WORKWEEK

3 Fintech News Stories

#1: I’ll Have What She’s Having 

What happened?

Buzzy fintech startup X1 has raised more money:

X1, a consumer fintech startup which recently launched an income-based credit card to the public, has raised an additional $15 million in funding.

So what?

As Mary Ann rightly notes in her article, this funding news is quite unusual. A few reasons:

• They just raised a big Series B six months ago! $25 million!
• This new money isn’t coming with a flat or down valuation. It boosts X1’s valuation by 50%.
• Jared Leto invested in this round. This isn’t actually unusual, but I’m contractually obligated to mention every instance of Jared Leto investing in a fintech company.
• Max Levchin (CEO of Affirm) also invested in this round, which struck me as a bit odd, given that he is fighting a war on credit cards. 

Look, I like X1. They seem to be building a cool product, sort of a combination of Petal (no credit score needed), Apple Card (slick, financial health-oriented UI), and Capital One (integrated card management capabilities). And they seem focused on building the company the right way (based on recent hires and comments made in the above TC article).

But it’s a credit card. A fast-growing credit card (revenue has reportedly tripled this year), sure, but I think we’ve learned the hard way to be skeptical of lending startups that grow quickly (tell me what your Annual Risk Adjusted Margin is, or don’t bother to share any metrics with me).

How is X1 having this level of success raising money in this environment?

I know quite a few early-stage B2C fintech founders who would like to order whatever X1 is having.   

#2: Give Me Liberty (and Money) or Give Me Death 

What happened?

TreeCard, a climate-conscious digital money app, raised money:

TreeCard, a climate-conscious digital money app, raised $23 million from investors in a new financing round.

Founded by British entrepreneur Jamie Cox in October 2020, TreeCard is a novel concept in the fintech world. It offers users a spending and money management platform tied to a debit card made from wood.

The firm uses 80% of the profits it makes from card interchange fees to plant trees through a partnership with green search engine Ecosia. TreeCard has so far planted more than 200,000 trees.

So what?

I love TreeCard’s mission, but let’s clear up a couple of things.

First, this isn’t a novel concept. Aspiration does exactly this and a lot more. I have my qualms about Aspiration as a business, but there’s no doubt that the company has been on this exact corner for a while.

Can TreeCard take Aspiration’s corner? I have no idea, but this definitely isn’t a competition-free zone.

Second, did you see who is leading this investment?

Peter Thiel’s Valar Ventures was the largest investor in TreeCard’s round, while EQT, Seedcamp and climate-centric venture capital firm World Fund also chipped in. Valar is a prolific investor in fintech, having previously taken stakes in the likes of Wise and N26.

What other fintech company did Peter Thiel recently invest in?

It’s on the tip of my tongue … give me just a second.
Ohh yeah, this one:

I understand that investors often have portfolios rife with conflicts – competing companies, companies with different theses on the market, etc. – but I don’t think I’ve seen a more blatant example of a fintech investor talking out of both sides of his mouth as Peter Thiel (who recently said in a speech, “When you have to call things science, you know they aren’t. Like climate science or political science.”) does here.

Apparently, to Mr. Thiel, wokeness is a scourge on society, unless it’s being used as a marketing tactic to build out a neobank.

#3: A Master Plan for Selling to Enterprise Buyers

What happened?

Teampay, a spend management platform, raised a Series B:

Today, Teampay has hundreds of customers and significant venture capital financing behind it. This morning marked the close of the company’s $47 million ($35.25 million in equity, $11.75 million in debt) Series B led by Fin Venture Capital with participation from Mastercard, Proof Ventures, Trestle and Espresso Capital, bringing Teampay’s total raised to $65 million.

So what?

This is such an intensely competitive space (over $2.8 billion was invested into corporate spend management companies in 2021) that the natural question to ask is how will Teampay differentiate itself?

Looking at the company’s website, everything I see looks fairly standard (AP automation, corporate cards, integrated payment and approval workflows, etc.) There’s one exception – Teampay appears to be focused on serving mid-market and enterprise companies.

This is different than most startups in this space, which tend to focus on other venture-backed startups and mid-market companies, but steer clear of the enterprise segment.

There’s a good reason for this (selling to enterprise buyers and trudging through enterprise procurement processes is a nightmare), but it appears Teampay has a plan:

[Andrew] Hoag [Teampay’s CEO] says that the new cash will be put toward expanding Teampay’s partnership with Mastercard and growing its sales and marketing operations.

Is Teampay sufficiently differentiated? Hoag believes it is, pointing to the Mastercard partnership. Teampay will collaborate with Mastercard “deeper” going forward, Hoag says, to “mutually explore opportunities” that “enhance product capabilities at scale.”

2 Fintech Content Recommendations

#1: The (corporate) expense management war (by Lorenzo Chiavarini, Dealroom) 📚

Speaking of corporate expense management, I found this blog on the subject to be an excellent primer on everything that is currently happening in the space and on the competitive dynamics that will be shaping it over the next few years.

Did you know Dealroom has a fintech newsletter? I had no idea, but I am now happily subscribed! 

#2: Endless Media (by Mario Gabriele, The Generalist) 📚 

I, like everyone who works in a creative field, am watching the rapid development of generative AI with a mix of fascination and mild terror.

Mario does a great job in this piece outlining the impact that these tools may have on content creation and media, subjects that everyone in fintech (and certainly everyone with a newsletter) should care about.

1 Question to Ponder

I’ve got a fun one for you today!

Imagine that every VC investor that invests in fintech was magically combined into a single, amalgamated investor, with all the combined money and deal flow. However, the process of creating this uber investor wiped their collective memory of everything they had learned about fintech and left them unable to form new long-term memories. 

What single piece of advice would you tattoo on their skin, Memento-style, to guide their investments? 

Mine would be: “fast growth for lending businesses = bad“

What advice would you imprint? Let me know on Twitter or LinkedIn.