M-KOPA snaps up $250M+ debt, equity for its asset financing platform

M-KOPA, the asset financing platform that offers underbanked African customers access to “productive assets” and the ability to pay for them via digital micropayments, has secured over $250 million in new funding. 

The capital injection includes $55 million in equity and over $200 million in debt, huge sums in both categories that testify to strong fundamentals and solid performance for any growth-stage company in this venture capital’s current contraction. Following the $75 million in equity the Kenyan-based fintech announced last March, M-KOPA has raised $245 million in equity funding since its inception in 2011. 

Japanese-based trading house Sumitomo Corporation, which M-KOPA co-founder and CEO Jesse Moore on a call with TechCrunch, described as the type of investor whose long-term visions complement M-KOPA’s aspirations, led the growth equity capital, donating the lion’s share at $36.5 million.

“They share with us a conviction that even though there might be wobbles in the economy, there’s an undeniable trend towards progress and an undeniable trend that the technology enablement of financial services and other digital services will only make the continent more successful,” commented the CEO on Sumimoto’s first significant fintech-focused investment on the continent.

The firm, known for its infrastructural deals in Africa, in a statement, said, “By leveraging each expertise and resource, we believe this partnership will have a positive impact on both the financial and telecommunications sectors, ultimately enriching the lives of people across the continent.” Meanwhile, Blue Haven Initiative, Lightrock, Broadscale Group and Latitude, the sister fund to Local Globe, participated in the equity round alongside Sumimoto.

Underbanked customers in emerging markets face challenges due to low-income, limited credit histories, and lack of collateral. Strong identity and credit scoring infrastructure in developed markets enables various credit options, allowing individuals to make large purchases through post-paid methods. However, in sub-Saharan Africa, where 85% of the population lives on less than $5.50 per day, making major purchases without credit is difficult, while access to credit remains limited. Also, in these markets, individuals have limited pre-existing financial identities and conventional collateral. 

M-KOPA’s business revolves around using debt to finance customers’ purchase of products and services it sells, such as smartphones and solar power systems, as well as loans and health insurance across four markets: Kenya, Uganda, Ghana and Nigeria. With its flexible credit model, the business allows individuals to pay a small deposit for the two products above and pay off through micro-installments, helping build their credit history over time. Default rates are little above 10%. 

Until now, M-KOPA had received a little over $100 million in working capital financing for this repayment cycle. It has doubled that amount with this new financing. Standard Bank, Africa’s largest bank in terms of assets, provided half of the $200 million+ “sustainability-linked” debt financing. Development financial institutions: the IFC, FMO, and BII and funds managed by Lion’s Head Global Partners, Mirova SunFunder, and Nithio supplied the rest. 

Moore noted in a TechCrunch interview that the funding, one of the largest combined debt and equity raises in African tech, will allow M-KOPA to double the size of its now 3-million-strong customer base in existing markets (a metric which already witnessed an 85% CAGR from 2020 to 2022.)

The asset financier also intends to: extend its financial services offerings and product sets and reduce greenhouse gas emissions in Kenya and Uganda, where its solar product is more prominent. However, what remains a top priority for the company is to continue to drive women’s financial inclusion across its operations (in 2020, when M-KOPA sold smartphones in Kenya, about 30% of its customers were women; two years later, it now stands slightly over 40% but the objective is to reach over 60%, the company’s chief executive noted.)

“Across all the markets, one key theme for us, in terms of broader impact, is our ability to close the gender gap of our consumers and I think we’re starting to make a notable impact on that problem. Data shows that women in sub-Saharan Africa are 20% less likely than men to own a smartphone,” said Moore. “There’s work to be done and our sustainability-linked facility is effectively an agreement between the lenders and M-KOPA to continue to try to overachieve on that front, especially as the quality of credit from female customers bests that of men globally so the ability to reach more female consumers with life-enhancing smartphones, and digital financial services is a win-win for us.”

In addition, last year, M-KOPA claimed to have provided over $600 million in cumulative credit for its underbanked customers via a network of over 10,000 agents. 52% of these agents are women, Moore disclosed on the call, and the credit figure now touches over $1 billion.

Various models, such as agency banking and community-based finance, tackle the financial inclusion problem in Africa. But the pay-as-you-go model employed by M-KOPA, which starts with providing assets on a credit sale basis (as the wedge fintech product) and building on that relationship to cross-sell financial services via partnerships (for instance, it partnered with Turaco to offer health insurance), is unique in itself, and according to Moore, “highly scalable, very commercially sustainable with a huge impact.”

