#329
Fintech To The Rescue?
Published:
Mar 29, 2020
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With more people in lockdown today than were alive in 1940 (2.6b), governments around the world have been turning on the stimulus taps. The US Fed and Congress unleashed their own $2t stimulus bazooka this week to help mitigate the economic fallout of the corona pandemic.
The debate that is now raging, over certain social media channels, is can fintech, and potentially even DeFi, play an integral role in implementing these unprecedented measures in each country?
With $300b earmarked for supporting American SMBs and each citizen making less than $75k entitled to receive $1.2k, the race is on to figure out the most efficient way to get these dollars in the hands of those most in need. Fintech startups have a tremendous opportunity to prove that they are faster, more efficient, and overall better equipped than incumbents in reaching the masses.
The US stimulus package has also reinvigorated the discussion around a centrally issued digital dollar, a blockchain-based currency that would be issued by the FED. The initial bill even included a provision for instituting the digital dollar, but it was eventually removed during further discussions – nevertheless, it demonstrates that many view a government-issued digital dollar and an accompanying wallet as the most efficient way to disintermediate any potential points of failure in distribution (read: the middleman, banks).
Lastly, we want to wish all our readers to stay safe and stay sane as we collectively push through these trying times. We also trust that you've had enough time to get a work-from-home (WFH) rhythm that is as optimal as Homer's?
Portfolio News
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Fintech To The Rescue?
FED digital dollars are part of debate over stimulus - These “digital dollar” accounts would be set up as a way to speed payments to households that need support. As things now stand, the US government lacks the infrastructure to disperse payments widely, and given the nature of the current crisis, speedy action is critical. Read more
Small businesses fear hold-ups in $350b rescue program - Getting the $350b in loans for small businesses in the record U.S. stimulus package into business owners’ hands before a wave of closures will strain the nation’s network of lenders and regulators as never before. Read more
How SMBs can survive the crisis - The current crisis will put many small businesses on life support. Karen Mills, who served as the Administrator of the SBA from 2009 - 2013 and has been advising policymakers on aid options as a fellow at Harvard Business School, offers guidance to owners on the brink of ruin. Read more
House approves $2t Virus Relief Bill, sends to Trump - The House approved the largest stimulus package in US history Friday as part of the response to the economic crisis. The package includes cash payments, unemployment benefits, and small business loans. Read more
Industry News
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FED’s big boost for BlackRock raises eyebrows - Investors poured a record-breaking $1.5b into an exchange-traded fund run by BlackRock, a sum that represents about $2.3m of fees for the asset management giant. And it was all thanks to the Federal Reserve. Read more
Olympics delay, not cancellation, provides reprieve for insurers - Jefferies analysts have estimated the insured cost of the Games at $2b, including TV rights and sponsorship, plus $600m for hospitality. However, delaying the Olympics is likely to cost insurers much less than a full cancellation as policies may not specifically cover a postponement. Read more
Morgan Stanley, Goldman win China nod to control ventures - Morgan Stanley and Goldman Sachs were granted approvals to take control of their securities joint ventures in China as policymakers push ahead with the opening of the nation’s $45t finance industry even as they fight to contain the coronavirus outbreak. Read more
Global Savings Group acquires French cashback company iGraal for €123.5m - The e-commerce content company has acquired iGraal for €35m in cash and the remaining in stock. Read more
Glitchy coronavirus markets cause quant funds to misfire - Renaissance, Two Sigma, and DE Shaw suffer unusual setbacks with the average quant fund losing 14% this year per Credit Suisse estimate. Read more
High-frequency traders feast on the volatile market - Fast-trading investors have made big profits during the market’s volatility, with strategies ranging from sophisticated computer algorithms to ones as simple as “selling the rips and buying the dips.” Read more
N26 says bank closures may drive mobile banking adoption - As banks close their branches to help stop the spread of COVID-19, N26 sees an opportunity to convert new users. Read more
Dash for cash: companies draw $124b from credit lines - During the past 3 weeks, more than 130 companies in Europe and the US have drawn at least $124b from their lenders. The true figure is likely to be much higher, since publicly traded companies are not required to report the drawdowns immediately. Read more
Newest shortage in NYC: dogs to foster - Of all the shortages created by the pandemic -- the toilet paper and the hand sanitizer - the latest is pets. Animal shelters are reporting they are either all out of or almost out of cats and dogs. Read more
New York retains top spot in Z/Yen Financial Center Index - New York extended its lead over London to head Z/Yen Group's rankings of global financial centers on Thursday. Z/Yen also said that New York came top in the fintech rankings, followed by Beijing, Shanghai, London, and Singapore. Read more
Notarize to add 1,000 online notaries to address the demand for remote transactions - The platform enables digital notarizations is adding notaries to address demand as more Americans are ordered to shelter in place, but still need to sign important documents. Read more
Coronavirus spurs demand for touchless technology - Communal surfaces are feared as potential sources of contagion, leading consumers to rethink a host of behaviors ranging from the way they pay for goods to the way they flush toilets. An estimated 3% of cards in the US are contactless, compared to 64% in the UK. Read more
Thoughts of COVID19's impact on LatAm fintech - As the economy heads for recession induced by the coronavirus pandemic, and fintech startups brace for a potential slowdown in investment, digital channels could ultimately get a boost from the turmoil. Read more
Fintech startups getting a boost from coronavirus outbreak - The digital mortgage software provider Blend has seen spikes in usage. The platform sees between 15,000 and 20,000 applications per day and is processing daily loan values as high as $8b. Read more
Select Financings
Alma - Paris based fintech consumer financing startup raised €12.5m in venture funding led by Idinvest and Isai. Read more
Enable - UK based rebate management solution platform raised $13m in Series A funding led by Menlo Ventures. Read more
Fast - San Francisco based one-click login and payments platform raised $20m in Series A financing led by Stripe. Read more
OfferUp - Bellevue WA based online and mobile marketplace raised $120m in venture funding led by OLX Group. As a part of the deal, OfferUp will also be acquiring competitor letgo’s classified business. Read more
Plastiq - San Francisco based credit card-as-a-payment-option raised $75m in Series D funding led by B Capital Group. Read more
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