Welcome to The Interchange, a look at this week’s fintech news and trends. To get this in your inbox, subscribe here.
We’ve all heard the recent drama of Stripe vs. Plaid tracked. Rather than repeating all of that here, I’ll refer to some of our recent articles on the subject and summarize: the two fintech startups have become (much) more competitive lately.
As if things weren’t turbulent enough, another startup has very publicly emerged as a formidable competitor to Stripe: Finix†
Now Finix doesn’t come out of nowhere. The SaaS startup — which began selling its payment technology to other companies in early 2020 — raised a $35 million Series B led by Sequoia. In an unusual twist, Sequoia walked away from the deal just 1 month later in which it reportedly wrote the self-described payment infrastructure company a check for $21 million. As TC’s Connie Loizos reported at the time, Finix told employees that shortly after issuing the check, Sequoia concluded that Finix was competing too directly with Stripe, the payment company that represented one of Sequoia’s largest private assets, and that Sequoia, in turn, was one of its largest outside investors.
Fast forward to last week. Finix announced that it would become a payment facilitator, in addition to enabling other companies to facilitate payments. This move puts it in direct competition with Stripe, which is CEO and co-founder Richie Serna not shy to admit†
In an interview last week, Serna explained that Finix did indeed start building software that gave each software company a way to become their own payment facilitator.
“We were building technology that would take three years to be built in-house by dozens of engineers, with tens of millions of dollars in technical R&D and investment, and cut that down to a few months by getting developer-friendly APIs to start monetizing their payments” , he said. “That was our largest core offer. What we’ve done now is become the payment facilitator ourselves, so we can take care of not only the payments, but also all the back office requirements and compliance certifications, so our customers can be up and running in days, not months.”
He says the move gives Finix the ability to partner with companies and software platforms that have $0 in processing volume to companies with billions of dollars in processing volume.
“This empowers these customers to get a better product experience and faster time to market, and allows us to take on those non-technical aspects of rolling out and monetizing and receiving payments,” added Serna. .
Historically, companies had to meet a certain volume threshold before Finix could work with them. But now, according to Serna, they can start working with them in their earliest state.
“Customers can start working with us from day one, using financial APIs, and when they’re ready to take on more of that ownership and more of that responsibility around risk, underwriting and compliance activities, they can graduate and create their own payment facilitator.” become. “, he said, “because we still use the exact same APIs.”
Finix has also touched on what the director described as the “card present” or personal payment space. This means that it can provide software for many types of businesses to accept credit card payments.
“When you think of a software vendor for restaurants, they need a different set of devices than the device vendor for gyms or food trucks,” Serna said. “And so that’s something that we offer and market uniquely.”
So, in case you haven’t figured it out yet, Stripe had reason to worry because Finix is indeed competing directly with it. So how are they different?
According to Serna, the answer lies in the fact that Finix “built an open system and open architecture that is modular and configurable.” Stripe, on the other hand, he said, “continues to double down on that vendor lock-in so it can keep closing their system and architecture.”
“We think about it very much like iOS,” Serna told gotechbusiness.com. “We’re thinking a lot more about ourselves as Android…And I think we’re just going to continue to see those features magnified as we continue to build our products and build our businesses.”
With just over 150 employees, Finix today powers more than 12,000 merchants in the US with its APIs. It has raised approximately $100 million in funding from investors such as American Express Ventures, Bain Capital Ventures, Homebrew, Inspired Capital, Lightspeed Venture Partners and Visa.
Meanwhile, in a recent Forbes articleStripe co-founder John Collison told Alex Konrad, reportedly with a shrug: “We will be competing with a number of companies and we will be partnering with a number of companies. Everyone just needs to be grown up and behaving well.” In the same article, sources told Alex that Stripe saw gross sales of about $12 billion in 2021, up 60% year on year. It also reportedly posted net sales. of about $2.5 billion.
Speaking of Stripe, Ingrid Lunden reported on May 24 that the company debuted its App Marketplace, a new offering where Stripe will provide access to both third-party apps and scripts created by app publishers, users, and Stripe itself, integrating those apps with Stripe. It may represent the biggest jump ever away from payments.
Swedish payment giant Klarna reportedly cut 10% of its workforce, or 700 jobs, in the past week. The move came just after the Wall Street Journal reported that the company was lowering its valuation to raise fresh capital.
One click checkout Bolt is believed to have laid off as many as 240 employees in go-to-market, sales and recruiting positions. Previous reports had cited 100 workers would be affected, but as details emerged, it became turned out to be more† In mid-February, founder Ryan Breslow made headlines after announcing on Twitter that Bolt was offering any employee the chance to borrow money from the company to exercise their stock options. Now it is unclear what will happen to the people who have been laid off and have borrowed money from the company. The company told Bloomberg that the number of affected employees taking out loans is in “single digits.”
But not all fintechs stop† Fidel API says it’s “growing fast” after its $65 million Serie B announcement and hires staff for more than 60 roles across its engineering, sales, and customer experience teams. The fintech says it has doubled in size in the past 6 months and plans to double again before the end of the year.
Peggy Mangot has left her role as an operating partner at PayPal Ventures to serve as the new head of fintech partnerships for JPMorgan Chase Commercial Banking. At PayPal Ventures, Mangot helped lead investments worldwide in fintech, commerce, infrastructure and crypto.
Both large and small companies maintain their crypto optimism despite the recent market correction in the evolving technology space. According to Harold Bossé, Mastercard’s vice president of new product development and innovation, the mass adoption of blockchain technology and digital assets will happen sooner rather than later. Read more here.
Financing and M&A
Seen on gotechbusiness.com
Paddle Acquires ProfitWell for $200 Million to Bring Analytics and Retention Tools to Its SaaS Payment Platform
Founder claims YC-backed fintech startup ‘copy-and-paste’ his company
Revenue-Based Financing Platform Bloom Raises $377 Million Series A Led by Credo and Fortress
Viola Credit Closes $700 Million Fund to Provide Asset-Based Loans to Fintech Startups
Roofstock founder closes $90 million fund to support early stage proptech startups
Zip puts $43 million on a $1.2 billion worth for its growing ‘procurement concierge’
Nowports Streamlines LatAm Shipping and Delivers $1.1 Billion Valuation
Indian fintech Jar sees $50 million investment
That’s it for this week! If you’re reading from the US, hope you enjoy the rest of your long weekend, and to everyone else, have a great day and week ahead. And to borrow from my brilliant friend and colleague, Natasha Mascarenhas, please support me by forwarding this newsletter to a friend or follow me on twitter†