#546
Stand and Deliver
Published:
Jun 29, 2024
Author:
Sarah Parsons Wolter
Share:
If you tried going to a car dealership this week, chances are it was back to the dark ages of pen and paper business and all repairs have ground to a stop. A cyberattack on CDK has caused mass-scale shutdowns in thousands of dealerships across the country. While archaic, CDK’s software powers the backbone of operations in over half of car dealerships in the US.
Dealerships are a worst-case scenario for cyber hacks given the amount of sensitive consumer data that’s handled in transactions, the large amount of business that’s done, and limited IT expertise and budget to update oftentimes very outdated systems. The hack comes at a time when cyber assaults are at a peak in sophistication, and vulnerabilities are exploited anywhere within a network. The Solarwinds hack in 2020 took down 18,000 organizations and at least 9 government agencies, while the MOVEit supply chain attack in 2023 affected 2,600 organizations, many of whom were third and fourth degrees removed from the point of infiltration.
Demands have also become more outrageous – CDK’s hackers are demanding tens of millions in exchange for unlocking dealerships across an industry that topped $1.2 trillion in the US last year. The infamous Russian-linked ransomware group Clop earned a whopping $75m from MOVEit, and just recently, new evidence discovered that the mastermind behind the JPMorgan hack and star FBI cooperator, Gery Shalon, may have been building a massive fraud empire in eastern Europe all along. In an age where hackers are more prolific and patient but not necessarily as dandy as they used to be, stay vigilant and be prepared to stand and deliver!
Portfolio News
MoneyLion Appoints Veteran Pinterest and Google Leader Jon Kaplan as Chief Revenue Officer - In this role, Kaplan will lead MoneyLion’s go-to-market strategy, with a focus on expanding the market share of MoneyLion’s leading digital financial ecosystem. He will also leverage MoneyLion’s data assets to deliver new revenue opportunities and drive success for MoneyLion’s enterprise clients and retail customers alike. Read more
Colombia-based Simetrik wants to transform Brazil into its biggest market - Brazil has become a priority for Simetrik. The Colombian startup, which raised $55m in February of this year in a series B round led by Goldman Sachs, understands that the country could not only become the main market for the startup later this year, but also represent almost half of its revenue. Read more
Hackers Beware
Single point of software failure could hamstring 15K car dealerships for days - CDK Global touts itself as an all-in-one software-as-a-service solution that is "trusted by nearly 15,000 dealer locations." One connection, over an always-on VPN to CDK's data centers, gives a dealership customer relationship management (CRM) software, financing, inventory, and more back-office tools. That all-in-one nature explains why people trying to buy cars, and especially those trying to sell them, have had a rough couple of days. Read more
CDK hack upends US auto industry, sending dealers back to paper forms - The outage impacting CDK's dealer management system that is used to complete deals, track store profitability and monitor employee compensation, has "significantly slowed down" the auto retail industry, said Cliff Steinhauer, an official at The National Cybersecurity Alliance. Read more
The FBI’s star cooperator may have been running new scams all along - When Gery Shalon, mastermind of the infamous JPMorgan hack, flipped, US law enforcement considered it a triumph. But new evidence suggests that while Shalon was working with the FBI, he built a massive new fraud empire in Europe. Read more
Industry News
Judge nixes $30b swipe fee settlement - U.S. District Judge Margo Brodie — having set expectations during a hearing earlier this month that she would do so — formally rejected the $30b settlement between Visa, Mastercard and merchants that would have set limits on those fees, levied each time a credit card is used. Read more
Nubank acquires AI-for-banks startup Hyperplane - Just seven months after announcing a $6m seed funding round, Hyperplane, a San Francisco-based data intelligence startup that is building foundation models for banks, announced Wednesday that it has been acquired by Brazil’s Nubank. Hyperplane focused on allowing banks to train their own models to power tools across their risk, collections and marketing departments. Read more
Goldman Sachs deploys its first generative AI tool across the firm - The new tool—for code generation— will be rolled out to thousands of developers across the company by the end of the month. Chief Information Officer Marco Argenti said the company’s approach to generative AI involved centralizing all proprietary uses of the technology on an internal platform, and restricting them elsewhere. Read more
Hedge funds made a killing on FTX—then it got complicated - Since FTX’s 2022 implosion, hedge funds had scooped up the rights to customers’ frozen accounts for pennies on the dollar, with five firms alone buying claims with a combined face value of about $2.4b. But collecting these winnings won’t be straightforward as investors are mired in legal battles with some of the original owners of the claims. Read more
