Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, we’ll take a look at the hottest fintech news of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there and it’s our job to stay on top of it — and make sense of it — so you can stay in the know.
About a year ago, it seemed like myself and other colleagues were writing story after story about spend management companies raising tranches of venture capital — remember Mary Ann’s roundup story from basically this same time last year?
On Friday, PitchBook’s Q1 2023 B2B fintech investment report showed that investment into enterprise fintech was $11.8 billion. Though it is a decrease from the same quarter in 2022, it was above the first quarter of 2021. And compared to the shrinking of quarter-to-quarter investments for the rest of 2022, the $11.8 billion shows a boost of confidence from investors, and dare we say a comeback?
Those figures are certainly proving themselves in stories we’ve been working on lately that show some spend management companies continue to do well in raising money and generating revenue. One of those is Clara, a spend management company based in Mexico that announced $60 million in new funding last week. Gerry Giacomán Colyer, Clara’s co-founder and CEO, told me the company is working with over 10,000 customers across Latin America and that its annual run rate of 5 million credit card transactions is equivalent to $1 billion.
He also noted that “over 10x in transactional volume is coming from revenue. With Brazil, Mexico and Colombia, we are covering two-thirds of LatAm’s GDP.” Giacomán Colyer also expects continued 2x month over month growth through the end of the year.
Meanwhile, last month, Mary Ann wrote about Ramp’s 4x revenue growth in 2022. She spoke to co-founder and CEO Eric Glyman, who described the successful results “as a desire on the part of companies of all sizes and stages seeking to save money by managing their spend better.”
However, despite the seemingly good times the spend management sector is currently experiencing, we learned this week that not everyone is popping bottles. Axios reported last week that Teampay, a corporate card company, confirmed it laid off 30% of its 100-person staff “in two instances in recent months.”
This comes five months after colleague Kyle Wiggers reported that Teampay secured $47 million in equity and debt. Perhaps founder and CEO Andrew Hoag inadvertently forecasted the layoffs when he told Kyle, “Teampay’s software-led approach has proven resilient — as we saw in late 2020 to 2021, when the economy rebounds, Teampay benefits disproportionately through accelerated growth.” If that’s true, maybe the opposite is also true: When the economy doesn’t do so well, maybe Teampay doesn’t do so well either?
Despite Teampay’s setback, the numbers are showing it’s still a space to watch. We’ll keep an eye on it for you.
Now I'm throwing it over to Mary Ann, who got the scoop on Navan's growth metrics. — Christine
Clara's co-founders Diego Iván García Escobedo and Gerry Giacomán Colyer Image Credits: Clara
Navan's chatbot, growth and IPO plans
A few weeks ago I talked to Ariel Cohen, CEO and co-founder of Navan (formerly TripActions), about that company’s growth. For the unacquainted, Navan was initially focused on travel expense management before accelerating efforts on its general spend management offering in 2020 after its revenue literally dropped to zero when the pandemic hit.
Highlights of the conversation include Ariel sharing some impressive growth metrics:
Spend volume processed via Navan Expense in the first quarter of 2023 grew more than 3x compared to Q1 2022 — and by 4.7x when looking at the 12 consecutive months ending in March 2023, as compared to the 12 months preceding. Also, the company touts that recent calendar year volume is nearly 80x that of the first full year of the Navan Expense product launch. Revenue-wise, Navan says it saw "3x YoY revenue growth."
I also asked Ariel if Navan was still planning to go public considering it filed confidentially to do so in September of last year. His answer: “I think eventually we will be a public company. We’ve raised around $1.4 billion to date and maturity wise, we are there, to be public. Growthwise, we are growing extremely fast, and a lot of our metrics would support being public. I don’t think the market is there right now.”
I also got a demo from CTO and co-founder Ilan Twig of just how Navan is using ChatGPT within its new offering, which is essentially a CFO dashboard, the company says. It was very interesting to see firsthand how its chatbot, Ava, works. Ilan was almost like a child with a new toy, honestly, giddily showing me how the bot could provide insight as to which hotels employees had used the most within a given time period in a given city, and other details such as did they get a corporate negotiated rate, or not? It even produced graphs! At one point, Ilan did have to reword his prompt but it was cool to see how the chatbot could respond to questions sequentially based on previous prompts. Navan’s goal is to help replace data analysts at companies, it says, ultimately helping them save money in more ways than one.
