The first two are different approaches to carbon capture and storage, while the latter uses engineered trees that grow faster and in theory sequester more carbon (experts have raised questions about whether they really do, however). That lineup may change, of course. “Ultimately, our goal is to support the best projects,” Power said.

A crowded market

TechCrunch+ has covered the corporate spend market exhaustively in recent years due to a hotbed of startup activity. Brex, Ramp and Airbase, among the better-known, yet-private unicorns competing from the U.S. market, have raised more than $3 billion in combined capital while private, according to Crunchbase data.

Bend is taking on Brex and Ramp with a green twist and a $2.5M seed round by Tim De Chant originally published on TechCrunch

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As another startup bank partner collapses, tech feels the gap

When First Republic Bank was in its final moments, Silicon Valley didn’t convulse with shock or lather itself into a social media tizzy.

Instead of panic, which rippled throughout the startup community in March when Silicon Valley Bank signaled trouble, there was widespread malaise. Part of the reason for that may be that we’ve been here before, and part of the reason may be that FRB had a faster resolution than SVB: Earlier this week, FRB was officially put under FDIC receivership so its assets could be sold to a bidder.

As startups scrap together new money management plans, fatigued with banking and stressed by the downturn, they’re finding that a gap has been left behind by the collapse of these venture-friendly institutions.

Marisa Ricciardi, founder and CEO of marketing agency The Ricciardi Group, wondered if the two bank failures called for the “death of relationship banking for small businesses.”

“Now that FR is Chase and SVB essentially doesn’t exist, what good options are there for founders?” Ricciardi asked. “Which bank will [let me] actually have the cell phones of bankers who will answer day or night? Which bank will give a founder a loan to put their kids through school or to buy a house, and understand the value of equity and options, etc.? It’s not just about these two banks: it’s about a new gaping hole in the overall founder and small business ecosystem that no one at present is able to fill. Entrepreneurship will be stifled by this in a meaningful way for a period. It will be interesting to see who stands up as a small business and growth bank.”

Hustle Fund’s co-founder and general partner Eric Bahn has used First Republic Bank as the firm’s bank for the past six years. He describes it as “one of those canonical institutions when you’re an emerging manager.”

“Just a couple months ago, there were just two options of banks to work with: Silicon Valley Bank or First Republic Bank,” he said.

While he is happy that JPMorgan stepped in to buy First Republic, he’s not that happy that one of the world’s largest banks ended up being the buyer. “I think we lost something big here, and my only hope is that JPMorgan respects the brand and the customer service that [FRB] has spent decades to build.”

“I was hoping that it’d be PNC,” Bahn said, referring to the Pittsburgh-based bank that was said to be among the bidders for FRB. “I thought that it’d be nice to see another slightly smaller bank win to consolidate and maybe strengthen this position for themselves to compete with the larger banks.”

As another startup bank partner collapses, tech feels the gap by Christine Hall originally published on TechCrunch

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10 years of fintech failure: 3 more ideas that failed to live up to the initial hype

Grant Easterbrook Contributor
Grant Easterbrook is a fintech consultant based in Amsterdam. He also co-founded Dream Forward, which was acquired in 2020.
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This article follows a piece I wrote that looked at six fintech ideas from the first decade of fintech that failed to go mainstream – algorithm-based buy/sell/hold advice, trade mimicking, P2P lending, P2P insurance, on-demand insurance, and standalone financial planning apps. But there’s more to the story. Given the intense interest in the fintech sector, it’s worth examining three more concepts that initially seemed promising, but largely failed to change the financial services industry.

Before diving in, it is important to once again first define how we are categorizing “failure.” This article is not focused on highlighting the demise of individual high-profile fintech startups or various failed fintech initiatives undertaken by large corporations (such as BloombergBlack or UBS’ SmarthWealth).

These ideas rolled out with hype and momentum, but they ultimately failed to change the way the average person manages their money.