Given its success in East and West Africa, where it has sold over a million solar home systems and helped avoid 2 million tonnes of carbon dioxide emissions, M-KOPA will now set its sights on South Africa, where Moore says the company is ready to open a pilot operation in the next few weeks. Electric mobility is also a category the ten-year-old asset financier, which directly employs nearly 2,000 people across Africa, plans to test out, starting in Nairobi. 

“There’s a huge demand for life-enhancing products like smartphones and solar systems, which are difficult to afford, but we’ve made them affordable and accessible to our customers,” said Moore. “Our next category in R&D right now is electric motorcycles. We’re very excited about electric mobility and we’re sure that in the next couple of decades, there will be a big switch in ownership where electric motorbikes will scale when there’s financing to go with them.”

M-KOPA snaps up $250M+ debt, equity for its asset financing platform by Tage Kene-Okafor originally published on TechCrunch

https://techcrunch.com/2023/05/15/m-kopa-snaps-up-250m-debt-equity-for-its-asset-financing-platform/

Apple partner Foxconn to invest $500 million in India’s Telangana

Foxconn will invest $500 million to set up manufacturing plants in the southern Indian state of Telangana, the latest in a series of bets from the key Apple contract partner as it expands its base in the South Asian market.

K.T. Rama Rao, Telangana’s IT minister, said in a tweet that the investment from Foxconn will create 25,000 direct jobs in the “first phase.” Foxconn, which already manufacturers iPhones in India, won a bid to manufacture the AirPods in the country earlier this year, Reuters reported. It also bought land worth $37 million in Bengaluru earlier this month, according to local media reports.

India’s Prime Minister Narendra Modi’s financial incentives in recent years to drive local manufacturing have attracted commitments from Foxconn, Wistron and Pegatron.

Foxconn entered India in 2006, years ahead of many of its global rivals. “During this time period, we have accumulated much experience in managing local employees, supply chain and logistics, which are all important competitive advantages that have allowed us to move at a pace that is faster than the market. It has also allowed us to expand quickly. Apart from continuing this momentum, we will also be increasing production yield locally,” Foxconn chairman Young Liu said on a recent earnings call.

“India has now reached a population of 1.4 billion people, translating to a large potential market for mid-to-high-end products which our clients are focusing on. Hence, it is necessary for us to continue to expand assembly and component operations in India. We see that more and more suppliers are investing in establishing plants in India and believe that this will become more prominent as time goes on. As for labor costs, India also has its advantages. Hon Hai will also continue to apply for government incentives, to increase its competitiveness.”

The growing interest from Apple’s manufacturing partners also comes at a time when the iPhone-maker is attempting to expand its manufacturing infrastructure beyond China.

Apple, which opened its first two retail stores in India last month, could expand its iPhone manufacturing capacity in India to produce 25% of all iPhones by 2025, according to JP Morgan analysts.

Jagmeet Singh contributed to this report. 

Apple partner Foxconn to invest $500 million in India’s Telangana by Manish Singh originally published on TechCrunch

https://techcrunch.com/2023/05/14/foxconn-to-invest-500-million-in-india-telangana-state/

Cold-chain startup Figorr raises $1.5M, backs the roll out of data-driven perishables insurance

Oghenetega Iortim built Nigerian-based cold chain startup Figorr after imagining better means of storage and transportation of temperature-sensitive products, following the post-harvest losses from his fresh agro-produce venture.

Figorr (previously Gricd) runs IoT-powered solutions that provide businesses, especially those in healthcare and agriculture, with key data such as location, humidity, and temperature of highly-perishable products, helping entrepreneurs to cut the losses that emerge from lack of such visibility. Figorr’s devices, which are placed/stuck in cold storage setups, come at no cost, but users subscribe to access the collected data.

Iortim says Figorr is currently on an expansion bid, following an increase in demand for its solutions outside Nigeria. The expansion is driven by a successful $1.5 million seed funding it has raised in a round led by Atlantica Ventures, with participation from Vested World, Jaza Rift and Katapult. The startup has so far raised $1.7 million equity funding, and $275K grants from various entities such as the Google Black Founders Fund, Africa Business Heroes by Jack Ma Foundation, FbStart, and Lafiya Innovators by Impact Hub.

Outside Nigeria, Figorr’s solutions are currently used in Ethiopia, Ghana, Kenya, South Africa, Tanzania and Uganda. It recently entered the Kenyan market to tap the growth of its agriculture sector.

“Kenya is a very interesting market for us, especially because of the agricultural play. We also believe it could be a very key springboard into new markets,” Iortim, Figorr founder and CEO, told TechCrunch.

