This is my weekly column. I will be publishing this every Sunday, so be sure to listen to the Equity show and hear me and Alex talk about all things startup. Once it becomes a newsletter on May 1, you can sign up here to have it hit your inbox directly.
The report found that the industry raised $121.6 billion last year, up 153% from the previous year. Alex and I will be doing a deep dive on that report next week, but it is a nice lead-in to what I will be examining today.
There has been talk of a decline in venture funding. If this past week's mega-rounds in the sector are any indication, the sector has the potential to be an outlier.
In what was not a surprise but still noteworthy, corporate spend and expense management startup Ramp confirmed that it raised $200 million in equity, secured $550 million in debt and doubled its valuation to $8.1 billion. Not bad for a company that only launched two years ago.
I only covered the Series C of the company, which has a valuation of $2.1 billion. Since it came out of stealth with $32 million in equity, I have been writing about it. It operates in the corporate spend and expense management space with more of a global footprint. It describes itself as an expense management platform. Latin America, Canada and Europe are some of the places where Jeeves is looking to expand. It is also looking at Southeast Asia and possibly Saudi Arabia and Africa.
Hyper-growth is one of the things that both Ramp and Jeeves have in common. Neither startup will give hard revenue figures. They provide some metrics. The revenue grew early 10x and the user base grew 15x compared to 2020. Eric Glyman tells us that Ramp is generating over $5 billion in payments volume. Considering it makes money off of each transaction, it's safe to say that Ramp is doing well. In the first two months of 2022, it brought in more revenue than all of the previous year, and it has seen its revenue grow by 900% since its September raise. The startup has doubled its client base to more than 3000 companies and has reached a billion dollars in gross transaction volume.
Is the market large enough for so many global players? It remains to be seen. The race in the space will be fun to watch. Alex pointed out this week that companies can add features and new products fast enough. Last week, Brex provided $10 million in growth capital via venture debt to Zesty.ai, a leading provider of climate risk data. Brex launched a venture debt program last August as part of its effort to be many financial related things to startups and maturing companies alike. It withdrew its application for a bank charter last year. New players are entering the scene. I wrote about a new company called Glean Artificial Intelligence, founded by former OnDeck and Better.com CFO Howard Katzenberg, which aims to help businesses save money by using machine learning to analyze things like deal terms, line-item data, negotiation offerings and opportunities. The incumbents are being kept on their toes by these startups.
The rapid pace of funding to support those initiatives will likely continue, but there is a caveat.
It's too early to tell if fintech is an outlier or if we're just seeing deals that were initiated late last year. The second quarter will give us more insight as to whether or not the technology is experiencing a slowdown or not.
In a conversation with Lightspeed Venture Partners, our amazing reporter,Anita Ramaswamy, talked about the topic of the global slowdown and how it might affect the financial services industry. Lightspeed hired Overdorff to lead the team's fintech practice. He told her.
Lightspeed Venture Partners website has an image of self-proclaimed fintech junkie, Justin Overdorff.
We’re seeing pretty big market changes. Maybe valuations aren’t coming down yet, but what is changing is that we are certainly seeing round sizes are shrinking. And the number of term sheets that are being offered are shrinking. So when you see, you know, a deal, and a [founder] who normally was going to go out for a $20 million Series A, they’re being told by the market to raise 12 to 15 million, because that’s where the appetite is. And instead of eight term sheets, you’re going to get two. And that’s been happening pretty clearly….Now, with that said, I think that there’s still a lot of appetite [for fintech] across the board.
According to Overdorff, on the venture side, VCs are trying to make their funds last longer.
If Overdorff's observations are any indication, both startup founders and investors are working harder to make their money last longer.
This week, it was announced that the company was launching a new card that would allow for spare- change investing. The move shows that Robinhood is taking steps to expand beyond trading and into more consumer finance areas. Sarah said that it puts it in more direct competition with other payment companies such as Chime and CashApp, which tie online customer accounts to physical payments cards. It is possible to increase customers by using the rounding feature.
This is another example of how fintechs are trying to do everything.
According to our friends at Protocol, Apple is buying a U.K. startup for $150 million. The Tap to Pay feature for the iPhone was introduced in February and turns the device into a payment terminal. The tech giant is moving into the field of financial services.
This list feels shorter than it has been in the past, but there was no shortage of fundings around the world. Here is a sample of a few.
Mastercard announced the launch of a new suite of open banking-driven smart payment decisioning tools. The move is one of the first significant technology developments to come out of the acquisition.
The narrative from above is that Forge's public debut will pose a fresh test to SPAC-led exits. Private shares are available in the market for Forge. It went public this week and had an impressive debut.
Forge’s public debut today will pose fresh test to SPAC-led exits
On March 24th, the ride-sharing giant said that it has reached an agreement to acquire a financial services startup that serves the blue-collar workforce. The piece was written by Manish Singh.
J.P. Morgan Payments will become the primary processor for Sightline's Play+ transactions, which include online casino, mobile sports betting, and cashless payments at casinos. Sightline helped launch the world's first casino with a fully cashless infrastructure.
Stori expects to reach 1 million active customers this month. Bin Chen, the CEO and co-founder, said that they are excited about reaching this milestone because most of their customers were rejected by traditional banks in the past. They are building credit history and gaining financial upward mobility with a Stori card.
Last week a national call for applications was issued for the leading fintech industry program for women-led startups. The application period for the program will be through April 22, 2022.
The online mortgage marketplace's journey, overarching goals and plans are discussed in this Q&A with Nora Apsel. The former engineer is very impressive and I talked to him earlier this year. Her company raised $25 million in a Series B in July of 2021. She told me in February that the startup's revenue has doubled in the last year.
The image was created by Nora Apsel.
The first female partner at an early-stage venture capital firm has just joined, and she's a founding member of the product team. In her new role, she will define the future of work and shape the infrastructure of the financial services industry in the next decade and beyond.
The image is from the movie "Cervin."
The National Pension Service of Korea and Investment Management Corporation of Ontario have committed $100 million to Tishman Speyer's first proptech venture capital fund. The venture wants to raise up to $150 million in total equity to invest in technology-driven opportunities related to all sectors of real estate.
That is it for this week. The launch of my newsletter was moved to May 1 due to logistical reasons. Thanks for reading and hanging in there. Have a great week ahead!
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