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Why PayPal, M1, Square and more want to be more than just JPMorgan or Charles Schwab

October 20, 2021, 3:08 PM UTC

Every company is a fintech. That phrase was everywhere just about a year ago. 

And while that’s more true than ever before as companies outside of the financial services industry add those functions to their businesses (gaming being an obvious example), even existing fintechs seem to be finding new dimensions to be more fintech-y than ever before.

In contrast to the banking habits of old when consumers had separate companies handle their bank accounts, stock trading, and mortgages, a flurry of financial services companies are betting that they can be consumers’ everything—that they can take if not a larger chunk of the wallet, the whole thing.

Payments company Square for example snapped up Afterpay earlier this year for $29 billion in a bet on lending to the younger consumer. This came after it launched bitcoin and stock trading functions in its Cash app years before. PayPal meanwhile launched an app with savings, crypto-trading, buy-now-pay-later, advanced pay, and more. Stripe began offering checking accounts last year. Oh, and here’s neobank Revolut with its crypto-trading and remittance functions along with the usual accoutrements.

Also, the CEO Chicago-based M1 Finance, Brian Barnes, announced Tuesday that he bought a small, 11-strong bank in Minnesota, allowing the unicorn better known for its robo-advisor functions to be a bank, brokerage, and more.

We’ll be seeing more of this in fintech—and there’s even a word that the companies themselves have coined for it. PayPal CEO Dan Schulman for example envisions his company becoming a mobile “superapp”—harkening to the companies in Asia that turned banking, ride-hailing, gaming, and appointment booking all into a single app. 

While PayPal hasn’t voiced a desire to be the next Uber, Schulman has pointed to services that will take it even beyond fintech—such as messaging. That increased engagement, he notes, would lead to increased revenue.

While we’re still a far cry from a WeChat in the U.S., it is worth noting though why many believed a superapp wouldn’t work—very top-of-mind, the current backlash against big tech and concerns about privacy. And even in this rush toward becoming some sort of one-stop-financial-shop, there have been examples of failures: Google, with its pay function, abandoned plans for its mobile-first bank accounts via Plex just a year after announcing the project

Bottom line: As businesses more broadly are becoming fintechs, fintechs too are looking to deepen their hold.

FACEB???’s FINE: What is still currently known as Facebook has been fined about $70 million for breaching orders from the U.K.’s Competition and Markets Authority over its roughly $400 million acquisition of Giphy from earlier this year. The watchdog says Facebook purposely refused to report all of the necessary information. Of course, this all comes as the tech company is apparently rebranding to focus on the metaverse, per the Verge.

Guess CEO Mark Zuckerberg thinks the timing of all this—including potential future investigations—is just fine.

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

Jessica Mathews compiled the IPO and SPAC sections of this newsletter.

VENTURE DEALS

- Gorillas, a Germany-founded grocery delivery company, raised nearly $1 billion in Series C funding.  Delivery Hero led the round and was joined by investors including Coatue Management, DST Global, Tencent, Atlantic Food Labs, Fifth Wall, Greenoaks, A*, G Squared, Alanda Capital, Macquarie Capital, MSA Capital, and Thrive Capital.

- HT Aero, a Chinese flying vehicle startup linked to Xpeng, raised $500 million in Series A funding. Xpeng, IDG Capital, and 5Y Capital led the round.

- CRED, an Indian fintech, raised $251 million valuing it at $4 billion. Tiger Global and Falcon Edge Capital led the round.

- Flock Freight, an Encinitas, Calif.-based freight shipping and truckload sharing company, raised $215 million in Series D funding. SoftBank Vision Fund 2 led the round and was joined by investors including Susquehanna Private Equity Investments, Eden Global Partners, SignalFire, GLP Capital Partners, and GV.

- Republic, a New York City-based investing platform, raised $150 million in Series B funding. Valor Equity Partners led the round and was joined by investors including Galaxy Interactive, Motley Fool Ventures, HOF Capital, Tribe Capital, CoinFund, and Pillar VC.

- Endpoint, an El Segundo, Calif.-based digital title and settlement tech company focused on real estate agents, raised $150 million in funding from its parent company, First American Financial.

- Honeycomb, a San Francisco-based engineering observability platform, raised $50 million in Series C funding. Insight Partners led the round and was joined by investors including Scale Venture Partners, Headline (formerly e.ventures), Storm Ventures, Industry Ventures, and NextWorld Capital. 

- Primer, a U.K. payment infrastructure startup, raised $50 million in Series B funding valuing it at $425 million. ICONIQ Growth led the round and was joined by investors including Accel, Balderton Capital, Seedcamp, Speedinvest, and RTP Global.

- HR Acuity, a Florham Park, N.J.-based HR case management and predictive insights software company, raised $47 million from K1 Investment Management.

