3 things to remember when diversifying your startup’s cap table

Making purposeful decisions on diversity and inclusion in the workplace goes beyond simply building your team.

As a minority female entrepreneur and co-founder of a women’s health startup, ensuring diversity within our cap table has been a must — and has proven instrumental to our success. Breaking down your cap table to diversify your investors based on a variety of criteria will provide far more value than funding alone.

I have spent the last 10 years working in women’s health, and the lack of diversity in investors and leadership baffles me. From the inception of my company until now, diversifying our cap table has been a top priority that will continue to serve as a key factor when bringing in investment.

Prioritizing diversity will bring a wealth of knowledge, perspective and expertise to the table. We knew that to make this happen, we had to focus on building a product and team that people wanted to invest in. Many startups talk about wanting to adding diversity to their cap table, but how should you go about it?

Set your investor criteria from the beginning

My co-founders and I were all in agreement that we would select our investors based on a variety of factors, such as type of investor (VC, angel, family office, etc.), gender, race, expertise and a deep passion for our mission. While arriving at these criteria, my co-founders and I wrote down reasons why each factor was important to us.

Breaking down your cap table to diversify your investors based on a variety of criteria will provide far more value than funding alone.

As a startup tackling a problem that affects women globally, it was particularly important for us to have women investors, racially diverse investors and industry professionals who understood the magnitude of the problem we were trying to solve.

Recent studies have shown that women and people of color disproportionately experience medical gaslighting. Seeking out investors who fit this profile was critical to onboarding people who we felt would share our passion for our work and be supportive along the way.

When setting your criteria, you should define your goals clearly and identify the value each investor will bring to the table. As a team, think about what you would want if you could have it your way and why.

Second-largest crypto exchange FTX expands its empire with launch of stock trading feature

Cryptocurrency exchange FTX is launching stock trading capabilities for its customers through its U.S. division. The company, helmed by co-founder and billionaire Sam Bankman-Fried, said in an announcement that its launch will start in private beta mode for a select group of customers chosen from a waitlist before a full rollout in late 2022.

FTX, which is the second-largest crypto exchange in the world, says it will offer “hundreds of U.S. exchange-listed securities, including common stocks and ETFs,” including fractional shares in certain securities.

Notably, FTX plans to route all orders through Nasdaq rather than a third-party market maker. The exchange says it will not receive payment for order flow (PFOF), a method for order fulfillment Robinhood became notorious for that involves the exchange receiving payment from market makers for directing orders their way. It’s a controversial way of clearing trades because it often means the investor doesn’t receive their shares at the best possible price since the market maker profits from the spread.

Robinhood continues to employ PFOF because it can bring in substantial revenue from the third-party market makers. FTX, in contrast, will be foregoing profits from its stock trading offering because it is offering the service to users with no fee or commission charged in exchange.

FTX also says it will allow users to fund their brokerage accounts on the platform with fiat-backed stablecoins such as USDC (these are different from algorithmic stablecoins like Terra (UST), which are backed by other cryptocurrencies and don’t hold reserves in the traditional sense). The exchange says it will be the first to offer this capability, though users can also fund their accounts by standard means through wire transfers, ACH transfers and credit card deposits.

FTX also won’t require customers to hold any minimum balance in order to qualify for the no-fee account, it said.

The announcement marks a pivotal moment in Bankman-Fried’s vision to expand FTX from an institutionally focused platform with deep trading roots to an exchange that serves the broad range of needs of retail investors. Bankman-Fried revealed in a filing last week that he had bought shares in Robinhood worth 7.6% of the company, which could mark another move toward that end.

“What we eventually want to offer is an everything app for financial services,” Brett Harrison, FTX.US’s president, told the Wall Street Journal in an interview.