Figorr is also set to launch a risk management platform before the year ends, which will provide insurance companies with the data needed to introduce tailor-made products to their customers. The platform will be built against the data that Figorr has been collecting over the last three years to show the risk profiles of its customers.

Iortim believes that with suitable and specific data, insurance companies will be better placed to provide tailored products.

“One major challenge we have seen by serving the sector is that a lot of our customers fear getting notifications that their products are being exposed to harsh conditions, and this is simply because historically, perishables are a risky sector,” said Iortim.

“We are helping insurance companies to see the opportunity by providing them with the data [and] for our customer, if something goes wrong, they will have some comfort that insurance is providing them with some level of coverage,” he said.

He says the insurance solution its building will revolutionize the way business is done, especially for smallholder farmers.

Iortim said having insurance will not only insure businesses from losses, but also ensure products are cheaper as businesses will not need to pass costs emerging from losses down to their customers.

Iortim launched Figorr in 2019, as a provider of mobile solar-powered storage boxes, before pivoting to double down on the IoT component of the product.

“When we built the solution, a lot of people were more interested in that IoT component, and in 2020 we decided to focus on helping businesses monitor, temperature-sensitive products, informing them on the location as well, helping them preempt and prevent losses from happening,” he said.

Iortim expects Figorr to continue growing buoyed by the fast-rising opportunities in Africa’s agriculture and health sectors.

In Nigeria, the device is mainly used in the healthcare sector to monitor temperature-sensitive products like vaccines and insulin, while in markets like Kenya, there is demand in the agriculture quarter, especially by horticulture businesses.

In sub-Saharan Africa, 37% of the food produced, or 120-170 kg/year per capita, is lost or wasted due to poor storage and handling, yet this is preventable if the food is kept safely and monitored in real-time to prevent losses. It is estimated that half of the vaccines in the world go to waste mainly due to cold-chain breaches.

Startups like Figorr are helping prevent these losses caused by poor storage, and lack of monitoring.

“What we are building is something that really impacts people,” said Iortim. “You can actually see the real effect on people’s lives in terms of accessibility to health care, and improved incomes.”

Cold-chain startup Figorr raises $1.5M, backs the roll out of data-driven perishables insurance by Annie Njanja originally published on TechCrunch

https://techcrunch.com/2023/05/14/cold-chain-startup-figorr-raises-1-5m-backs-the-roll-out-of-data-driven-perishables-insurance/

Apple releases satellite-based emergency SOS feature in Australia and New Zealand

Apple made its emergency satellite communication features available to users in Australia and New Zealand on Monday. The company said that users with iPhone 14 in the region can contact emergency services and share their location with friends and family in places with no cellular or Wi-Fi connectivity.

The iPhone maker announced the service with the iPhone 14 launch last September and first rolled it out in the U.S. and Canada in November. Since then the service has expanded to 12 countries with two more being added today.

Apple said that emergency communication through satellite features could be activated by rapidly tapping the power button five times, holding the power and a volume button, or dialing 000. If a user doesn’t have any connectivity, the system will guide them to use satellite communications by answering a short questionnaire about the emergency. This info along with the location is sent to dispatchers intimating them about the situation.

The system also guides users to point the iPhone in the direction of the satellite to send a message. The company said because of the low bandwidth of the satellite communications, Apple compresses the message by 3x so it could be sent quickly.

Image Credits: Apple

Plus, if you are on an off-the-grid hike and want to inform your family about your location, you can share it through the Find My app even if you are not connected to a cellular or a Wi-Fi network. To do that, open the “Me” tab and select “Send My Location” under the “My Location via Satellite” section.

“Australians know full well the importance of remaining connected in regional, rural, and remote areas, particularly when they need emergency services. The ability to contact Triple Zero with Emergency SOS via satellite when there is no mobile coverage is a strong backup to keep Australians connected in an emergency,”  Australia’s minister of communications, Michelle Rowland, said in a statement.

“This will go a long way in helping emergency services respond to, protect, and ultimately, keep individuals safe from harm. Australians are encouraged to familiarise themselves with this feature and whether their device supports it.”

While Apple has expanded its satellite communication feature to 14 countries, rival phone makers like Samsung, Oppo, Vivo, and Xiaomi are also set to debut this feature in their devices soon.

