\nInside Stripe\u2019s latest moves<\/br>
\n2023-06-04 21:37:50<\/br><\/p>\n
Welcome back to The Interchange<\/a>! If\u00a0you want this in your inbox, sign up here<\/a>. While there is always a lot going on in the world of fintech, this week felt a little subdued overall \u2014 at least when it came to funding rounds. But there was definitely still other fintech news to cover, and we\u2019ll dive into it here.<\/p>\n Stripe made headlines more than once this week as it acquired a (non-fintech!) startup and announced an expansion of its issuing product into credit.<\/p>\n In each case, I covered the news exclusively, which helped give me some insight into the fintech giant\u2019s motivations behind each move.<\/p>\n Let\u2019s start with the acquisition. Stripe picked up Okay<\/a>, a startup that developed a low-code analytics software to help engineering leaders better understand how their teams are performing. Okay is a small startup, with just seven employees, that over time had raised $6.6 million from investors such as Sequoia Capital and Kleiner Perkins after graduating from Y Combinator\u2019s Winter 2020 cohort. I didn\u2019t talk to Stripe directly about the deal but Okay\u2019s co-founder and CEO Antoine Boulanger told me that \u201cby increasing engineering effectiveness, Stripe will be better positioned to attract and retain talented engineers.\u201d It also presumably will be in a better position to compete in an increasingly crowded space.<\/p>\n In other words, Stripe deciding to acquire a startup that helps engineering leaders build performance dashboards to gauge how their teams are doing feels like the company is very serious about making sure its own engineering team is working effectively enough to not only move faster, but also be more productive. I found it interesting that one of Okay\u2019s customers is Stripe competitor Plaid. Or I should say was. Of course, now Okay will be folded into Stripe\u2019s engineering team and will no longer serve outside customers.<\/p>\n Stripe also announced this week its plans to give companies the ability to create and distribute virtual or physical charge cards that allow their customers to spend on credit<\/a> rather than using the funds in their accounts.<\/p>\n \u201cAmong our suite of products, Issuing [which it launched in 2018] has been doing really, really well,\u201d Denise Ho, Stripe\u2019s head of product for BaaS, told TechCrunch. \u201cAnd the No. 1 top demand within Issuing has been the ability for Stripe to enable our platforms to offer credit to their users.\u201d<\/p>\n This has a twofold benefit for Stripe \u2014 giving it a new revenue stream as well as the option to offer new financing capabilities to their customers \u201cwith little additional operational cost,\u201d Stripe touts. It also gives companies like Ramp and Karat, among others, the ability to give their clients access to credit at a time when credit may not be as easy to come by.<\/p>\n Ho also told me that Stripe has worked hard to make sure all its products work well together. For example, she said, its Issuing product is built on top of its Connect offering so customers \u201cdon\u2019t have to KYC every single [one] of the thousands of businesses on their platform.\u201d<\/p>\n \u201cAnd when these businesses need to pay you back for, say, the couple [grand] they spent last month, they can use Stripe Invoicing and Stripe payments. And then we have the ability to move the money from the payments balance into issuing.\u201d One Twitter user<\/a> speculated that the expansion might mean that Stripe \u201cis going towards becoming a bank.\u201d While we don\u2019t know about that, we can say that Stripe\u2019s efforts to become a one-stop-shop for its customers appear to be advancing.