Posted In:

Regulation, UK, big tech


#461
The FAANGs Are Out. The Sinks Are In!

Published:

Oct 31, 2022


Author:

Cindy Grazer

Posted In:

Regulation, UK, big tech

Published:

Oct 31, 2022


Author:

Cindy Grazer


Share:

Big Tech takes the spotlight again this week. The UK Financial Conduct Authority is launching an inquiry into Apple, Amazon, Google and Meta around their efforts in retail financial services. The concern primarily stems from the amount of consumer data that these tech companies have around their customers, and whether well-funded balance sheets could lead to investments that eventually stifle competition.

In many ways, the data moat is what has allowed Big Tech to expand its network effects and become the important players that they are today. But this earnings season has shown that they aren’t invincible - Facebook’s parent company Meta lost a quarter of its market value after reporting quarterly earnings this week.

Meta’s increased spending on the Metaverse was only part of the news that Wall Street disliked. On Monday, Apple had updated its App store rules to require users and advertisers to make an in-app purchase (where Apple gets 30% of the cut) when they buy for a “boost” on posts - an advertising mechanism primarily used by Tiktok, Facebook and Instagram.

As Big Tech companies reach high levels of saturation and monetization in their core businesses - advertising, for example, perhaps they look to reinvigorate growth through financial services. Needless to say, the opportunity is extremely attractive as it relates to the size of the TAM. But given all that has been debated with Big Tech, privacy and antitrust, will regulators feel comfortable with their venture into the field? The EU regulator warned Twitter’s new boss to “fly by our rules” - what he probably meant was….

Newsletter Image 10.31.22

Portfolio News


Mattilda raises $10m in Seed funding led by FinTech Collective - We are very pleased to announce FinTech Collective’s investment in Mattilda, a Mexico-City based SaaS solution helping private schools in Latin America streamline their financial and administrative processes. The capital will allow Mattilda to continue growing its receivables operation, enabling tuition payments to be made digitally by various methods, as well as to to continue building an interface for communication with students’ families. Read more

Jesus Lanza featured in Cracks Podcast - Mattilda co-founder Jesus Lanza was recently featured in one of Latin America's top podcasts - Cracks, by Oso Trava. He is presented as a business leader in the region, on the back of Lottus Education's success, which is now recognized as the most successful search fund endeavor in the region's history. Read more

MoneyLion partners with NFL player and University of Pennsylvania lecturer Brandon Copeland to launch MoneyLion University - MoneyLion University will bring engaging, useful and educational content to MoneyLion customers, transforming how the company teaches about money and supporting MoneyLion’s extensive nationwide financial literacy initiative. Read more

MakerDAO community approves proposal to place USDC in Coinbase's custody platform - The MakerDAO community has approved a proposal to place as much as $1.6b in USD coin (USDC) with Coinbase Prime, where it will yield 1.5%. Decisions on MakerDAO are made by votes of its governance token, MKR, and for this proposal, 109,944 MKR were put toward saying "yes," or about 75% of the total vote. Some 14% voted "no," and 11% abstained. Read more

Yaydoo platform acquires fintech startup Oyster - The financial infrastructure firm, Oyster, was acquired by the Mexican platform specialized in financial management, Yaydoo, which in previous months had also announced the purchase of the startup Paystand, a transaction that gave rise to a new B2B Fintech unicorn and the first derived from the union of a company from the United States and Mexico. Following the acquisition, Poovala will become part of Yaydoo as chief technology officer. In a statement, Poovala said that with the merger they hope to improve their service to small and medium-sized companies that require financial services. Read more

The FAANGs Are Out. The Sinks Are In!


Meta slams Apple for ‘undercutting others’ with ad policy - The policy change, disclosed this week, requires users and advertisers to make an in-app purchase when they pay to “boost” posts in apps like TikTok and Meta’s Instagram. Apple takes a commission of as much as 30% on in-app purchases, meaning a company like Meta would lose a portion of its ad revenue to the iPhone maker. Read more

UK regulator warns over Big Tech’s growing interest in finance - While acknowledging that consumers may benefit in the short term, the FCA suggests that Big Tech companies might be able to “exploit their ecosystems” and large data stores to “lock consumers in”, as in other markets where they already face regulatory scrutiny, such as mobile app stores. Read more

Industry News


Stone Ridge Holdings Group launches Wolf, a NYC startup accelerator dedicated to Lightning - With the Lightning Network now accessible to more than 150m people around the world, the new venture will accelerate the development, deployment, and adoption of Lightning and Taro. Read more

The crypto story - Finance writer Matt Levine has written a guide for crypto that encompasses an entire issue of Bloomberg Businessweek. What follows is his brilliant explanation of what this maddening, often absurd, and always fascinating technology means, where it might go, and why it still matters. Read more

Amazon now allows customers to make payments through Venmo - While paying with Venmo on Amazon, customers can use their Venmo balance, linked bank account or eligible debit card to complete the transaction. A recent survey noted that Venmo users shop two times more frequently than an average shopper. So that might be beneficial for Amazon in terms of increasing the number of transactions on its platform. Read more

JPMorgan Chase merchants can now receive payments through Meta Pay - In 2019, Facebook Pay, renamed as Meta Pay in June, was launched as a unified payments service through which users across Meta's platforms including WhatsApp and Instagram can make payments without exiting the app. Read more