Data intelligence startup Near, with 1.6B anonymized user IDs, lists on Nasdaq via SPAC at a $1B market cap; raises $100M

The IPO window has all but closed for technology companies in the wake of a massive downturn in the market, but an opening still remains for some, in the form of SPACs. Near — a data intelligence company that has amassed 1.6 billion anonymized user profiles attached to 70 million locations in 44 countries — today announced that it would be listing on Nasdaq by way of a merger with KludeIn I Acquisition Corp., one of the many blank check companies that have been set up for the purposes of taking privately held companies public, at a valuation “near” $1 billion. It will trade on Nasdaq using the “NIR” ticker.

Alongside that, the company is picking up a $100 million equity investment into its business from CF Principal Investments, an affiliate of Cantor Fitzgerald. 

If you’ve been following Near or the SPAC market, you might recall that there were rumors of KludeIn talking to Near back in December. At the time Near was reportedly aiming at a valuation of between $1 billion and $1.2 billion with the listing. The last several months, however, have seen the IPO market virtually shut down alongside a massive drop in technology stocks across the board and a wider downturn in tech investing overall, even in much smaller, earlier-stage startups.

Near, originally founded in Singapore in 2012 and now based out of Pasadena, had raised around $134 million in funding, including a $100 million round in 2019 — which had been the company’s last big raise.

Its investors include the likes of Sequoia India, JP Morgan, Cisco and Telstra (which have agreed to a one-year lock-up according to KludeIn’s SEC filings). Company data from PitchBook notes that Near had tried but cancelled a fundraise in May 2021.

All in all, Near is an interesting example when considering the predicament that a lot of later-stage startups might be finding themselves at the moment.

On the one hand, the company has some big customers and some potentially interesting technology, especially in light of the swing from regulators and the public toward demanding more privacy in data intelligence products overall.

It works with major brands and companies including McDonald’s, Wendy’s, Ford, the CBRE Group and 60% of the Fortune 500, which use Near’s interactive, cloud-based AI platform (branded Allspark) to tap into anonymised, location-based profiles of users based on a trove of information that Near sources and then merges from phones, data partners, carriers and its customers. It claims the database has been built “with privacy by design.”

It describes its approach as “stitching” and says that it’s patent-protected, giving it a kind of moat against other competitors, and potentially some value as an asset for others that are building big data businesses and need more privacy-based approaches.

On the other hand, while financials detailed in KludeIn’s SEC filings show growth, it is at a very modest pace — numbers may not look that great to investors especially in the current climate. In 2020, Near posted revenues of $33 million, with estimated revenues of $46 million for 2021, $63 million for 2022 and $91 million for 2023. The company estimates that its gross profit margin for this year will be 72% ($44 million) but equally estimates that EBITDA has been negative and will continue to be until at least 2024.

Image Credits: Near

Looking out further than Near, it will be interesting to see how many others follow the company in taking the SPAC exit route, which has proven to be a controversial vehicle overall.

On the plus side, SPACs are lauded by supporters for being a faster, more efficient route for strong startups to enter the public markets and thus raise money from more investors (and giving sight of an exit to private investors): this is very much the position Near and KludeIn are taking.

“Enterprises around the world have trusted Near to answer their critical questions that help drive and grow their business for more than a decade. The market demand for data around human movement and consumer behavior to understand changing markets and consumers is growing exponentially and now is the time to accelerate the penetration of the large and untapped $23 billion TAM,” Anil Mathews, founder and CEO of Near, said in a statement. “Going public provides us the credibility and currency to double-down on growth and to continue executing on our winning flywheel for enhanced business outcomes over the next decade.”

“I am thrilled to partner with Anil and the entire team at Near as they continue to help global enterprises better understand consumer behavior and derive actionable intelligence from their global, full-stack data intelligence platform,” added Narayan Ramachandran, the chairman and CEO of KludeIn. “We believe this merger is highly compelling based on the diversified global customer base, superior SaaS flywheel and network effects of Near’s business, highlighted by the company’s strong customer net retention.”