Apple releases satellite-based emergency SOS feature in Australia and New Zealand by Ivan Mehta originally published on TechCrunch

https://techcrunch.com/2023/05/14/apple-releases-satellite-based-emergency-sos-feature-in-australia-and-new-zealand/

Software snafus abound, Nuro makes more cuts and VinFast takes the SPAC road

the station scooter1a

Welcome back to The Station, your central hub for all past, present and future means of moving people and packages from Point A to Point B.

Automakers have been struggling with software development for years now. But the stakes are higher than ever because all of these companies keep touting the coming of the “software-defined” car, in part, to compete with Tesla. It reminds me of the days when automakers (and others) called future cars “an iPhone on wheels.”

Making declarations around software is not the same as actually pulling it off. And automakers are figuring this out.

Software problems have led to an executive shakeup over at VW Group’s software arm Cariad, prompted Chinese regulators to recall 1.1 million Tesla vehicles, and caused Polestar and Volvo Cars to delay production of their respective EVs. Fisker has also reportedly struggled with software integration problems in its Ocean SUV. And that’s just this week.

Software is also leading automakers to beef up their internal teams, instead of going to suppliers. General Motors, for instance, hired Apple executive Mike Abbott to head up its software division.

The upshot: Software-defined vehicles are still a work in progress.


Oh and hey, I’m back with another Disrupt 2023 promo. But this time I’m here looking for early-stage startups! Apply to join the Startup Battlefield 200 cohort at TechCrunch Disrupt 2023. All finalists get expert training, VC networking, a booth at Disrupt, and the chance to compete for $100,000 in equity-free funds. Applications close May 15. Apply today.


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Micromobbin’

France will spend 2 billion euros ($2.17 billion) through 2027 to improve cycle infrastructure and help people buy e-bikes. Bien joué!

Grant Sinclair’s enclosed electric trike is “designed to be safe like riding inside a large crash helmet.”

India’s Hop Electric delivered its first over-the-air update to its OXO electric motorcycle. The company used user-generated data to inform the changes it made, like improved acceleration and range-prediction.

Lime has asked a federal California court not to throw out a suit accusing Hertz of using trade secrets to build a new version of its mobile app within weeks of one of Lime’s top engineers leaving for the car rental company.

With the rise of e-bikes comes the rise of waste from e-bikes at the end of their lives. PeopleForBikes and Call2Recycle want to stop battery waste before it starts. The two launched their “Hungry for Batteries” e-bike recycling campaign to help simplify the process of recycling e-bike batteries.

Segway-Ninebot has unveiled its 2023 lineup of smart vehicles, including the Ninebot KickScooter F2 Series, the Ninebot KickScooter Max G2, the Segway eScooter E300SE and more. Segway says the F2 and Max G2 come with auto-class traction control systems, giving the rider max control on slippery conditions. Segway also partnered with Apple to integrate Find My technology into the F2 and Max G so users can find their scooters if stolen.

Swft released its 2023 lineup of e-bikes, including two mountain bikes, an all-terrain e-bike and a BMW-style e-bike.

VanMoof has refreshed its entry-level lineup with colorful new e-bikes. The X4 and S4, out this month, have the same frame and vibes of VanMoof’s previous X3 and S3, but less of the high-tech complexities.

Yamaha introduced the Booster e-bike with a top speed of 15 miles per hour and the Booster speed pedelec with a top speed of 28 miles per hour.

— Rebecca Bellan

Deal of the week

As I mentioned last week, mobility SPACs are having a helluva time — and not in the fun party kind of way. EV SPACs like Arrival, Canoo, Faraday Future, Lordstown, Lucid and Nikola have seen their values annihilated in the past year. And yet, another company is voluntarily jumping into the SPAC fray.

You might recall that VinFast, the Vietnamese EV maker and arm of conglomerate Vingroup, filed in December 2022 for an initial public offering in the United States. The company is now taking a different path to the public market. On Friday, VinFast announced it would go public through a merger with SPAC (or blank-check) company Black Spade Acquisition Co.

Under the deal, VinFast will have an equity value of about $23 billion. Considering that VinFast’s VF8 EV has been widely criticized for just about everything from ride quality to literally failing to operate, this run for the public markets might not be the best idea. I guess we’ll see!

Other deals that got my attention this week …

CelLink, a California-based automotive wiring components startup, has received conditional commitment for a $362 million loan from the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing loan program. The funds will be used to help finance the construction of a factory in Texas.

Faraday Future plans to raise $100 million in debt, critical funds that will allow the company to start initial deliveries of its flagship FF 91 Futurist vehicle. And the struggling EV SPAC is going to need it. The company’s earnings report shows it had $33 million in cash and restricted cash at the end of the first quarter.