All eyes on SEC, CFTC as crypto industry waits for regulations - Crypto is an industry without regulation—a once-appealing prospect for a movement that sought to supplant the financial system, but now a hindrance to a sector seeking legitimacy. In the absence of regulation from lawmakers, the authority has fallen to Behnam’s CFTC and Gary Gensler’s Securities and Exchange Commission. Read more

EU to propose banks offer mandatory 'instant payments' in euros - The EU wants to modernize payments so that money can be transferred from one account to another in seconds and at any time, compared with existing card payments and direct deposits which can take up to several business days. The new rules form part of the bloc's policy of "fostering the development of competitive home-grown and pan-European market-based payments solutions" in a region where U.S. duo Mastercard and Visa dominate cross-border retail payments. Read more

'Unbanked' U.S. households hit lowest level since financial crisis - Just 4.5% of 132.5m U.S. households were considered “unbanked” in 2021, data from the Federal Deposit Insurance Corporation (FDIC) show. That rate, which represents about 5.9m U.S. households, is almost a full percentage point lower than when the survey was last conducted in 2019, and is the lowest level recorded since the FDIC began conducting the survey in 2009. Read more

Adyen launches embedded financial products - Adyen has broadened its offering by taking live two new embedded financial products - Capital and Accounts - which are now available to platform and marketplace businesses in the US and Europe via Adyen's single integration. Research conducted in partnership with Boston Consulting Group finds that 64% of small and medium-sized businesses (SMBs) are interested in financial services embedded within a platform. Read more

Goldman Sachs doubles down on the rich - Long considered Wall Street’s premier investment bank, Goldman has been under pressure for years to find other sources of income to even out the inevitable swings in the revenue it gets from trading and dealmaking. Shareholders watched with envy as the likes of UBS and Morgan Stanley built up wealth management arms that generated steadier fees. Now Solomon is heading down a similar path, but years later. Read more

Apple issues new App Store rules for crypto and NFT payments - In order for apps to sell NFTs and related services, they’ll have to go through Apple’s in-app purchase systems (where Apple charges a typical 30% fee on payments it handles) and “may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.” Apple specifically guides against any app functionality that lets NFT holders “unlock features or functionality within the app,” which may have served as an oblique workaround to its payments rule. Read more

Marqeta is making a big move beyond cards - Marqeta’s bid to expand beyond its core card-issuing business by offering ways for businesses to process financial transactions could expand its revenue and customer base, but also puts it in competition with a range of banking technology providers. The products, called Marqeta for Banking, would enable clients to offer new capabilities, including bill pay, direct deposit, and free ATM access. Read more

Saudi wealth fund launches $24b tech fund - A sovereign wealth fund led by Saudi crown prince Mohammed Bin Salman has launched a $24b investment fund targeting the Middle East tech sector. Read more

Chime, Nubank no.1 in PYMNTS’ digital banking app provider ranking - Chime and NuBank tie at the No. 1 slot for a third time. Scores remain at 100. Revolut keeps consistent at the No. 2 slot with a score of 98. Monzo stays true to the No. 3 slot but is down two points for a total of 93. Starling Bank is down two points but stays strong in the fourth slot. Dave previously shared the fifth slot with KOHO but now holds down the space alone with a total of 89, four points higher than before. Read more

Select Financings


Bilt Rewards - New York based provider of co-branded credit cards and loyalty programs for property renters raised $150m in growth funding led by Left Lane Capital. Read more

Bookkeep - New York based accounting automation platform raised $6.6m in Seed funding led by Fin Capital. Read more

Breezeway - Boston based vacation rental property management platform raised $15m in Series B funding led by Catalyst Investors. Read more

Celestia - London based blockchain scaling startup raised $55m in growth funding led by Bain Capital Crypto and Polychain Capital. Read more

ConnexPay - Atlanta based payments acceptance and issuance platform raised $110m in
growth funding led by FTV Capital. Read more

Finexio - Orlando based B2B accounts payables company raised $35m in Series B led by Mendon Venture Partners and National Bank Holdings Corp. Read more

Floryn - Netherlands based online lender for SMBs raised $64m in growth funding led by NatWest. Read more

Fursure - Miami based pet insurance marketplace and neobank for pet owners raised $3m in Seed funding led by MaC Ventures. Read more

Lama AI - New York based business banking tech provider raised $9m in Seed funding led by Viola Ventures and Hetz Ventures. Read more

Limit - California based digital insurance wholesale broker for the cyber market raised $14.5m in Series A funding led by IA Capital Group. Read more

LuckyTruck - Cincinnati based retail platform focused on the trucking insurance market raised $2.4m in Seed extension funding led by Candid Insurance Investors. Read more

Martian - New York based web3 wallet raised $3m in Pre-Seed funding led by Race Capital. Read more

Merge - San Francisco based API integration service raised $55m in Series B funding led by Accel. Read more

Moneyhub - UK based payments platform raised $40m in growth funding led by Legal & General and Lloyds Banking Group. Read more

Onward - Los Angeles based financial platform for co-parents raised $9.7m in Series A funding led by TTV Capital. Read more

Reap - Hong Kong based web3 payments startup raised $40m led by Acorn Pacific Ventures, Arcadia Funds and HashKey Capital. Read more

Uplinq - Toronto based credit assessment firm for SMB lenders raised $1.25m in new funding from ATX Venture Partners. Read more

WeTravel - San Francisco based business management and payments platform for multi-day travel businesses raised $27m in Series B funding led by Left Lane Capital. Read more


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