On the minus side, those positives are also the very reasons for some of SPAC’s problems: Simply put, they have enabled public listings for companies that might have found it much harder, if not impossible, to do so through the scrutiny of more traditional channels. Sometimes that has played out okay anyway, but sometimes it has ended badly for everyone. Just this week, Enjoy — which also listed by way of a SPAC — said that it was on course to run out of money by June and was reviewing its strategic options.

Time, the appetite for more data intelligence and potentially some factors out of its control like the investment climate, ultimately will show which way Near will go. The transaction is expected to generate $268 million of gross proceeds, assuming there are no redemptions and a successful private placement of $95 million of KludeIn common stock, KludeIn said.

M&A is coming for DeFi protocols as market conditions change

At the Permissionless conference in sunny West Palm Beach, conversations around mergers and acquisitions in crypto were heating up as market players were starting to discuss this trend growing at the protocol level for decentralized finance (DeFi).

Panelists Nikita Ovchinnik, chief business development officer at 1inch; Vanessa Grellet, managing partner at Aglaé Ventures; and Tom Schmidt, partner at Dragonfly Capital, took to the stage with TechCrunch to discuss what DeFi M&A will look like as crypto market conditions become shakier.

Conference host (and my former employer) Mike Ippolito, co-founder of Blockworks, said while introducing the panel that though M&A happens often in the traditional startup space, it’s something that is being explored and pioneered in real time at the protocol level.

“I think we will see an explosion of M&A in DeFi,” Ovchinnik said. “M&A is ultimately a perfect tool [for] how you can scale and expand your product line and roll out the long-term horizon.”

Given the current bearish crypto market conditions, the panelists agreed that while some DeFi protocols can survive the downturns and continue to raise money, when that capital dries up, it’ll be harder to sustain themselves and there will be a lot more consolidation in the next two years.

In 2020, there were 118 crypto M&A deals, which spiked 233% to 393 deals in 2021, according to a report by PwC. The average deal size also rose 241% from $52.7 million to $179.7 million during the same period.

In December 2021, two decentralized autonomous organizations (DAOs), Rari Capital and Fei Protocol, merged via a token swap and were united under a new TRIBE token and the name FeiRari. At the time, Jeff Amico, a partner on the crypto team at Andreessen Horowitz, tweeted that the merger was “a new primitive to align incentives between web3 communities going forward.”

But it has been about six months since that merger, and clarity and guidelines around M&A in DeFi remain limited, the panelists commented.

“I think the M&A infrastructure just doesn’t really exist in crypto right now,” Schmidt said, adding that until the market matures, it’s going to be ad hoc in terms of determining how these actually happen.

“It’s the wild, Wild West right now; there’s no framework,” Grellet said. “We can copy and paste the existing traditional finance framework, but I don’t know if that’s really what we want to do.”

DeFi protocols consolidating as bear market conditions grow

On May 17, blockchain analytics platform Nansen announced the acquisition of Ape Board, a multi-chain DeFi dashboard, for an undisclosed eight-figure amount, Alex Svanevik, CEO of Nansen, told TechCrunch.

“We’ll never rely on M&A as a primary way to expand, but I do think that our portion of crypto, namely the information landscape, is ripe for consolidation,” Svanevik said. “It’s not great to have to visit 20 different websites for information.”

Neon triples revenue in quest to become the biggest bank for Brazil’s working class

When Pedro Conrade started Brazilian digital bank Neon in 2016, he was a 23-year-old business school student who was frustrated with the service and costs associated with traditional banking in his country.

“I used to make $300 in a month to pay $200 a year in banking,” he recalls. “It was super expensive, and the service was terrible. I had a catastrophic relationship with incumbent banks.”

As many entrepreneurs do, Conrade set out to solve for a pain point that he was experiencing: a lack of affordable and accessible financial services. He founded Neon specifically with the mission of decreasing inequality in Brazil, which is known for having a large gap between the wealthier members of its population and lower income residents. Its focus is on the underbanked population of the Brazilian working class.