Getaround plans to acquire the assets of HyreCar, another car-sharing marketplace, for $9.45 million.

ProLogium Technology, a Taiwanese solid-state battery maker backed by Mercedes-Benz, is considering raising fresh funding at a valuation of about $2 billion, Bloomberg reported, citing unnamed sources.

Qualcomm plans to acquire Autotalks, a fabless chipmaker out of Israel that builds semiconductor and system-on-a-chip technology to aid in automotive safety; sources told TechCrunch that Qualcomm is paying between $350 million and $400 million for the startup.

UVeye, the automated vehicle inspection technology startup based in New Jersey and Tel Aviv, raised $100 million in a Series D funding round led by Hanaco VC. Existing investors GM Ventures, CarMax, W.R. Berkley Corporation, F.I.T. Ventures LP and Israeli institutional investors also participated in the round, which has pushed its valuation to about $800 million.

Wingcopter, a delivery drone startup based in Germany, picked up €40 million (close to $44 million) in financing from the European Investment Bank.

Notable reads and other tidbits

ADAS

Porsche has partnered with Mobileye to bring hands-free automated assistance and navigation functions to future sports cars.

Autonomous vehicles

Nuro is laying off 30%, or about 340 employees, across the company as part of a restructuring meant to extend its capital runway. The company is also pausing plans to ramp up commercial operations this year and delay volume production of its Nuro bot — the third-generation, or R3, delivery robot designed to be the flagship of its commercial strategy.

Ouster was named the exclusive long-range lidar supplier through 2026 to Motional for its Ioniq 5 robotaxis.

Earnings

Woof! There were a lot of earnings this week and many of the results were on the gloomy side of things. I can’t cover them all, but here are a few highlights.

Bird cuts costs in the first quarter, but the rest of its results, including ridership and revenue, were not so hot.

Gogoro reported first-quarter revenue of $79.3 million, down 16% year-over-year, while its net loss grew to $40.6 million — up from its net loss of $21.7 million in the same quarter last year. The company said that while revenue from its battery-swapping service was up YoY, sales of hardware and vehicle sales decreased compared to the same quarter last year.

Lucid’s first-quarter results show a company with widening losses and revenue that failed to meet Wall Street expectations. Lucid’s Q1 revenue was $149.4 million, up year-over-year, but lower than the $257.7 million it reported in the fourth quarter of 2022. Importantly, the company said it plans to produce more than 10,000 vehicles in 2023, which is on the lower end of its previous guidance.

Luminar beat its own guidance for Q1 and brought in $14.5 million in revenue, up 112% from the same period last year. That gain is on top of a net loss of $146.8 million, which was wider than expected. Luminar still has cash and cash equivalents of around $90 million. The lidar company said it’s on track to meet or beat its goal of adding at least $1 billion to its forward-looking order book in 2023 and expects its revenue to grow 100% in 2023.

Rivian was one of the few bright spots  — although the company is still burning through cash. The company beat Wall Street expectations with $661 million in revenue in the first quarter, a nearly seven-fold increase from the same period last year when it was plagued by supply constraints and production woes that curbed deliveries. It also managed to narrow losses to $1.35 billion, or $1.45 per share, in the first quarter, down from the $1.59 billion, $1.77 per share, in losses in Q1 2022. Oh, and how could I forget — Rivian is sitting on $12 billion in cash.

TuSimple did not file a Q1 report, and that’s the problem. The company hasn’t filed an earnings report since the end of the third quarter in 2022. As a result, TuSimple received a delisting notice from the Nasdaq for failing to file its quarterly report on time. TuSimple shares may stop trading as early as May 15.

Electric vehicles, charging and batteries

Fisker lowered its production target for the year to 32,000 EVs. The EV company also said it has partnered with Ample to bring the first Fisker Ocean SUV to market with swappable battery technology by Q1 2024. The companies intend to share revenue generated from the battery-swapping system.

Subaru is stepping up its EV plans. The company plans to add four EVs to its portfolio with an aim to produce 400,000 units by 2028.

Tesla officially broke ground on a Texas lithium refinery, making it the only U.S. automaker to refine its own lithium.

Volvo will call its upcoming small all-electric SUV the EX30.

In-car tech

Google unveiled a bunch of new auto-related features — like YouTube and conferencing coming to cars — at the company’s 2023 Google I/O developers conference. Auto tidbit of the event: By the end of the year, 200 million vehicles will be equipped with Android Auto.

Tesla is facing another lawsuit. This time, a group of Tesla Model S and Model X owners filed a proposed class-action lawsuit in the U.S. District Court in San Francisco alleging that automatic software updates decreased driving range or caused battery failures.