Flipkart Group launches payments app, Super.money, in fintech push - The Walmart-owned firm’s new app allows users to make mobile payments via UPI, an interoperable network that is the most popular way Indians transact online. To woo customers, Super.money is promising “real cashback” and not “useless rewards” for paying, sending or receiving money via the app, the Android app’s description says. Read more
Bank M&A deals substantially bigger in 2024 - Axios reports that as of mid-June, some 27 bank deals worth $5.5b have been announced in the second quarter — handily beating the $5.2b combined value of the 126 deals announced over the preceding five quarters, per S&P Global Market Intelligence's tally. Read more
iBusiness Funding enters definitive agreement to acquire Funding Circle USA and return Funding Circle's newly acquired SBLC license to the SBA - U.K. lender Funding Circle will be acquired for £33m ($42m), which marks a retreat from the U.S. market for one of the oldest fintech companies out there. This exit has also become ammo for lawmakers pushing for more stringency about which lenders get to participate in the Small Business Administration's loan program. Read more
Nubank partners with Lightspark to enhance customer experience via blockchain - Nubank announced a partnership with Lightspark, a global leader in infrastructure for the Bitcoin Lightning Network, Bitcoin’s second-layer blockchain that scales and accelerates transactions. The agreement between the companies aims to evolve the Nu app in the future by incorporating new blockchain-based features or services. Read more
Klarna to exit checkout business after finding conflict of interest with rivals Adyen and Stripe - The Swedish firm confirmed that an investor consortium led by Kamjar Hajabdolahi had agreed to buy Klarna Checkout in a deal worth 5.4bn kronor (£407m). Klarna Checkout enables merchants to work directly with Klarna to put its offerings on their site while also allowing them to partner with payment service providers (PSPs) like Stripe or Adyen to make Klarna’s products available. Read more
Chime acquires enterprise employee rewards company Salt Labs - Jason Lee, the entrepreneur who cofounded the payroll service DailyPay, is selling his latest startup, Salt Labs, to neobank Chime Financial. Roughly all of Salt’s 22 employees will join Chime, including Lee, who will lead a new business unit. The deal, which is expected to close later this week, calls for Chime to provide an upfront payment of $14m, according to people familiar with the deal. Read more
VanEck files for Solana ETF, SOL rises 8% - The filing is the first Solana ETF to be filed in the U.S. and follows six days after a similar product filing in Canada. Read more
KKR Makes Its Biggest Foray Into Apartments, Betting on Rising Rents - KKR paid $2.1 billion for more than 5,200 apartment units across the country, from California and Texas to New Jersey, KKR said. The deal includes 18 new mid- and high-rise multifamily buildings. Read more
Select Financings
Allora Labs - Boston based decentralized AI network raised $3m in new funding led by Archetype, Delphi Ventures, CMS Holdings, ID Theory and DCF God. Read more
Bling - Germany based family fintech app raised $12m in Series A funding led by Owl Ventures. Read more
CereTax - Atlanta based sales tax solution raised $9m in Series A funding led by S3 Ventures. Read more
Conduit - San Francisco based on-chain compute startup raised $37m in Series A funding led by Haun Ventures and Paradigm. Read more
Connect Money - Egypt based provider of embedded financial services to non-bank customers raised $8m in Seed funding led by Lorax Capital Partners, DisrupTech Ventures and Algebra Ventures. Read more
Covalent - Canada based blockchain infrastructure startup raised $5m in new funding led by RockTree Capital. Read more
Crossover Markets - Bernardsville based digital asset trading technology firm raised $12m in Series A funding led by Illuminate Financial and DRW Venture Capital. Read more
Fetcherr - Israel based pricing, inventory and publishing platform raised $90m in Series B funding led by Battery Ventures. Read more
KarmaCheck - San Francisco based employee background check startup raised $45m in Series B funding led by Parameter Ventures. Read more
LoopFX - London based peer-to-peer FX trading platform raised £2.6m in Seed funding led by Augmentum Fintech. Read more
Klarity - San Francisco based AI-driven document review startup raised $70m in Series B funding led by Nat Friedman and Daniel Gross. Read more
Norm Ai - New York based regulatory AI platform raised $27m in Series A funding led by Coatue Management. Read more
Payabli - Miami based payments infrastructure solution for software companies raised $20m in Series A funding led by QED Investors. Read more
Rainforest - Brookhaven based embedded payments platform for SaaS providers raised $20m in Series A funding led by Matrix Partners. Read more
RISR - Philadelphia based engagement platform for financial advisers raised $1.5m in Seed funding from angel investors. Read more
SoSoValue - Singapore based crypto financial research startup raised $4.2m in Seed funding led by CoinSummer Labs, OnePiece Labs and HongShan. Read more
Viio - Denmark based software spend management platform raised €3.3m in new funding led by North Ventures. Read more
FinTech Collective Newsletter
Curated News with Context
Delivered every Monday, the weekly newsletter, produced by our team, provides a tightly edited rundown of global fintech news, along with a bit of our original analysis.