“I wanted to help underserved people in Brazil and offer them financial education, and a better relationship with banks,” he told TechCrunch in his first interview with a U.S. publication. “We started out by offering a prepaid card connected to a mobile app, so they could have a better understanding of their expenses.”

Conrade claims that Neon was the first digital bank in Brazil to not charge any fees — monthly or transaction, or otherwise. 

“We essentially give them back $200 a year that they would be paying to another bank, while helping them better understand their financial life, access credit for the first time in their lives — and the cheapest credit out there at that,” he said. 

Conrade realized at one point that if Neon was going to become the primary relationship for customers, it needed to be more than a pure digital account. So it added several products such as credit cards, personal loans, payroll loans, cashback in debit and various forms of payment.

“We are the biggest player for payroll loans in Brazil, competing with big banks already,” Conrade said. “In our segment, if we try to give unsecured credit, it would be tough to increase more than 50% penetration.”

Neon’s approach seems to be resonating with the Brazilian population, if the startup’s growth and funding history are any indication.

In February, Neon raised a $300 million Series D financing that valued the company at $1.6 billion, officially giving it unicorn status. Spain’s BBVA provided the whole amount, which is notable, considering that it is one of the largest financial institutions in the world. According to Conrade, BBVA’s condition upon investing was that it take the whole round.

“I had to tell other firms no,” Conrade explains. “But we see them as a great partnership. They are a pure minority investor but we view them as very strategic and different from VCs and private equities in that they have a lot of knowledge, especially in Latin America and credit business investment.”

In a statement at the time, BBVA chairman Carlos Torres Vila said that Neon “has proven to have an offering that is connected to Brazilians’ financial needs, “as its customer acquisition figures demonstrate. In addition, it has the capacity to continue growing quickly, considering how it launches products with such agility in a market with as much potential as Brazil.”

So, just how quickly has it grown? Its metrics are impressive. The fintech today has close to 16 million clients that are split between two segments: consumer and micro-entrepreneurs. The former makes up 70% of its customer base, and the latter 30%. For the solopreneurs, Neon offers more than just banking services but QuickBook-like accounting services as well.

“I believe we are the only bank in Brazil focused on this segment,” Conrade said. “So we’re shaping our product to serve them better.”

While Conrade declined to reveal hard revenue figures, he did share that Neon grew its revenue by 3x in 2021 and he expects that the company will at least more than double it this year. Also last year, Neon doubled its employee base from 800 to 1,600 employees, and expects to hire an additional 700 employees this year. Overall, Neon has raised $726 million to date with backers such as BlackRock, General Atlantic, Monashees, PayPal, Quona Capital, Vulcan Capital and others. Today, it has 1,800 employees. It has grown in part through a number of strategic acquisitions that were designed to bolster its offerings.

Image Credits: Neon

“We intend to become the largest bank for the average worker and low-income population in Brazil,” Conrade explained. “We’re a purpose-driven company. Every time we hire senior management from incumbents, they ask why we’re not going after premium clients, who might have better margins. I tell them, ‘We’re not here for this. We want to focus on this particular segment, and help them be better served.’” 

One of the ways that Neon hopes to achieve its goals is to help its customers build their credit history. For example, it offers them a savings feature if they, say, pay their utility bill three times in a row. It also has an investment product that Conrade describes as “super simple” to use. 

Neon makes its money in two parts — 50% in interest accrual from its credit businesses and 50% from interchange and floating.

The company is not yet profitable, as it has been focused on growth, but Conrade does expect it is moving in the “direction of becoming profitable soon.” 

Moving forward, the founder is eager to tap into the tech talent in the U.S. with its new flexible hybrid work model. Neon plans to also enter new business verticals like insurance and other credit alternatives such as loans and guarantees.

“We view constant use of data intelligence as an important tool to grant more credit, making it possible to know even more customers and help them improve their scores,” Conrade said.