- Hash, Brazil's payment infrastructure fintech, raised $40 million in Series C funding. QED Investors and Kaszek led the round and was joined by investors including Endeavor Scale-Up Ventures. 

- Clyde, a New York City-based warranty company, raised $25 million in Series B funding. Headline led the round and was joined by investors including Vulcan, Spark Capital, and Crosslink.

- Sommelier, a San Francisco-based maker of decentralized and automated DeFi portfolio manager software, raised $23 million in Series A funding. Polychain Capital led the round and was joined by investors including Alameda Ventures, Zola Ventures, Byzantine Ventures, Tendermint Ventures, Secure Ventures, D1 Ventures, and Ferngrove Ventures. 

- BIOMILQ, a N.C.-based baby milk company, raised $21 million in Series A funding. Novo Holdings and Breakthrough Energy Ventures led the round and was joined by investors including Blue Horizon, Spero Ventures, Digitalis Ventures, Green Generation Fund, Alexandria, and Gaingels.

- SUPERPLASTIC, a Burlinton, Vt.-based maker of animated celebrities and vinyl toys, raised $20 million in Series A funding. Investors include Google Ventures, Index Ventures, Founders Fund, Craft Ventures, Galaxy Digital, Mantis VC/The Chainsmokers, Kakao, LINE Friends, Austin Rosen/Electric Feel Entertainment, Day One Ventures, and Betaworks.

- Embed Clearing, a clearing and custody broker, raised $20 million in Series A funding. Investors include The Treasury, GFC, Torch Capital, Trusted Insight, PruVen Capital, Fin VC, Bain Capital Ventures, and SWS Ventures.

- The Dyrt, a Portland, Ore.-based camping app maker, raised $11 million in Series B funding. Realization Capital Partners led the round.

- SOC Prime, a Boston-based threat detection company, raised $11 million in Series A funding led by DNX Ventures. Investors also include Streamlined Ventures and Rembrandt Venture Partners

- interviewing.io, a San Francisco-based interview practice platform, raised a $10 million Series A led by M13. 

- Open, a Los Angeles-based mindfulness company, raised $9 million in Series A funding. Founders Fund and A.Capital Ventures led the round and was joined by investors including Susa Ventures and Aglaé Ventures.

- Valence, an Israel-based cybersecurity startup, raised $7 million in seed funding. YL Ventures led the round.

- Wander.com, an Austin-based smart-home booking company, raised $7 million in funding from investors including Redpoint Ventures.

- RodRadar, an Israeli-based startup developing sensors for avoiding damages to underground utilities,raised $6 Million in Series A funding. Brick & Mortar Ventures led the round.

- Mage, a Santa Clara, Callif.-based product development collaboration tech maker, raised $6.3 million in seed funding. Gradient Ventures led the round and was joined by investors including Neo and Designer Fund.

- Lydia AI, a Canadian A.I. startup, raised $8 million in Series A funding. Information Venture Partners led the round and was joined by investors including 500 Global.

- Credo AI, a San Francisco-based governance platform, raised $5.5 million from Decibel,  AI FUND, and Village Global. 

- Bites, a Tel Aviv-based employee communications and training company, raised $5 million in seed funding. Vertex Ventures Israel led the round and was joined by investors including Surround Ventures, Oryzn Capital, Lyra Ventures, an ASEAN VC, and J-Ventures.

- RevOps, a San Francisco-based workflow software startup, raised $5 million in additional seed funding. Investors included Caffeinated Capital, Coatue Management and Gradient Ventures. 

- Synchron, an asset management protocol built on the Solana blockchain, raised $4.2 million. Investors included Sanctor Capital, Wintermute Trading, and GBV Capital

- Overwatch Research, an Ireland-based preclinical research tech company, raised $3.5 million in seed funding. Frontline Ventures and SV Angel led the round.

- CollateralEdge, a Dallas-based lending mitigation fintech company, raised $3.5 million in seed funding. Perot Jain led the round and was joined by investors including Kneeland Youngblood (founding partners at Pharos Capital Group).

- MagniLearn, an Israel-based edtech, raised $2.8 million in seed funding. OurCrowd‘s incubator Labs/02 and Reliance Industries led the round.

- Locale, a San Francisco-based food delivery startup, raised $2 million in seed funding. Decent Capital led the round and was joined by investors including Goodwater Capital and Esas Ventures.

PRIVATE EQUITY

- Summit Partners invested $625 million in Invicti Security, an Austin-based application security testing company. Turn/River Capital will remain a shareholder. 

- JMI Equity invested $50 million in SafetyChain Software, a Novato, Calif.-based plant management software company. Financial terms weren't disclosed.

- Clayton, Dubilier and Rice agreed to acquire PwC's Global Mobility Tax and Immigration Services business, which includes employee tax, immigration, business travel, mobility managed services and payroll solutions. Financial terms weren't disclosed.