Rather, this piece will focus on fintech ideas that received some degree of initial hype and momentum, but ultimately failed to change the way the average person manages their money. So, with those caveats, here are three more fintech concepts from the last ten years of fintech that did not succeed.

Independent financial advisor search and matchmaking tools

In the early 2010s, approximately 15 firms launched an online search or matchmaking service designed to help individuals find a financial advisor that best met their needs. The traditional approach to financial advice – where wealthy individuals usually find an advisor through friends, family, or a local financial advisor’s proactive sales outreach – lags behind modern online product search trends. Every day, consumers shop online and pour over user reviews. The logic behind this early wave of startups was that the experience of finding a financial advisor should mimic the way consumers look for other products and services online.

Financial advisor matchmaking startups generally took one of two approaches. The first approach was to offer a search tool that let users find local financial advisors based on parameters such as assets under management, experience, rating, gender, etc. Here’s an example of a financial advisor’s profile on the now-defunct financial advisor search tool Tippybob.

2013 Screenshot of a Financial Advisor Profile at Tippybob, an independent financial advisor platform.

2013 Screenshot of a Financial Advisor Profile at Tippybob. Image: Greg Easterbrook

The second approach was to offer an online financial advisor matchmaking service. Prospects were asked to enter basic information about their income, age, assets, needs, etc. and the firm would introduce them to a local financial advisor who was selected as a personalized fit for their needs.

As of 2023, there are still a few independent sites (such as Smart Asset and Zoe Financial) offering some kind of financial advisor matchmaking tool. And of course, Googling “financial advisors in my area” will yield paid ad placements. In general, however, independent financial advisor search and matchmaking tools failed to go mainstream. Most wealthy individuals still find their financial advisor via traditional methods rather than relying on web-based approaches.

This idea failed to catch on for two reasons. First, these startups were unable to overcome the difficulty of building a two-sided network for a product with a slow sales cycle. Advisors didn’t want to join these matchmaking services unless there’s a large number of users on the platform. Without a significant number of advisors on the platform, however, these services struggled to attract users. This chicken-or-the-egg problem was compounded by the very slow sales cycle of financial advice.

Secondly, financial advice is fundamentally different from other types of goods and services sold online. There are potentially massive negative consequences if a consumer chooses the wrong financial advisor and they receive bad investment advice. Ordering a pizza or a pair of shoes online does not carry the same level of risk.

Consumers who would like to work with a financial advisor seem inclined to only want to hire someone with whom they have a high level of personal trust. Thus, the financial advisor business model has proven resilient to disruption by online product search and comparison services that have upended so many other industries.

10 years of fintech failure: 3 more ideas that failed to live up to the initial hype by Walter Thompson originally published on TechCrunch

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How a fintech company handled a fintech crisis

When Silicon Valley Bank collapsed earlier this month, it sent massive waves across the banking and venture capital worlds, and beyond.

Companies like Rippling, Brex and many others scrambled to secure funding to offset not being able to access funds, while companies on the payments side, like Etsy, worked to find alternative ways to process payments.

Spend management company Airbase found itself straddling both of those worlds during the SVB crisis. TechCrunch+ spoke with CEO Thejo Kote about how Airbase not only had its funds with SVB but also was “the only spend management company that uses SVB as the payment rails for large parts of our platform.”

Airbase CEO Thejo Kote. Image Credits: Airbase

When all of this went down initially, much of the attention was focused on the depositors who held funds, Airbase included; SVB was its primary operating bank, Kote said. SVB went into receivership on March 10, but there wasn’t the first sigh of relief until March 12 when the U.S. government stepped in and said deposits would be protected.

“It was kind of a rollercoaster ride until that news [about the protected deposits] came out,” Kote said. “We had a unique front-row seat to this episode as a company that has its payment rails in SVB.”

Impact on the business

Airbase currently processes over $5 billion of annual payments on behalf of its customers, with a large portion flowing through SVB from customer bank accounts. On that particular day of the collapse, a “fairly large portion” of Airbase’s customers “had payments in flight,” Kote said.