Block rival SpotOn lands $300M at $3.6B valuation after doubling ARR last year

Payments and software startup SpotOn has closed on $300 million in a Series F financing that values the company at $3.6 billion.

Dragoneer Investment Group led the latest round, which included participation from existing backers Andreessen Horowitz (a16z), DST Global, Franklin Templeton and Mubadala Investment Company, as well as new investor, G Squared. 

The investment marks SpotOn’s third raise in the past year alone and Dragoneer’s sixth time investing in the company over a three-year period. It is, however, the first time the firm has led a round. It comes on the heels of a year in which the company says it saw 100% year-over-year ARR (annual recurring revenue) growth.

Last September, SpotOn announced it had closed on a $300 million Series E round at a $3.15 billion valuation. That funding event came just three and a half months after the startup raised $125 million at a $1.875 billion valuation (a A16z led both of those rounds).

Since its 2017 inception, SpotOn has been focused on providing software and payments technology to SMBs with an emphasis on restaurants and retail businesses. Last year, it acquired Appetize in an effort to extend its reach to the enterprise space. 

Today, SpotOn — which operates a SaaS business model — says it serves businesses “of all types and sizes,” from local family restaurants to Major League Baseball stadiums. But it is primarily focused on businesses in the retail, food and hospitality sectors. 

In the eight months since its last raise, SpotOn has bought another company, released a new product and hired new execs. Late last year, it acquired Dolce, a labor management startup which streamlines payroll, scheduling, tip-pooling and compliance, in an effort to strengthen its flagship restaurant product.

The company also launched SpotOn Retail, which it describes as “an omnichannel retail platform that allows independent retailers to compete with big-box stores and e-commerce giants by selling in store, online or on the go through one seamless, intuitive dashboard.”

It also has made a number of executive hires, including naming Lisa Banks as its chief financial officer. While SpotOn did not comment on any potential plans to go public, the hiring of a CFO typically indicates that the public markets are in a company’s sights.

“Mom-and-pop restaurants and retail businesses are facing rapidly changing consumer expectations within today’s tech-driven landscape. SpotOn has made it their mission to provide customized solutions to drive the growth and adaptation needed as businesses of all sizes evolve and grow,” said Marc Stad, founder and managing partner at Dragoneer, in a statement. 

In the broader fintech landscape, SpotOn is taking on payments giant Block (formerly Square) head on. Block, which acquired BNPL player Afterpay in a surprising $29 billion deal, today has a market cap of $48.5 billion. It is also challenging decacorn Toast on the restaurant side.

Interestingly, perhaps as evidence of the global private market correction, SpotOn’s valuation increase was less dramatic than it has been in the past 18 months. So while it was not a flat round, it was about $500 million higher, or a 14.3% increase, compared to its last raise. For context, SpotOn’s Series E raise at a $3.15 billion valuation was about 5x of its $625 million valuation at the time of its Series C round.

Stripe expands its infrastructure play with Data Pipeline to sync financial data with Amazon and Snowflake

Stripe — the payments giant valued at $95 billion — is on a product sprint to expand its services and functionality beyond the basic payments that form the core of its business today. Today the company took the wraps off Data Pipeline, an infrastructure product that will let its users create links between their Stripe transactions data and data stores that they keep in Amazon Redshift or Snowflake’s Data Cloud.

The move underscores how Stripe is positioning itself as more than just a payments provider, but a larger financial services and data powerhouse, a “financial infrastructure platform for businesses” in its own words.

The launch comes just weeks after the company announced Financial Connections, which lets Stripe customers connect with their customers’ banking services to pull in more complete financial data about those users.

Data Pipeline — which has been working in a closed beta up to now — has already picked up a few early customers: ChowNow, Housecall Pro, HubSpot, Lime, Shipt, and Zoom, which Stripe said use it to “automate downstream reporting and identify growth opportunities.” In other words, payments are still happening, but now Stripe’s turning the payments data result from those into a profit center of its own.

