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The perils of the fintech deal flurry

October 28, 2020, 2:14 PM UTC

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It was already a big deal when Visa agreed to acquire fintech startup Plaid for $5.3 billion in January—two times the company’s previous private market valuation. But the deal heralded something even larger, helping ignite a flurry of mega fintech deals: Intuit announced plans to acquire Credit Karma for $7.1 billion just a month later, while competitor Mastercard said it planned to acquire Finicity for nearly $1 billion in June.

Now the Department of Justice is scrutinizing all three deals, each involving a startup selling to an older and larger incumbent. In particular, the DoJ could soon decide whether it will sue to block Visa’s planned acquisition of Plaid, according to the Wall Street Journal—and it is also looking into the Finicity and Credit Karma deals. 

Plaid and Visa aren’t direct competitors—Visa focuses on payments while Plaid builds software that helps digitally connect consumers’ various bank and fintech accounts. (Signing into Wells Fargo through Venmo, for instance? Plaid is doing that.). But customers speculated that one day, Plaid could eventually create an entirely cardless payments network that does away with fees that Visa and Mastercard charge to merchants to process the payments.

In most cases, it seems as if the ultimate dream for founders is to go it alone or take your company public rather than combine with another player. So why did Plaid, hugely promising even before the deal with Visa, decide to be acquired by a much larger, and much older business?

“It wasn’t an easy decision by anybody,” Rick Yang, General Partner at NEA and a board member at Plaid, told me in July during a broader conversation about the venture capital environment. “Visa is one of the biggest companies in the world with one of the widest reaches. And while Plaid from a venture and fintech perspective felt like it was making a huge impact, the company’s ambitions ultimately are global in nature. That was probably something the company could have achieved in five or 10 years—but by partnering with Visa, they could do it in the next couple of years.”

But if the DoJ interferes, Plaid may have to go it alone.


FORMER UBER CTO MAKES A MOVE. TO SOUTH KOREA. MID-PANDEMIC: Thuan Pham, who survived as Uber’s top engineer even as the rest of the senior C-suite cleared out following the company’s tumultuous 2017, left the company earlier this year as the pandemic upended its business. Now he has found his next gig as CTO of Coupang, the delivery company with the largest market share in South Korea, which is often compared to Amazon. “Amazon is a trillion-dollar company,” Pham says. “That is part of the aspiration.” Not sure I personally would be able to quarantine for two weeks in a hotel room as Pham did: The newly re-minted executive made it through on mostly cold meals for 14 days in Seoul as part of his onboarding experience. He plans to fly back to San Francisco next week, working from 4 a.m. to 2 p.m. PT to match the time in Asia. Read more.

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com

VENTURE DEALS

- Faire, an online wholesale marketplace, raised $170 million in Series E funding. Sequoia Capital led the round, valuing at $2.5 billion. Other investors included Y Combinator, Lightspeed Venture Partners, Forerunner Ventures, Khosla Ventures, Founders Fund, D1 Capital Partners, DST Global, Dragoneer, and Norwest Venture Partners.

- Honor, a San Francisco-based in-home care network for the elderly, raised $140 million in Series D funding. Baillie Gifford and T. Rowe Price Associates co-led the round and were joined by investors including Rock Springs, Prosus Ventures, Andreessen Horowitz, Thrive Capital, and 8VC

- Eightfold AI, a San Francisco Bay Area-based recruiting software company, raised $125 million in Series D funding. General Catalyst led the round and was joined by investors including Capital One Ventures, IVP, Lightspeed, and Foundation Capital.

- WHOOP, a Boston-based maker of a subscription-based health monitoring watch, raised $100 million in Series E funding valuing it at $1.2 billion.  IVP led the round and was joined by investors including SoftBank Vision Fund, Accomplice, Two Sigma Ventures, Collaborative Fund, Thursday Ventures, Nextview Ventures, Promus Ventures, Cavu Ventures, and D20 Capital. 

- Streetbees, a London-based consumer insights platform, raised $40 million in Series B funding. Lakestar led the round.

- Eagle Eye Networks, an Amsterdam- and Austin-based cloud video surveillance company, raised $40 million in Series E funding. Accel led the round.

- Apeel Sciences, Santa Barbara, Calif.-based makers of fruit and food coatings, raised another $30 million in funding from International Finance Corp, Temasek, and Astanor Ventures.

- Primmune Therapeutics, a San Diego-based developer of orally administered therapeutics for viral diseases and cancers, raised $27.4 million in Series A funding. CAM Capital and Polaris Partners led the round and were joined by investors including Samsara BioCapital and Oberland Capital as well as existing investors McDermott, BioRock Ventures, and BioBrit. 

- Bluefin, an Atlanta-based provider of payment and data security technologies, raised $25 million. Macquarie Capital Principal Finance led the round.

- Odaseva, a San Francisco-based enterprise cloud privacy platform, raised $25 million. Eight Roads Ventures led the round and was joined by investors including F-Prime Capital, Partech, Salesforce Ventures, and Serena.

- Replicated, a Culver City, Calif.-based software vendor, raised $25 million in Series B funding. Two Sigma Ventures led the round.

- Kandji, an Apple enterprise management solution, raised $21 million in Series A funding. Greycroft led the round and was joined by investors including Okta Ventures, B Capital Group, and First Round Capital. 

- SidekickHealth, a digital therapeutics company, raised $20 million in Series A funding led by Wellington Partners and Asabys Partners. Read more.

