The Horror! The Horror!
By Alex Johnson
3 Fintech News Stories
#1: For The Children
An interesting B2C fintech company raised a Series A:
The daughter of divorced parents herself, Jacklyn Rome founded Onward in 2020 with the aim of helping divorced and separated parents more easily manage their shared expenses. Rome, who previously led new product launches at Uber and Blue Apron, said she built the app with the intent of not only alleviating headaches for the parents but also helping reduce family tension overall. As she can personally attest to, children also suffer greatly from being caught in the middle as their estranged parents bicker over money.
Today, Onward — formerly called Ensemble — raised $9.7 million in a Series A funding round led by Atlanta-based TTV Capital to advance its mission.
A while back, I wrote:
Money plays a foundationally important role in many different types of relationships. It causes couples to fight. It stresses out parents who don’t feel that they’re adequately preparing their children to go out into the world. And it creates a lot of awkward silences between adults and their elderly parents.
What’s weird is that there aren’t any traditional bank products specifically designed to solve these money-adjacent relationship challenges.
I’m not super bullish on most B2C fintech these days, but this category – B2C fintech focused on enabling more productive relationships – is an exception.
I love this. This is a money-adjacent problem that fintech is in a perfect position to address. And there are 50 million co-parents in the U.S. waiting for a solution.
#2: BaaS is Evolving Scary Fast
There were a whole bunch of BaaS and embedded finance-related announcements last week at Money20/20, some of which I covered in my recap essay.
However, one that I didn’t cover was Synctera. They’re doing some stuff:
Synctera … today announced the launch of two products that will allow FinTech builders to launch a wider range of products, faster:
– Synctera Smart Charge Card: A complete solution for FinTechs and businesses to create and issue charge cards for their customers
– Synctera White Label Banking App: A free, full-featured codebase that Synctera customers can use to immediately launch a neobank or customize to their specific product vision
One dimension of competition in BaaS platform land is the speed at which different companies ship new product archetypes. The more financial products and experiences the platform supports, the wider its appeal is to fintech startups and non-finance brands looking to get into embedded finance.
Synctera is clearly trying to keep the pace up. I have a few thoughts:
- The charge card product is interesting, on two different levels. First, it should allow Synctera’s fintech clients to offer a credit builder card product that is comparable to those offered by Chime and Varo. Bond rolled out a similar product for its clients a while back. Second, I’m noticing a bit of an uptick in fintech companies that are interested in offering up-market charge cards, based, I guess, on the notion that consumers want the interchange-funded rewards of a credit card without the temptation of a credit card’s ability to revolve a balance. I’m not sure I buy the hypothesis here (AmEx got out of the charge card business for a reason), but I might be missing something. And if I am, Synctera could be an enabler of this trend.
- The white label banking app is a bit more confusing to me. I mean, it’s cool in the abstract. However, I have to wonder how useful it will be. If you are a B2C fintech startup building on top of a BaaS platform, isn’t the thing you want to differentiate on going to be the app and overall UX? Wouldn’t you want maximum control over that layer? Plus, you are already dealing with thin margins (splitting revenue with the BaaS platform and bank partner). I’d imagine the use of this app would further cut into those margins, yeah?
#3: The Horror! The Horror!
An investing and asset-based lending company raised a Series A:
Andreessen Horowitz led a $40 million funding round for The Coterie, valuing the financial technology platform at more than $100 million.
The Coterie gives its users — mostly startup founders — investment access to venture funds managed by firms including Coatue Management, Andreessen Horowitz, Tribe Capital and Initialized Capital, as well as private companies like SpaceX and Stripe. The startup says it aims to lend based on an individual’s assets, rather than a salary or credit score.
We talk a lot around here about the underbanked and about the credit invisible, but really we should have been focusing on a much bigger problem:
The company refers to its users as “the misunderstood.” Agarwal says they are a group of 25-to-45 year-old founders and early startup employees with net worths of $1 million to $50 million, who are struggling to diversify beyond their illiquid slugs of equity in closely held companies. He estimates there are between 1 to 3 million such people in the US.
Are you telling me that there are millions of rich young people out there whose illiquid wealth is making it difficult for them to invest and get access to loans?
The horror! The horror!
Also, there’s this:
The investment marks one of the largest Series A checks ever written by Andreessen Horowitz
[Smashing my head into my desk 130 times.]
2 Fintech Content Recommendations
#1: Sardine: Fintech’s Great Detective (by Mario Gabriele, The Generalist) 📚
This sponsored deep dive by the great Mario Gabriele starts with an anecdote about a type of financial crime called pig butchering.
Trust me, it’s a scary story.
It’s also a great overview of a fintech company that I am a big fan of – Sardine. It’s very much worth a read.
#2: Capital & Taste (by Packy McCormick, Not Boring) 📚
Another sponsored deep dive by another great business and tech writer. And it’s about another fintech company that I’m deeply intrigued by – Capital (formerly Party Round)!
Packy starts this essay by comparing Capital to an onion that looks like candy on the outside but becomes healthier and healthier with each layer you peel off.
(I’m imagining my son’s horrified reaction if such food actually existed)
This is another one you should make the time for.
1 Question to Ponder
Today’s question is a bit abstract:
What is a bank?
I’m going to be writing about this at some point and would appreciate your input. Feel free to be as imaginative in your answers as you’d like!