The product will let users incorporate Stripe financial data more comprehensively and easily with other business information, which in turn will let those users leverage that data in wider business intelligence efforts, as well as in financial reporting and in their work monitoring business activity for fraud, security issues and more.

This is notable for Stripe launching an infrastructure product, specifically in the area of ETL (extract, transform, load), which it built from the ground up internally, with the aim of replacing third-party products for its users. It is not the first product from the company aimed at the wider area of enterprise analytics, however: in 2017 the company launched Sigma, a tool to track payments data.

“Whereas Sigma allows you to access/query your Stripe data in the Stripe Dashboard, Data Pipeline allows you to access your Stripe data directly in your Snowflake or Amazon Redshift data warehouse,” said Vladi Shunturov, product lead at Stripe, in an emailed interview. “This way, Data Pipeline makes it easier to query your Stripe data in combination with your other business data.”

Snowflake and Amazon work with other third-party ETL providers, and Stripe declined to comment on what financial arrangements, if any, exist with these specific partnerships. It also declined to comment on whether it would be adding other data warehouse providers to that list.

“We’re always considering ways to expand our services and better serve our users, but don’t have any specific plans to share at this time,” said Shunturov

With the Amazon and Snowflake integrations, Stripe partnered with the two to use their respective data sharing technologies to build its product, he said. Specifically, Stripe initiates a data share that enables us to store the user’s Stripe data in the Stripe cluster and we then provide the user read access to this data. “This way, the user can access their data without giving write access to their cluster,” he said. “We are committed to continuously improve data freshness and expand the breadth of business-ready reports and metrics. Accomplishing this required that we build this capability natively on Stripe.”

Shunturov added that the impetus for the product, and perhaps the company’s strategic roadmap for how it’s building out these new wave of services overall, stems from requests from users.

Stripe users, and especially larger users, have requested easier ways to not just export but continuously sync their Stripe data to their data warehouse so they can centralize their Stripe data with other business data without having to build or maintain an API integration themselves,” he said. “By making product-level reports and metrics available we are also significantly reducing the data engineering investment our users have to turn raw data into business insights. Snowflake and Amazon Redshift were selected as our initial launch partners due to high user demand. In fact, both were the most widely-used data warehouses among the Stripe user community.”

Data Pipeline is currently only in the U.S., for Stripe users that also use Amazon Redshift or Snowflake’s Data Cloud.

Amex Ventures bets $5M on Trellis, which wants to make switching insurance providers easier

How many people have stuck with the same auto insurance provider because the process of finding a new one feels overwhelming and painful?

A lot.

It’s no surprise then that a number of startups have emerged over the years to help consumers tackle this challenge in one way or another, including The Zebra and Jerry. The latest company to gain traction in the space, and raise venture dollars, is Trellis.

Trellis says it has built an API platform that lets consumers shop for car insurance policies by offering side-by-side comparisons, a way to buy a new plan and cancel their old plan – at once. What separates Trellis from many others in the space is that it also partners with digital banks, fintechs and financial institutions so those organizations can offer the insurance options to their customers. And now one of those financial institutions, Amex Ventures, has poured $5 million into the company in an effort to help it continue to grow.

“We are not a brand that most consumers have heard of, and we intend for it to stay that way,” said CEO and founder Daniel Demetri. By partnering with existing financial services platforms such as Acorns, Truebill and Albert, Trellis aims to help businesses that have an audience that are already engaged, and that they are having financial conversations with, help bring insurance into the conversation.

“As we think about broadening the reach of our platform, there’s a lot of cool opportunities for us to explore doing that with American Express,” he said. “Expanding our relationship with large financial institutions is our core focus.”

Before he founded Trellis in 2019, Demetri worked at banks like Citigroup and JPMorgan as well as tech companies like Google, Kayak and Earnest.

The concept for Trellis, he said, was based on the idea that car insurance and homeowners insurance “are super confusing for consumers and unnecessarily disjointed from the rest of our financial lives.”