Miscellaneous

HopSkipDrive brought on a new executive team with backgrounds from Walmart, The Honest Company and Bird.

Vianova is working with French public transport operator RATP to analyze curb activities and sidewalk usage to prevent bus lane congestion and transform curb usage in Paris.

Zipline, the drone delivery startup, is expanding its U.S. customer base across healthcare, restaurant and retail verticals.


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Software snafus abound, Nuro makes more cuts and VinFast takes the SPAC road by Kirsten Korosec originally published on TechCrunch

https://techcrunch.com/2023/05/14/software-snafus-abound-nuro-makes-more-cuts-and-vinfast-takes-the-spac-road/

Fintech startup Brex was among the bidders for SVB’s early-stage and growth portfolios

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. — Mary Ann and Christine

Brex bid for SVB portfolios

The FDIC finally released the various financial institutions that bid for parts of Silicon Valley Bank’s portfolio. As our fellow fintech enthusiast Alex Johnson pointed out, there was one name that stood out on that list for being “not like the others”: fintech startup Brex.

TechCrunch spoke with Brex co-CEO and co-founder Henrique Dubugras, who confirmed that the company did in fact put its name in the hat for SVB but only for the early-stage and growth portfolios within its business.

The idea actually came from a customer, he said, who thought Brex “could handle those customers better than big banks.” The first week after the SVB meltdown, the FDIC was not going to accept any bids from entities other than banks. During that time, Brex worked to step up for SVB customers in other ways. Then the following week, the FDIC said it was open to selling it by parts — and also open to non-banks submitting bids.

“That’s when we submitted our bids,” Dubugras said.

While the offer didn’t pan out, he doesn’t regret Brex taking a shot at it. “In the end, we think it was just easier for them to sell the whole thing in one piece,” he added.

Still, the startup continues to “keep seeing [its] deposits materially increase,” as not every startup or early-stage that once banked at SVB wants to move their cash over to a big bank.

At one point (in early 2021), Brex was in fact thinking of becoming a bank itself, going as far as to apply for a bank charter, before later withdrawing that application.

Today, Dubugras said that’s not something he thinks is in Brex’s future. — Mary Ann 

Digital banking for seniors

Different demographics can have different banking needs. So it’s no surprise that we have seen a flurry of financial technology startups offering banking services catered to certain populations based on factors such as age and ethnicity.

For example, numerous fintech startups cater to younger users — from Greenlight to Step to Current and now, Acorns. There are banks that target specific ethnicities and/or races. Greenwood wants to serve Black and Latinx consumers; Cheese started out targeting Asian American consumers; numerous (TomoCredit, Welcome) are eager to serve immigrants.

But far less common are fintechs dedicated to serving older members of our society. Enter Charlie, a new startup offering banking services for the 62+ community, which launched last week with $7.5 million in funding led by Better Tomorrow Ventures. The company’s goal, according to co-founder and CEO Kevin Nazemi (who also co-founded now publicly traded Oscar Health), is to help retirees and soon-to-be-retirees “make the most of their limited resources.”

My ears perked up when I got this pitch, as it’s a concept that hasn’t come across my inbox in all my years of covering fintech. I realized that (1) older Americans have fewer options when it comes to digital banking and (2) the COVID-19 pandemic really did lead to a lot of people who were once resistant to online banking being won over by the ease and convenience. And while trust probably remains an issue for some, I suspect a decent segment of this population would welcome more options.

Perhaps Jake Gibson, founding partner of Better Tomorrow Ventures, said it best. He told TechCrunch that he believes that the “vast majority of founders, including in fintech, tend to build products for people that look like themselves.”

“That’s why we have so many repetitive neobanks, social investing apps, etc. Meanwhile you can probably count on one hand the number of fintech companies serving the needs of seniors, despite that being such a huge population,” he added. — Mary Ann 

Financial crime prevention

One of the fun stories I wrote this week was on Cable, a company that provides automated assurance and risk assessment. I don’t normally dabble in the financial crime sector of fintech, but what co-founders Natasha Vernier and Katie Savitz are doing is pretty interesting.

Why? Well, people in the U.S. reported $8.8 billion of financial fraud in 2022 to the Federal Trade Commission. And as Vernier explained to me, much of the controls monitoring by banks and fintechs to make sure they can prevent fraud is still done manually.

By automating this process — which is something Vernier believes Cable is the only company doing right now — banks and fintechs can monitor all of their accounts to know, in real time, if they are compliant with regulations and if their failure controls are working as expected to combat breaches.