<\/p>\n Stripe, which is one of the world\u2019s highest-valued private companies, has had some struggles as the payments space in which it operates only continues to get more competitive and the IPO market has dried up. In the past year alone, companies such as Plaid<\/a> and Finix<\/a> have released competing products, for example. And Stripe, which has yet to go public via a long-awaited IPO, earlier this year raised $6.5 billion at a $50 billion valuation<\/a> after being valued at $95 billion<\/a> in March of 2021. Stripe\u2019s latest raise took place months after the company laid off about 1,120 workers<\/a>, or 14% of its workforce, in November of 2022 after saying it had \u201coverhired for the world we\u2019re in.\u201d<\/p>\n On that note, CB Insights<\/a> pointed out in an email this past week that despite laying off 14% of its staff last year, Stripe still has nearly 2x the employees of Adyen while its valuation ($50 billion as of March 2023) is essentially equivalent to Adyen\u2019s market cap. \u2014 Mary Ann<\/p>\n Image Credits:<\/strong> Getty Images<\/p>\n<\/div>\n Another week, another spend management company providing milestones.<\/p>\n This past week, two players in the space provided us with some business updates worth noting.<\/p>\n For one, Brex shared that two of its products \u2014 Empower, Brex\u2019s spend management platform, and Brex business accounts \u2014 \u201chave each achieved $100 million in ARR.\u201d<\/p>\n When TC+ editor and my Equity podcast co-host Alex Wilhelm and I pressed Brex on what this meant exactly, a spokesperson told us the following via email:<\/p>\n The company added that since launching Empower last year, Brex has signed on companies such as Coinbase, Indeed, SeatGeek, Lemonade and DoorDash, among others. It also said that its business accounts, which it describes as cash management accounts with a suite of money movement tools across ACH, wires and checks, have seen \u201crapid growth due to the ease of use and up to $6M in FDIC insurance coverage.\u201d<\/p>\n You may recall that Brex also recently announced it was going global<\/a>.<\/p>\n It\u2019s not the only one.<\/p>\n Mesh Payments this past week also announced an expansion to support global multinational businesses operating in Europe, the United Kingdom and Asia in local currencies. The company believes that by doing so, it can work to solve \u201ca major pain point companies encounter when managing spend for remote workforces and across multiple entities.\u201d<\/p>\n I hopped on a call with Mesh co-founder and CEO Oded Zehavi, who shared that the expansion comes during a period in which the fintech company saw its payments volume (and revenue as a result) climb by 3x compared to the first half of 2022. He was candid about the fact that while that volume came both from existing and new customers, the company could definitely see a decline in spending from existing clients \u2014 but was making up for that by continuing to sign on new ones, including an unnamed Fortune 100 company.<\/p>\n Mesh aims to serve mid-market and enterprise companies, and Zehavi said the expansion into Europe, the U.K. and Asia is just the beginning as the company continues to explore other territories. Acknowledging that it is challenging to serve global customers, he said that in some cases Mesh partners with local banks and with other fintechs that serve multiple territories.<\/p>\n He was also adamant about the fact that disruption of this space still has a long way to go.<\/p>\n \u201cWe just came from a Gartner event and I will not exaggerate and say that more than 90% of the companies that attended this event are using Concur, and don\u2019t use any one of the new players in this space,\u201d Zehavi said. \u201cSo it means that the space is still far from being disrupted.\u201d \u2013 Mary Ann<\/p>\n Image Credits:<\/strong> PonyWang (opens in a new window)<\/span><\/a> \/ Getty Images<\/p>\n<\/div>\n On June 7, TechCrunch is going to (virtually) be in Atlanta. We have a slate of amazing programming planned, including the mayor himself,\u00a0Andre Dickens<\/a>. If you are an early-stage Atlanta-based founder,\u00a0apply to pitch<\/a>\u00a0to our panel of guest investors\/judges for our live pitching competition. The winner gets a free booth at TechCrunch Disrupt this year to exhibit their company in our startup alley.\u00a0Register here to tune in to the event.