Trellis offers a suite of technologies packaged as “Savvy” that, in a nutshell, helps consumers make better insurance decisions and tie those decisions into platforms they’re already using “to make it more convenient and accessible,” according to Demetri.

Part of his motivation for starting the company was the belief that insurance is overly separate from the rest of consumers’ financial lives. His intent with the startup was also to give everyday Americans access to the same sort of advice that high net worth individuals get through “high-paid” financial advisors.

“The financial services and platforms that are available to the mass market are very monoline — it’s ‘here’s your bank account, and then here’s your credit card, and then here’s your auto loan, and then your car insurance is over there,’ ” Demetri told TechCrunch. “All these things are like different planets and all and so the only thing tying it all together is the consumer themselves and a lot of work.”

As a result, he said, consumers might not be as attentive to the decisions they’re making. That’s where Trellis comes in. 

“We’re a back-end focused platform that’s helping automate a lot of the tedious work of making really important decisions around insurance,” Demetri said.

For example, the startup has a set of proprietary digital recommendation technologies that gives consumers a way to compare their existing insurance policies to potential new ones. This means that they are comparing apples to apples, rather than apples to oranges. Some sites offer quotes on new policies, he said, but without taking into account the consumer’s existing coverage so they don’t know if they’re paying less for the same, worse or better coverage. Frustrated consumers often don’t end up switching policies because it can be too much work to manually compare one policy to another.

In summary, Demetri describes Trellis as the “Plaid for insurance.”

“A consumer can provide the password to their insurance account, and then we go get all of that data and provide a bunch of quotes that match their coverage,” Demetri said.

The technology can go a step further, he added, in that it can even find issues with a person’s existing coverage. For example, the company often sees customers who might have $250,000 worth of coverage in case they hurt somebody, and only $5,000 If they hurt their car.”

“We can push insights because we can understand someone’s existing coverage,” Demetri said. “By understanding an existing insurance policy, we can bring simplicity in the process to the consumer.”

Image Credits: Trellis

While Trellis started with a focus on auto insurance, it is working to add homeowner’s insurance to its offering. And while consumers can go to the company’s website to try it out, Trellis is more focused on white labeling its technology and embedding it into its partners’ apps and websites. The startup has doubled its number of partnerships over the past 12 months to “a couple of dozen,” and has integrated the Savvy platform in seven of the top 50 mobile finance apps and four of the top five digital banks. In total, over 9 million users have visited Savvy, approximately 1 million user insurance accounts have been “securely connected,” and users have saved an estimated $60 million, the company claims. Trellis has quadrupled its number of users versus a year ago. Revenue growth, Demetri said, is “better than proportional” to that growth.

“More and more insurers are participating in the program,” he said. “That means more options for the consumer.”

Demetri started out building Trellis in San Francisco and moved its headquarters to Salem, New Hampshire, where he is based. The company currently has about 80 full-time employees.

Previously, Trellis raised a total of $12 million across a seed and series A round from investors such as General Catalyst, Nyca and QED Investors. Demetri describes the latest financing as a strategic investment.

Margaret Lim, managing director at Amex Ventures, said that through the investment, American Express wants to collaborate with Trellis “on partnerships that can help our customers make better financial decisions.”

“Insurance is an essential part of our customers’ financial lives. Yet today the process is highly cumbersome and filled with many pain points,” she wrote via email. “Trellis is simplifying the entire insurance buying process, making it more seamless and transparent. It has rolled out a series of solutions that makes it easier..for consumers to compare and purchase the right insurance policy. The company’s strong user growth momentum and partnership traction demonstrates that their value proposition is resonating.”

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Plaid officially expands into identity and income verification, fraud prevention and account funding

Fintech decacorn Plaid is expanding beyond its core product of account linking — its first major expansion since its 2013 inception.

In conjunction with its “Plaid Forum” event, the startup today unveiled a number of “product enhancements and new initiatives,” which include moving into identity and income verification, fraud prevention and providing new tools for account funding and disbursements.

