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The coronavirus crisis is fintech’s chance to prove its mettle

April 15, 2020, 1:30 PM UTC

It was the Great Recession that gave rise to the fintech boom, or so the origin story goes. Armed with righteous anger against big banks and validation from the Dodd-Frank Act mandating banks to make consumers’ data available to them “in an electronic form,” companies like Robinhood, SoFi, and Venmo (now owned by PayPal) became near ubiquitous.

Now as fintech faces its first global downturn, could its players become even more entrenched than before? Company leaders certainly see it as an opportunity to prove their mettle.

Not only is usage up within apps such as Venmo, but in a historic first, fintechs are being called upon to help disburse parts of the U.S.’s massive $2 trillion stimulus package—which includes forgivable small business loans and $1,200 payments to consumers—aimed at cushioning the economic blow of the coronavirus. 

The Internal Revenue Service, for instance, has allowed eligible recipients to elect to receive their stimulus payments electronically—through Square’s Cash App or Venmo—rather than by paper check. The Small Business Administration meanwhile has approved PayPal, Square, and Intuit to distribute the forgivable Paycheck Protection Program (PPP) loans. 

Fintech proponents argue the industry will be faster and more efficient than their older banking competitors. And in this high-pressure moment, when consumers and small businesses are desperate for monetary relief immediately, speed is everything.

My colleague Jen Wieczner has the full story:

The crisis has become a proof-of-concept for fintech, one likely to change the way people bank and move their money even after they can visit a teller in person again. Says Zach Perret, CEO of Plaid, a startup whose software powers virtually all the major U.S. fintech apps (and which was recently acquired by Visa): “This shutdown time, I’ll suspect we’ll look back and say this was one in which digitalization really accelerated.”

The chosen ones

Late Tuesday, President Donald Trump revealed a list featuring some of the most prominent names in commerce as part of his “Economic Revival Industry Groups”—business leaders that Trump says will be advising him on when and how to reopen the economy. Colloquially, Trump has described it as his “Opening the Country” council.

Included in the list: Amazon CEO Jeff Bezos, Facebook CEO Mark Zuckerberg, Blackstone CEO Stephen Schwarzman, Mark Cuban, and one prominent venture capitalist, Doug Leone of Sequoia.

Interestingly absent: longtime Trump supporter Peter Thiel.

VENTURE DEALS

-Onfido, a San Francisco-based provider of identity verification and passwordless authentication, raised $100 million in funding. TPG Growth led the round.

-Moma Therapeutics, a Cambridge, Mass.-based drug discovery platform focused on molecular machines, raised $86 million in Series A funding. Third Rock Ventures led the round, and was joined by investors including Nextech Invest, Cormorant Asset Management, Creacion Ventures, Casdin Capital, and Rock Springs Capital.

-Cerevance, a Cambridge, Mass.-based drug discovery and development company focused on brain diseases, raised $45 million in Series B funding. GV (formerly Google Ventures), Bill Gates, and Foresite Capital invested, along with Takeda Ventures, the Dementia Discovery Fund, and Lightstone Ventures.

-Perspectum, a Oxford, U.K.-based medical software company for identifying and monitoring multiple diseases, raised $35 million in funding. Blue Venture Fund and HealthQuest Capital led the round, and were joined by Oxford Science Innovation, Puhua Capital, the University of Oxford, and others.

-Alkira, a San Jose, Calif.-based multi-cloud networking start-up, raised $30 million in funding. Kleiner Perkins, Sequoia Capital, and GV were the investors.

-Awake Security, a Santa Clara, Calif.-based advanced network traffic analysis company, raised $36 million in Series C funding. Evolution Equity Partners led the round, and was joined by investors including Energize Ventures and Liberty Global Ventures, as well as existing investors Bain Capital Ventures and Greylock Partners.

-FarEye, a New Delhi-based leading logistics SaaS platform, raised $25 million in Series D funding. M12 led the round and was joined by investors including Eight Roads Ventures, Honeywell Ventures, and SAIF Partners. 

-Setu, an Indian digital payments startup, raised $15 million in Series A funding. Falcon Edge and Lightspeed Venture Partners U.S. led the round, and was joined by investors including Lightspeed India Partners and Bharat Inclusion Seed Fund.

-Nifty Games, a San Francisco-based developer of head-to-head sports games for mobile devices, raised $12 million in Series A funding. March Capital Partner led the round, and was joined by investors including Xiomatic Gaming, Defy Partners, Vulcan Capital, Courtside Ventures, Transcend Fund, Century Game, and OneTeam Ventures.