The concept is catching on: In the past year, the company increased its revenue five times, and raised $11 million in Series A capital, led by Stage 2 Capital and Jump Capital, with participation from existing investor CRV.

“Regulators are particularly interested in effectiveness testing, but also, just the volatility in the banking industry right now, with COVID and if we are in a recession or not, there is increased financial crime,” Vernier said. “We’ve certainly seen, globally, an increase in fraud and other types of financial crime over the last few years. And, as real-time payments get rolled out in the U.S., we’ll see more financial crime.” — Christine

Weekly News

Alex Wilhem was on fire last week when it came to analyzing the fintech space. In this piece, he looked at how both Coinbase and Robinhood reported better-than-anticipated revenue in the first quarter. He wrote: “The changing revenue mix at both Coinbase and Robinhood makes it clear that their ability to generate material amounts of revenue off cash balances (and the crypto equivalent) is changing the game in their favor. Studying public company performance is a great way to better understand what’s happening in that segment of the market, so that’s what we’re doing today with Coinbase and Robinhood. As always, we’ll relate what we’ve learned back to startups.”

Alex also leapt off how PayPal saw its stock drop despite the company reporting better-than-expected revenue and profit in the first quarter. He wrote: “Indeed, fintechs haven’t fared well at all even when you account for the broader dip in valuations at tech companies. It almost feels unfair. Comparing data from F Prime’s fintech index with valuation marks for SaaS and cloud companies in terms of historical revenue multiples, it appears that fintech companies are being clobbered a little too much. So why are fintechs today worth less than they were before the recent venture boom? Why are cloud companies faring better?” More here.

Christine, too, was busy covering Capchase’s move into the buy now, pay later space. In a nutshell, Capchase Pay is aimed at helping software-as-a-service companies close deals faster by giving them a way to collect the full contract value for their software while also providing their customers with flexible payment terms. Though SaaS growth didn’t take as big of a hit as previously thought, Miguel Fernandez, co-founder and CEO of Capchase, told TechCrunch “that SaaS companies did see a shift in their return on investment when sales cycles delayed as buyer’s asked for more flexible financing terms.” He called buy now, pay later offerings “one of the last B2B payment frontiers to be done in software.” More here.

Christine also wrote about the District of Columbia Attorney General announcing an agreement with SoLo Funds, a fintech company that enables peer-to-peer lending, to settle a lawsuit that alleged SoLo Funds engaged in predatory lending practices. As Christine wrote, SoLo denied the allegations in the Complaint and denied that it had violated any law or engaged in any deceptive or unfair practices. More here.

Reports Manish Singh: “After India and Brazil, WhatsApp is launching the ability to pay businesses within a chat in Singapore. Meta has partnered with Stripe to roll out the feature in the region. WhatsApp has built this payment feature using Stripe Connect and Stripe Checkout solutions, making in-app payments available online and offline. Customers can pay businesses using credit cards, debit cards or Singapore’s PayNow fund transfer system.” More here.

“In recent weeks, a number of brand-name mainstream financial institutions have been rolling out new crypto products and services in an attempt to make the space more accessible. At the end of April, Mastercard, PayPal and Robinhood all independently talked about the measures they’re taking to do so at Consensus 2023 and how they are furthering their moves into the crypto ecosystem.” More here.

Dan Primack interviewed Stripe president John Collison at Axios’ BFD event this week and discussed Stripe’s annual letter, among other things. Here are some takeaways from that interview:

  • It is still hard to start a business, and there is still too little cross-border finance, and Stripe is helping with that.
  • Stripe processed transactions totaling $817 billion in 2022, and Collison said that “it could be in the general vicinity of” $1 trillion this year.
  • When asked about why Stripe hasn’t gone public, Collison said, “The world in Q1 of 2023 didn’t seem like a phenomenal time to go public.” He noted that the company raised $6.5 billion in March instead to help employees with their equity awards “to do right by them.” Collison went on to say that “Silicon Valley seems to get caught up in transactions and IPOs, but look, we’re just focused on building something useful for people and having a good business that is self-funding.”

Fast co-founder Domm Holland is back with a new venture, Trady. After seeing his last two companies go bust, we have to say he’s certainly, uh…bold.

This tweet’ll make you think. (Courtesy of Theodora [Theo] Lau, founder of Unconventional Ventures.)

More headlines

Onboarding and automation: What fintechs can learn from big banks

Plaid signs agreements to migrate traffic to financial institutions’ APIs

Revolut’s CFO leaves the digital bank after two years, citing personal reasons

Visa partners with Tarabut Gateway. This news follows Tarabut Gateway’s $32 million raise last week to expand Saudi open banking.