A recent panel at Fintech Meetup in Las Vegas in March -- made up of Mesh Payments co-founder and CEO Oded Zehavi; Michael Sindicich, EVP and general manager of Navan Expense; and Michael Tannenbaum, COO and CFO at Brex -- also touched on the topic of innovation in the space -- all agreeing on the importance of globalization, automation and travel expense as a category.
This quote from Zehavi of Mesh Payments (which raised its own $60 million funding round last September) sums up pretty well the potential for spend management companies: "We were all playing a game of musical chairs. When it was very happy music, many companies in our space got a lot of funding, even though their fundamentals were not so strong. And now the music has stopped, some of us have chairs, but others don't...The fact that we are connected to the accounting system, we see all the employees, we sit in the middle between the employees, the finance team, and the vendors, is an amazing position for us to leverage and start offering more and more services under the stack of the CFO that we'll be able to monetize." -- Mary Ann
Anthemis' layoffs — an outlier or a 'sign of what's to come'?
Last week, I published a scoop on fintech-focused VC firm Anthemis having laid off 28% of its staff, or 16 people, earlier this year as part of a restructuring. While 16 people may not seem like a lot, when it comes to venture firms, it actually is. It’s not typical, or often, that we see such large cuts at one time. Anthemis is an active investor, having backed the likes of eToro and Betterment. It’s also had a couple of recent stumbles in Pipe and Daylight. So the news of its staff reduction came as a bit of a surprise. (These are among the least fun types of scoops.) One thing that struck me is that after publishing the story, a founder reached out expressing concern about perception around Farhan Lalji — a former managing director at Anthemis — being among those affected by the cuts. That founder wrote me a note saying that while at Anthemis, “Farhan was the first VC to believe in” his company. “And there's no way we'd be where we are today without him,” he added. Anyway, I have since learned that Farhan has branched out to start his own firm, LTV Capital.
Interestingly, there was a lot of chatter on Twitter as to whether these layoffs were an outlier in the industry or “a sign of what’s to come.” It’s hard to say. There could be other similar cuts taking place at other venture firms, and we just don’t know about them. But as Alex pointed out in last week's episode of the Equity podcast, if firms are investing less, wouldn’t it make sense that they would need less staff?
Meanwhile, a couple of days after my story ran, Anthemis announced that it secured additional capital from institutions such as Visa and BMO for its Female Innovators Lab (FIL) Fund. In a statement, the firm said: “Anchored by Barclays, with investment from Aviva, the fund now totals $50 million, making it the largest early-stage fintech fund focused on female founders. With this latest raise, the fund will invest in additional early-stage companies and continue its focus on designing, sourcing, and scaling female-founded embedded finance startups.” — Mary Ann
Ansa's virtual wallet for merchants
Having covered fintech now for a few years, it’s less and less often that I come across companies building technology that feels, well, unique. But this week, I wrote about a startup building something I’m not sure I’ve ever seen before: virtual wallets for merchants. It sounds simple, right? But it’s not, or else we’d see a lot more of it outside the Starbucks of the world. Interesting backstory: Sophia Goldberg, a former Adyen product manager, had this idea for a company but was looking for a technical co-founder. Bain Capital Ventures partner Christina Melas-Kyriazi ended up introducing Sophia to JT Cho, a software engineer she’d worked with at Affirm.
The two self-proclaimed “payments nerds” hit it off famously and went on to raise $5.4 million for Ansa. Besides Bain, other backers include Nimi Katragadda at Box Group; Nichole Wischoff at Wischoff Ventures; Cambrian Ventures; the Fintech Fund; Susa Ventures; and angels such as Plaid co-founder and CEO Zach Perret; Gokul Rajaram and the founders of Alloy; among others. I tend to always root for the underdog, so the fact that Ansa aims to help small businesses like coffee shops and quick-service restaurants (and down the line, they say, enterprises) save money on fees and better retain customers made me happy. Read more here. — Mary Ann
Image Credits: Ansa
A super interesting feature from Catherine Shu: “Southeast Asia is already home to a thriving fintech scene, where Grab, GoTo and Sea have built super apps that encompass financial services, and startups like Xendit, Akulaku and Dana (to name a few) have raised hundreds of millions of dollars for payments, banking services and other financial tools. Indonesia and Malaysia, in the heart of Southeast Asia, are among the countries with the largest Muslim populations in the world. These factors are proving fertile ground for establishing and growing fintechs that focus exclusively on Islamic finance, offering products and services that follow shariah law.” More here.