-Nelumbo, a Hayward, Calif.-based company focused on advanced-surface modifications, raised $14 million in funding as part of its Series A, which was co-led by Prime Mover’s Lab and University of Tokyo Edge Capital. Safar Partners, Darwin Venture Management, and Neue Fund and also participated.

-Sanar, a São Paulo Brazil-based online medical education platform raised roughly $11 million in Series B funding. DNA Capital and Valor Capital led the round, and was joined by investors including Vox Capital and e.Bricks Ventures.

-Slite, a French startup focused on document sharing and organization, raised  $11 million in Series A funding. Spark Capital led the round. Read more.

-Crop Enhancement, a San Jose, Calif.-based maker of agrochemical products to enhance crop yields, raised $8 million in Series B funding. Spruce Capital Partners/MLS led the round and was joined by investors including 1955 Capital, Phoenix Venture Partners, Cavallo Ventures, Davinia Investments, and Alexandria Ventures.

-Atlas AI, a Palo Alto, Calif.-based provider agricultural insight solutions, raised $7 million in Series A funding. Airbus Ventures led the round, and was joined by investors including Micron Technology and existing investor The Rockefeller Foundation. Read more.

-Savi, a Washington, D.C.-based platform for student loan borrowers, raised  $6 million in Series A funding. Nyca Partners led the round. Read more.

-AI.Reverie, a New York-based simulation platform, raised $5.6 million in funding. Vulcan Capital led the round and was joined by investors including Compound, In-Q-Tel, Resolute Ventures, SGInnovate, TechNexus and Triphammer Ventures.

-Credit Kudos, a U.K-based. fintech for credit scoring, raised £5 million ($6.25 million) in Series A funding. AlbionVC led the round, and was joined by investors including TriplePoint, Plug & Play Ventures, Ascension Ventures’ Fair by Design fund, and Entrepreneur First.

-Aaptiv, a New York-based maker of a workout app, raised an undisclosed amount of funding from existing investor Insight Partners. Read more.

PRIVATE EQUITY

-A consortium led by Stone Point Capital and Further Global acquired Duff & Phelps, a New York-based valuation consultancy. The deal is valued at $4.2 billion.

-Persistence Capital Partners invested in Summit Veterinary Pharmacy, an Ontario, Canada veterinary compounding pharmacy. Financial terms weren't disclosed.

-Forest2Market and Fisher International, portfolio companies of Battery Ventures, acquired Tecnon OrbiChem, a U.K.-based  provider of data and analytics firm for the petrochemical industry. Financial terms weren't disclosed.

-Longview Power, a Maidsville, W.Va.-based power generator backed by KKR, filed for Chapter 11 bankruptcy protection. Read more.

-Capital Constellation, managed by Wafra, made a minority investment and formed a strategic partnership with Pollen Street Capital, an asset manager in the United Kingdom and Europe. Financial terms weren't disclosed.

-An affiliate of Mill Point Capital acquired Knight Enterprises, a Clearwater, Fla.-based provider of communications infrastructure services. Financial terms weren't disclosed.

OTHERS

-Airbnb will raise $1 billion through a  syndicated term loan. The investors include Apollo Global Management, Benefit Street Partners, Glade Brook Capital Partners, Oaktree Capital, and Owl Rock Capital, Bloomberg reports citing sources. Read more.

-J.C. Penney is exploring filing for Chapter 11 bankruptcy protection, Reuters reports citing sources. Read more.

F + FS

-General Atlantic and credit investor Iron Park Capital Partners plan to launch a $5 billion fund to finance companies hit by the coronavirus pandemic, the Wall Street Journal reports citing sources. The facility will provide structured-equity and debt financing. Read more.

-Lightspeed raised $4 billion across three funds. Lightspeed Venture Partners XIII with $890 million, Lightspeed Venture Partners Select IV  with $1.8 billion, and Lightspeed Opportunity Fund with $1.5 billion. Read more.

-Zetta Venture Partners, which focused on AI, raised $180 million for its third and largest fund. 

-Corigin Ventures closed its second fund with $36.1 million.

PEOPLE

-Oak Hill hired Micah Meisel as a partner. Meisel was previously at InTandem Capital.

-HarbourVest appointed Tadasu Matsuo as a managing director and co-head of the firm’s Japan office. 

-Greylock hired David Thacker as a general partner. Thacker was most recently VP of product management at Google.

-Corigin Ventures hired Aubrie Pagano as a partner.