<\/a><\/p>\n Image Credits:<\/strong> Bryce Durbin (opens in a new window)<\/span><\/a><\/p>\n<\/div>\n TC+ editor Alex Wilhelm did a couple of fintech-related deep dives this week, including his unique take on Klarna<\/b>\u2019s first-quarter earnings that led him to conclude<\/a> that while \u201ca few good quarters do not make for a comeback\u2026there\u2019s lots to like about the company best known for its buy now, pay later services.\u201d He also dug into U.K.-based neobank Monzo<\/b>\u2019s fiscal 2023 results<\/a> and \u201cwhat its recent profitability tells us about its performance this past year (spoiler alert: good things).\u201d Alex also took that opportunity to make some other observations on other neobanks worth $1 billion or more. As he put it, \u201cWe are compiling an IPO list in our heads, after all.\u201d<\/p>\n This week, Mary Ann caught up with personal finance guru Suze Orman<\/b>, who made her debut into the startup world about a year ago with SecureSave<\/a>, a company that enables employers to offer employees sponsored emergency savings accounts. Mary Ann and Suze discussed a number of hard-hitting topics, including why SecureSave isn\u2019t like its competitors (it doesn\u2019t try to go after all your money) and how Americans aren\u2019t saving enough (people like to spend \u2014 spoiler!). Oh, and we found out her weapon for success<\/a>. There was more fintech talk on Friday\u2019s episode of the Equity podcast as well. Check it out here<\/a>.<\/p>\n As Ivan Mehta reports, Amazon<\/b> may have gotten out of the food delivery business in India but recognizes that dining is big business. The company is now testing dine-in payments at select restaurants. Read more<\/a>.<\/p>\n Affirm<\/b> has a partnership with FIS\u2019 Worldpay<\/b>\u00a0that enables Worldpay merchants to offer Affirm\u2019s Adaptive Checkout product. Eligible consumers can, in a few clicks, sign up for biweekly and monthly payment options. Check out TechCrunch\u2019s coverage of Affirm, including what happened with Affirm\u2019s earnings earlier this year<\/a> and the buy now, pay later boom<\/a>.<\/p>\n Speaking of FIS<\/b>, rumor has it that the company is acquiring BaaS platform Bond<\/b>, according to fellow fintech enthusiast Jason Mikula.<\/p>\n Other headlines<\/i><\/b><\/p>\n JPMorgan debuts payments partner marketplace<\/a><\/em><\/p>\n How a $13 billion fintech that angered Jamie Dimon won over banks<\/i><\/a><\/p>\n Kasisto launches KAI-GPT, the first banking industry-specific large language model<\/i><\/a><\/p>\n Adyen launches payout services to provide faster global payments<\/i><\/a><\/p>\n Seen on TechCrunch<\/i><\/b><\/p>\n Revolut alums raise millions for Vault, a startup offering banking services to Canadian SMBs<\/i><\/a><\/p>\n Ol\u00e9 Life wants to make buying life insurance for Latin Americans easier<\/i><\/a><\/p>\n Vartana lands a $20M investment to scale its sales closing platform<\/i><\/a><\/p>\n NomuPay, formed from pieces of failed fintech Wirecard, says it\u2019s raised $53.6M for cross-border payments<\/i><\/a><\/p>\n Hostaway unlocks $175M to expand its vacation rental management platform<\/i><\/a><\/p>\n Qflow raises $9.1M to track construction receipts, making it easier to de-carbonize<\/i><\/a><\/p>\n Taxfix, the $1B German accounting startup, slashes 120 jobs amid funding crunch<\/i><\/a><\/p>\n And elsewhere<\/i><\/b><\/p>\n Mexican fintech unicorn Stori secures $50M in debt capital<\/i><\/a><\/p>\n Fintech startup from JPMorgan alum raises $23.5M<\/i><\/a><\/p>\n Brazilian health insurance company Sami secures $18M<\/i><\/a><\/p>\n ICYMI fintech funding round-up: Ballerine, Tr\u00e9bol & more<\/i><\/a><\/p>\n RealBlocks raises additional $10M in extension of Series A financing<\/i><\/a><\/p>\n SVB alum raises $7M for new cash management startup<\/i><\/a><\/p>\nStripe has been busy<\/h2>\n
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<\/p>\nSpend management update<\/h2>\n
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<\/p>\nCity Spotlight: Atlanta<\/h2>\n
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<\/p>\nWeekly News<\/h2>\n
Fundings and M&A<\/h2>\n
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