Mary Ann wrote about how Shopify has teamed up with Israeli B2B payments startup Melio to launch a new bill pay tool designed to allow U.S.-based merchant customers to manage their expenses and vendors via its platform. It’s another step in Shopify’s plan to straddle the intersection of fintech and commerce, noted Shruti Patel, global head of merchant services partnerships and monetization at Shopify. The rationale behind the new feature plays to the notion that if merchants can spend less time on tedious tasks such as consolidating their invoices and paying bills, they can spend more time focusing on growing their businesses. It also was in part driven by merchants asking for money movement capabilities, Patel told TechCrunch in an interview. More here.
Smart analysis from Anna Heim and Alex Wilhelm: “While the banking world watches American lender First Republic publicly convulse after its earnings report detailed a widespread evaporation of its deposit base, the startup world of neobanks is taking blows as well. Earlier this week, Revolut, a highly valued, U.K.-based neobank saw its valuation decline by some 46% in the eyes of one of its backers…Revolut’s revaluation raises a few questions: How much trimming is there left to do in the fintech world? And, are we likely to see something similar more generally in the neobanking startup sector?” More here.
Speaking of banks, Alex first took a look at First Republic’s tanking stock and deposits earlier in the week: “Shares of First Republic Bank are off 29% in early-morning trading Tuesday as investors digest its first-quarter earnings results, which came out Monday after the bell. The bank reported revenue and profit above analysts’ expectations, but for investors, other concerns outweighed the good results. Chief among those concerns is a massive decline in the bank’s deposit base. The bank closed 2022 with $176.4 billion worth of deposits against $166.9 billion in loans, but by the end of Q1 2023, it had $104.5 billion in deposits against $173.3 billion in loans.” More here.
By Friday, unfortunately for First Republic, the stock had tanked even further at the threat of government intervention. And, listen to Mary Ann, Alex and Natasha riff on just how much the Silicon Valley Bank debacle played a role in all this on the Equity podcast.
Contributor and fintech consultant Grant Easterbrook takes a look at three fintech concepts that, in his view, “initially seemed promising but largely failed to change the financial services industry.” You may agree. You may not. Either way, it’s a good read. More here.
Reports Rebecca Bellan: “Uber Freight, the logistics business spun out of Uber in 2018, is partnering with transportation fintech startup AtoB to offer carriers fuel cards and spend management software. AtoB, a four-year-old company that has been described as Stripe for transportation, offers an integrated financial platform based around its core product of a fuel card for truckers. Unlike other fuel cards offered by competitors like Brex and Fleetcor, AtoB’s fuel card is based on the Visa platform, so payments are more likely to be accepted at a wider range of fuel retailers. There are also no hidden or annual fees, according to the company.” More here.
Christine spoke with Stripe’s Vivek Sharma, head of revenue and finance automation, about the financial infrastructure company’s updates to its revenue and finance automation suite that included new billing features, tax API and revenue reporting tool. “It'll lead us into the larger trend that's happening in what we call the ‘revenue front office and finance back office,’” Sharma said. “These are considered to be disconnected systems, so Stripe has had a rare privilege of sitting right in the middle.” TechCrunch reported earlier this month that Stripe processed $817 billion in transactions in 2022 and is now valued at $50 billion after raising $6.5 billion in March.
Wise launches new interest feature for US customers, bolstering multi-currency account (TechCrunch covered Wise’s name change from TransferWise amid the company going public in 2021.)
ACI and MagicCube to deliver ‘seamless’ contactless payments for commercial off-the-shelf devices (TechCrunch covered MagicCube’ $15 million raise and plan to ‘replace all chips’ in October of 2021.)
Frank founder moved millions of dollars out of JPMorgan after she was accused of defrauding the Wall Street giant—and put it in Signature Bank – The saga continues. Last we reported, Charlie Javice had been charged with fraud by the SEC.
Fundings and M&A
Seen on TechCrunch
Financing platform Fairplay adds more than 100 million dollars to support new ventures (Christine covered the company’s January 2022 $35 million debt and equity raise here.)
That's it for this week! Thank you all again for reading, and for your continued support! Hope you're having a fabulous and fun-filled weekend! xoxo, Mary Ann and Christine
Image Credits: Bryce Durbin