That meant that not only were they drawing funds for payroll but also to pay vendors, including many time-sensitive payments. The funds in transit totaled eight figures, and much of that was ultimately delayed by a few days, he said.

How a fintech company handled a fintech crisis by Christine Hall originally published on TechCrunch

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Now is the time to invest in Black-owned banks

In the past two weeks, millions of dollars shuffled from startup and investor bank accounts housed in the collapsed Silicon Valley Bank to the JPMorgans, Brexes and Wises of the world. As founders and investors continue looking for new places to park their money, it’s essential to consider this moment as an opportunity to start banking with some of the few Black-owned banks.

Digitally, there is Intrepid, founded by Collin Thompson, which works exclusively with businesses and global remote teams. Thompson told TechCrunch+ that his company’s goal is to become a trusted partner to founders, especially those affected by the SVB collapse.

Intrepid offers similar services to Brex, in addition to more specialized assistance, such as all-in-one HR tools. In the wake of SVB’s crash, Intrepid has implemented services like higher Federal Deposit Insurance Corporation insurance and sweep accounts. To create insurance beyond the typical $250,000 backed by the FDIC, Thompson said he’s building a new deposit network product with his banking partners, allowing his company to create multiple deposit accounts within the FDIC-insured limit and letting customers access those accounts through a single application. Intrepid also provides social resources, such as introductions and events, for those looking to grow their business networks.

“Given our diverse backgrounds, this informs how we manage risk, what types of customers we take on and how we serve,” Thompson said. “Our interests, experiences and character guide us, and this will impact the types of customers we attract. We believe that every customer, regardless of their background or identity, deserves to have a financial partner they can trust and rely on, and we are here to provide that.”

There are also brick-and-mortar Black banks, such as Unity National Bank, currently the only Black-owned bank in the state of Texas, which has a branch in Atlanta; Liberty Bank, which has branches in nine states, including Louisiana; and OneUnited, which is based in Massachusetts with branches in Los Angeles, Miami and Boston.

Many Black-owned brick-and-mortar banks are based in the U.S. South, which aligns with the latest venture migration pattern to states such as Georgia, Texas and Florida. Though these banks do not have many branches, they could still be important when considering financial diversification.

Now is the time to invest in Black-owned banks by Dominic-Madori Davis originally published on TechCrunch

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Pitch Deck Teardown: StudentFinance’s $41M Series A deck

There’s no shortage of “upskilling” startups out there, but it’s rare to see one raise a $41 million round. That’s what Spanish startup StudentFinance pulled off a couple of weeks ago. Today, we are taking a closer look at the pitch deck the company used to make that happen.

We’re looking for more unique pitch decks to tear down, so if you want to submit your own, here’s how you can do that. 

Slides in this deck

StudentFinance shared a slightly redacted slide deck; it removed sensitive revenue, cost and unit economics slides. Everything else is as pitched.

  1. Cover slide
  2. Mission slide
  3. Opportunity slide
  4. Problem slide
  5. Solution slide
  6. Value proposition slide part 1
  7. Value proposition slide part 2
  8. Business model slide
  9. Technology slide
  10.  Metrics slide
  11.  Road map slide (labeled “expansion” slide)
  12.  Geographic expansion slide (labeled “expansion” slide)
  13.  Growth history and trajectory slice (labeled “expansion” slide)
  14.  Team slide
  15.  Contact slide

Three things to love

To raise a $41 million round, a company needs solid traction and a huge market. I’m unsurprised to see that those parts of the story, in particular, were very well covered.

Clear, bold mission

Student Finance mission slide

[Slide 2] Off to a solid start. Image Credits: StudentFinance (opens in a new window)

Company-building is future-building, and being able to have a clear vision for the future is a crucial part of that. StudentFinance’s second pitch deck slide sets the tone for what’s about to come: It’s a BHAG, as it’s called in the industry —a big, hairy, audacious goal. StudentFinance has great clarity about what they are building and who they are building it for, and it really helps investors co-dream with the founders.