- The Wanderlust Group, a provider of tech for marine and outdoor lifestyle industries, raised $14.2 million in Series B funding.  Investors included Avenir Growth, Allen & Company, and Grassy Creek.

- Skan, a San Jose, Calif.-based computer vision platform, raised $14 million in Series A funding. Cathay Innovation led and was joined by investors including Citi Ventures, Zetta Ventures, Bloomberg Beta, Plug and Play Ventures, and Firebolt Ventures. 

- Panoply, a San Francisco- and Tel Aviv-based cloud data platform, raised $10 million in funding. Ibex Investors and C5 Capital led the round.

- Gauss, a developer of computer vision applications for healthcare and maker of an at-home COVID-19 test, raised $10 million. The 4100 Group led the round and was joined by investors including SoftBank Ventures Asia, Northwell Health, Providence Health and Services, OSF Healthcare, and Polaris Partners. 

- Canvass Analytics, a Toronto-based industrial A.I. company, raised $6.5 million in Series A funding. Yamaha Motor Ventures and Laboratory Silicon Valley led the round.

- Finmark, a Raleigh, N.C.-based financial modeling software provider for startups, raised $5 million in seed funding. Investors included IDEA Fund Partners, Bessemer Venture Partners, and Draper Associates.

- KatKin, a London-based cat food company, raised £4.5 million in seed funding. Octopus Ventures led the round.

- Lightyear, a New York-based networking infrastructure startup, raised $3.7 million in seed funding. Amplo led the round and was joined by investors including Susa Ventures, Ludlow Ventures, Mark Cuban, David Adelman, and Operator Partners. Read more.

-  Obsess, a New York-based virtual stores and showrooms tech provider, raised an undisclosed amount of seed funding. Investors included Venture Reality Fund, WXR Fund and Jump Capital.

- Cinnamon, a San Francisco-based video startup, raised $2.5 million in seed funding. Coil led the round. 

- Seatrec, a Monrovia, Calif.-based renewable energy company that harvests energy from temperature differences in the environment, raised $2 million in seed funding. Norge Larson led the round and was joined by investors including Sunstone Management, Frontier Angels, SeaAhead’s Blue Angels, and Pasadena Angels. 

- Psyomics, a U.K.-based healthtech and University of Cambridge spin-out, raised £1.5 million in funding. Parkwalk led the round and was joined by investors including Jonathan Milner, Martlet, and Cambridge Enterprise.ve.

PRIVATE EQUITY

- GTCR is acquiring a majority stake in Consumer Cellular, a Portland, Ore.-based wireless company focused on those over 50. Financial terms weren't disclosed, but Bloomberg pegs the price at around $2 billion. Read more

- Francisco Partners agreed to acquire Forcepoint, an Austin-based cybersecurity solution, from Raytheon Technologies. Financial terms weren't disclosed.

- Cerberus Capital Management acquired National Dentex Labs, a Palm Beach, Fla.-based  network of fully-owned dental labs. Financial terms weren't disclosed. 

- Hg invested in CaseWare International, a Toronto-based maker of audit and assurance software. Financial terms weren't disclosed.

- TPG Growth took a majority stake in SmartSweets, a Vancouver-based candy brand seeking to be a healthier alternative. Financial terms weren't disclosed.

EXITS

- Exact Sciences acquired Base Genomics, a DNA methylation company, from Oxford Sciences Innovation for $410 million.

- REPAY Holdings Corporation (NASDAQ: RPAY) acquired CPS Payment Services, a payments provider, for up to $93 million. Financial terms weren't disclosed.

- Apple acquired Vilynx, a Barcelona-based A.I. company analyzing video content, per Bloomberg. Financial terms weren't disclosed. Read more.

OTHERS

- LVMH is in talks to slightly reduce the price of its planned acquisition of Tiffany, the luxury jeweler, per CNBC. LVMH previously sought to pay $16 billion, or $135 per share. Now deal talks are around $130 and $133 per share. Read more.

- Spin Master Corp agreed to acquire Rubik’s Brand, a fellow game maker for kids, for $50 million. Read more.

IPO

- Krafton, the South Korean company behind battle royale game PlayerUnknown’s Battlegrounds, is weighing an IPO that could be South Korea’s largest ever debut. Read more.

- Root, a Columbus, Oh.-based car insurer, raised $663.7 million. 

SPAC

- Cerevel Therapeutics, a Boston-based company developing treatments for neuroscience diseases, combined with Arya Sciences Acquisition Corp II, a SPAC formed by Perceptive Advisors. 

- Gores Holdings VI, the sixth blank check company from The Gores Group, now says it plans to raise $525 million in an upsized offering.

- Ajax I, a blank check company established by Och-Ziff’s Daniel Och and investor Glenn Fuhrman, raised $750 million.

F+FS

- Aristagora VC, a seed stage fund, says it raised $60 million for its first fund.

- Camber Creek, a venture firm in the real estate tech space, raised $155 million for its third fund.

- PayPal says it will invest $50 million in eight early-stage, Black- and Latinx-led venture capital funds: Chingona Ventures; Fearless Fund; Harlem Capital; Precursor Ventures; Slauson & Co; VamosVentures; Zeal Capital Partners; and one additional fund. 

- TVM Capital Life Science, a Munich, Germany- and Montreal, Canada-based life sciences venture capital firm, closed its latest fund at $478 million.

PEOPLE

- Pantheon Ventures hired Matt Cashion as a partner.

- Glasswing Ventures added Carol Meyers as a venture partner.

- Concord Health Partners promoted Timothy Leahy to partner.