- Genstar Capital and GI Partners recapitalized Daxko, a Birmingham, Ala.-based software and payments provider for the health, fitness and wellness industry. Financial terms weren't disclosed.

- Hellman & Friedman agreed to acquire The NPD Group, a Port Washington, N.Y.-based market information provider. Financial terms weren't disclosed.

- LLR Partners invested in Genesee Scientific, a manufacturer and distributor of products to life science markets. Financial terms weren't disclosed.

- A syndicate led by Metamorph Partners acquired Fluxx, a San Francisco-based collaborative grantmaking platform for private and public organizations. ABS Capital Partners co-invested. Financial terms weren't disclosed.

- Partners Group and Kohlberg & Company acquired BluSky Restoration Contractors, a U.S.-based provider of restoration services for commercial, industrial, healthcare, and multifamily real estate. Dominus Capital retains a minority stake. Financial terms weren't disclosed.

- Searchlight Capital Partners agreed to acquire a majority stake in Integrated Power Services, a Greenville, S.C.-based industrial aftermarket services company. Financial terms weren't disclosed.

EXITS

- The Cranemere Group acquired a majority stake in Outpatient Imaging Affiliates, an Nashville-based outpatient imaging company, from ICV Partners. Financial terms weren't disclosed. 

OTHERS

- Axel Springer completed its acquisition of POLITICO, the Arlington, Va.-based political news site, for over $1 billion.

- JAB acquired a majority stake in Cardif Pinnacle, a pet insurance-focused subsidiary of BNP Paribas. It is also acquiring Figo Pet Insurance, a pet insurance company. Financial terms weren't disclosed.

- Peak6 Group acquired a minority stake in Wolverhampton Wanderers FC, a U.K.-based European soccer team. Financial terms weren't disclosed.

- Pernod Ricard will acquire a minority stake in Abasolo, a Mexican whisky maker, from Casa Lumbre, per Bloomberg.

- SoftBank Group has held talks to invest in Ampere Computing, a maker of server-computer processors, per Bloomberg. Financial terms weren't disclosed.

- Vonage (Nasdaq: VG) acquired Jumper.ai, a Singapore-based conversational commerce company. Financial terms weren't disclosed.

IPO

- AutoStore, a Norwegian warehouse robotics company, raised $123 million from an offering in Oslo, and insiders sold $697 million of shares, per Reuters. The firm is now valued at $12.4 billion—making it Norway’s most valuable listing in 20 years. Thomas H. Lee Partners, SoftBank Group, and EQT own the firm. 

- Fertiglobe, a fertilizer producer in the Middle East and North Africa, and owner OCI NV raised $795 million in Abu Dhabi, according to Bloomberg. The offering values the company at $5.8 billion. State-owned Abu Dhabi National Oil Company and fertilizer and chemical producer OCI NV own the firm. 

- Udemy, a San Francisco, Calif.-based education platform, plans to raise up to $421 million in an offering of 14.5 million shares priced between $27 and $29 per share. The company posted $430 million in revenue in 2020 and a net loss of $78 million. Insight Venture Partners, Prosus, Norwest Venture Partners, and Stripes Group back the firm.

- LianBio, a Shanghai-based biotech company, plans to raise up to $345 million in a U.S. offering of 20 million ADSs priced between $15 and $17 per ADS. The company reported a loss of $140 million and has yet to post revenue. Perceptive Advisors owns a majority stake in the firm. RA Capital and BridgeBio Pharma back the firm.

- AirSculpt Technologies, a Miami Beach, Fla.-based body contouring company, plans to raise up to $170 million in an offering of 10 million shares priced between $15 and $17 per share. The company posted $63 million in revenue in 2020 and reported net income of $8 million. Vesey Street Capital Partners backs the firm.

- Stronghold Digital Mining, a Kennerdell, Pa.-based eco-friendly Bitcoin mining company, raised $127 million in an offering of 6.7 million shares priced at $19 per share—it had previously planned to price shares at up to $18. The company generated $4.1 million in total operating revenue in 2020 and reported a net loss of $145,000. 

- Mynaric, a German aerospace laser communication technology company, filed for an IPO in the U.S. The company posted $789,000 in revenue in 2020 and reported a net loss of $23,000. Apeiron Investment Group backs the firm.

- Scientific Games, a Las Vegas-based slot machine maker, is planning to raise about $3 billion by taking its global lotteries business public in Australia, according to Bloomberg. An IPO could value the unit at around $10 billion, per Reuters.

F+FS

- SoftBank Group’s Chief Operating Officer Marcelo Claure is advocating for a spinoff of its now roughly $8 billion Latin American investment fund, per Bloomberg. The move is reportedly putting him at odds with Masayoshi Son.

- Sisu Game Ventures, an early-stage fund focused on gaming startups, raised $50 million in its first close.

PEOPLE

- Upfront, a Los Angeles-based venture investor, added Molly O'Shea as an investor.

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