This slide invites investors to join the journey, something all startups should do when pitching. What is the big goal, the big change you want to see in the world? Bring that to life, and you’ve made a great first impression.

A clearly formulated problem space

[Slide 4] Gotta love a clear problem. Image Credits: StudentFinance

The company goes from a great mission to discussing what the opportunity looks like. From there, it moves on to this slide, talking about the three big problems getting in the way of a global, comprehensive approach to upskilling. Having a clear, well-articulated problem statement goes a long way toward helping an investor get a feeling for how big, how serious and how urgent the problem is. Ideally, it should also hint at how prevalent the problem is (i.e., how many people are experiencing it).

Breaking down the problem into three easy-to-grasp segments like this is particularly elegant. Funding is an obvious one‚ people are worried about money — but finding jobs and getting career guidance are less obvious slices of this challenge at first glance. Bringing it to life by using the short example questions underneath helps humanize the problem. All very well done.

Promising early metrics

For a company raising more than $40 million, I would have expected pretty beefy metrics. Of course, I have nothing to benchmark it against, so I don’t know if these metrics are actually good or great, but the investors must have seen something. The win here, though, is identifying and reporting on metrics that seem key to the company:

[Slide 10] Metrics, metrics, metrics. Image Credits: StudentFinance

Some crucial numbers are missing here, and in any other circumstance, I would give the founders a hard time.

You can tell a lot from a company’s metrics — both the KPIs themselves, of course, but also the figures that a company believes are key to its growth. StudentFinance overlaps these metrics on the UN sustainable development goals, which is a great way to signal how it can be a force for good in the world. Again, elegantly done.

The number of people reskilled and the value of tuition fees are both crucial numbers (although I can’t figure out what ISA stands for, so perhaps there’s an opportunity for a tweak there). Job creation, salary generation and finding that half of the folks who go through the program land jobs are all key indicators that make a lot of sense.

Some crucial numbers are missing here, and in any other circumstance, I would give the founders a hard time, but the team already let me know that “sensitive revenue, cost and unit economics slides” had been removed — and those are exactly the type of metrics that I would like to see here.

In the rest of this teardown, we’ll take a look at three things StudentFinance could have improved or done differently, along with its full pitch deck!

Pitch Deck Teardown: StudentFinance’s $41M Series A deck by Haje Jan Kamps originally published on TechCrunch

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For fintechs in 2022, the bigger the exit, the larger the decline in value

While the public market correction has been widespread, tech and fintech stocks have seen the largest declines, according to a recent report.

Specifically, the Fintech Index — which tracks the performance of emerging, publicly traded financial technology companies — was down a staggering 72% in 2022, according to F-Prime Capital’s State of Fintech 2022 report. After hitting a peak of $1.3 trillion in late 2021, the F-Prime Fintech Index slid to $397 billion by the end of 2022.

Currently, the Fintech Index comprises 55 companies across B2B SAAS, payments, banking, wealth and asset management, lending, insurance and proptech.

“The biggest shift in 2022 was that public investors for the first time got to weigh in on fintech stocks,” said David Jegen, managing partner of F-Prime Capital. “That was probably not super great timing considering the broad macroeconomic impact on tech.”

The fact that so many fintech companies even went public was a big deal in and of itself, Jegen said. “We had 10 years of exciting fintech disruption, all of it led by private investors,” he said. “So 2021 was huge because the IPO window was open when we had a really mature cohort of fintech companies.”

Indeed, 75 fintech companies went public in 2021, meaning 2022 was the first year that F-Prime could even put together a Fintech Index.

Notably, the decline was especially pronounced for the 10 largest exits during the peak years of 2020-2021. In other words, the bigger the exit, the larger the decline. The cumulative market cap decline for the top 10 recent exits totaled over $220 billion; Coinbase, NuBank, Robinhood, SoFi, Affirm and Wise all saw their valuations tumble.

For fintechs in 2022, the bigger the exit, the larger the decline in value by Mary Ann Azevedo originally published on TechCrunch