The move comes two weeks after payments giant Stripe announced it was encroaching on Plaid’s territory with a new product of its own

In a blog post entitled “Ushering in fintech’s next phase,” Plaid CEO and co-founder Zach Perret noted that the majority of Plaid’s network traffic has run through direct bank APIs that are made possible through bank partnerships and Plaid Exchange, a data access offering that is used by over 1,000 banks and fintechs to deliver API-based data access to their customers. 

But now, the company has expanded its data connectivity offering to include Core Exchange, which Perret said offers banks, fintechs, or “data partners” another way to “securely” share data when using Plaid.

Alain Meier, Plaid’s head of identity, told TechCrunch that account connectivity has always been the company’s core focus. Over the years, he points out, Plaid has helped power the connectivity to millions of accounts – especially as more consumers use digital financial services.

Over time, as Perret shares, the company has added more fintech companies to its network including Chime, Dave, Robinhood and SoFi. It’s also added new types of data connections, such as payroll data so people can verify their income and employment details when doing things like getting a loan or buying a car.

And as fintech adoption has grown in recent years, so has demand from Plaid’s customers for the company to address more of the onboarding experience.

“This ultimately helps build trust and security for the entire ecosystem as more people onboard to new fintech apps and services,” Meier said. “That’s why we are expanding our platform to now include identity verification and new tools for fast and easy account funding and disbursements.”

The move into identity verification is not at all a surprise considering that Plaid shelled out $250 million in January to purchase Cognito, which offered ID verification, along with help with thorny issues like KYC rules, and anti-money laundering requirements.

“When Cognito joined Plaid, we estimated that about 90% of Plaid customers need some type of ID verification, so this is a natural extension for Plaid,” Meier told TechCrunch. And Perrett confirms that Plaid’s new identity verification offerings indeed bring Cognito’s products to the Plaid API. 

The company has integrated its new verification product into Plaid Link, with the aim of giving customers to link their accounts and verify their identities in “a single, seamless user experience,” Meier said.

Identity has always been top of mind for Plaid, he claims, starting with an API for confirming account ownership during authentication. In the past, Plaid customers had to work with six to 12 different vendors in order to handle all of the different aspects of the ID verification and compliance flow, noted Meier.

Beyond those new offerings, in what is perhaps the most surprising new news to come out of the company today, Plaid said it is also hoping to turn new users into active customers through account funding, which will give people a way to pay, or be paid, for goods and services.

“Funding an account is the first step a user takes to invest, send money, or to begin using a digital wallet,” Meier said. “We are working to make account funding and transfers a seamless part of the overall onboarding experience to improve this critical activation step.”

Finally, the company believes is now offering risk-based tools designed to help lower risk and fraud in account funding and transfers via ACH. Its new Signal (transaction monitoring) offering for example, uses machine learning to analyze more than 1,000 risk factors and provide scores and insights that Plaid says provide “more certainty that a transaction will settle,” so a company can accelerate access to those funds without increasing risk. Early customers, Plaid claims, have seen “significant reductions” in unauthorized returns and NSF fees.

Plaid in April of 2021 raised a $425 million Series D at a valuation of $13.4 billion. The nine-year-old company made headlines last year when the deal it had struck to be acquired by consumer credit giant Visa for $5.3 billion fell through due to regulatory concerns — an event that many say turned out to be a blessing in disguise for the startup.

Identity verification is an increasingly crowded, and well-funded, space. Socure, a company that uses AI and machine learning to verify identities, last November raised $450 million in funding for its Series E round led by Accel and T. Rowe Price. Persona, a startup focused on creating a personalized identity verification experience “for any use case,” which says it helps businesses customize the identity verification process — and beyond — via its no-code platform secured $50 million in a Series B funding round in May of 2021. And last August, a pair of early Affirm employees raised $70 million for SentiLink, an identity verification startup.

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