Twitter to add encrypted direct messages and voice and video chat

Shopify launches eCommerce payments tool with help from Israeli fintech Melio

Tema launches active luxury and reshoring ETFs

Paysend launches cross-border payments solution for small businesses in US

Earnings of note

Affirm reported a quarterly loss of 69 cents per share for the quarter ended March 2023, compared to a loss of 19 cents per share a year ago. However, it said revenue was $381 million, an increase of 7.4% over the same period in 2022. Its gross merchandise volume was up 18% to $4.6 billion, and the company said it represents a 43% compounded annual growth rate on a two-year basis. In terms of transactions, Affirm reported that 88% of them were from repeat customers, while transactions per active consumer increased by 34%.

Robinhood also posted mixed earnings for the first quarter, including a net loss of 57 cents in earnings per share on net interest revenue of $208 million. That compares to a net loss of 19 cents per share on net interest revenue of $167 million for the fourth quarter of 2022. In addition, the company launched 24 Hour Market, which it said makes “Robinhood the first brokerage to enable customers to trade individual stocks at their convenience, 24 hours a day, five days a week.”

Dave, a neobank, reported that it narrowed its loss, posting a net loss of $14 million on revenue of $58.9 million, for the first quarter ended in March. That compared to a net loss of $32.8 million, on revenue of $42.6 million, for the same period in 2022.

Courtesy of Jason Mikula of Fintech Business Weekly: “Varo did reduce its overall loss by about 11% vs. Q4 2022 but, at nearly $29 million, the fledgling neobank is still a long way off from profitability — which helps to explain why the company raised an additional $50 million in equity at a substantially reduced valuation, as first reported by Fintech Business Weekly. Still, the additional capital extends Varo’s runway by less than six months, based on its current burn rate. The additional $50 million in funding was finalized in April, per management comments in the call report, and thus is not reflected in Varo’s Q1 data.” More here.

Funding and M&A

Seen on TechCrunch

Salsa dips into $10M to fire up payroll features for software companies

The Mint, started by Better Tomorrow Ventures, wants to be the accelerator fintech needs

Petal raises $35M, spins off data unit ‘to bring credit scores into the 21st century’

Triumph raises $14M for an SDK to add real-money tournaments into games

8fig gives smaller e-commerce businesses the ‘C-suite’ they’ve always wanted

Zamp wants to give online sellers ‘freedom from sales tax’

And elsewhere

EasyKnock acquires power buyer Ribbon

Cross-border processor Rev acquires online payments company Netspend to reach underbanked customers


Join us at TechCrunch Disrupt 2023 in San Francisco this September as we explore the impact of fintech on our world today. New this year, we will have a whole day dedicated to all things fintech, featuring some of today’s leading fintech figures. Save up to $800 when you buy your pass now through May 15, and save 15% on top of that with promo code INTERCHANGE. Learn more.


As always, we’re so grateful for your readership and support! Have a wonderful week ahead!! xoxoxo, Mary Ann and Christine

Fintech startup Brex was among the bidders for SVB’s early-stage and growth portfolios by Christine Hall originally published on TechCrunch

https://techcrunch.com/2023/05/14/fintech-startup-brex-among-the-bidders-for-svbs-early-stage-and-growth-portfolios/

US tech policy must keep pace with AI innovation

As innovation in artificial intelligence (AI) outpaces news cycles and grabs public attention, a framework for its responsible and ethical development and use has become increasingly critical to ensuring that this unprecedented technology wave reaches its full potential as a positive contribution to economic and societal progress.

The European Union has already been working to enact laws around responsible AI; I shared my thoughts on those initiatives nearly two years ago. Then, the AI Act, as it is known, was “an objective and measured approach to innovation and societal considerations.” Today, leaders of technology businesses and the United States government are coming together to map out a unified vision for responsible AI.

The power of generative AI

OpenAI’s release of ChatGPT captured the imagination of technology innovators, business leaders and the public last year, and consumer interest and understanding of the capabilities of generative AI exploded. However, with artificial intelligence becoming mainstream, including as a political issue, and humans’ propensity to experiment and test systems, the ability for misinformation, impact on privacy and the risk to cybersecurity and fraudulent behavior run the risk of quickly becoming an afterthought.

In an early effort to address these potential challenges and ensure responsible AI innovation that protects Americans’ rights and safety, the White House has announced new actions to promote responsible AI.

In a fact sheet released by the White House last week, the Biden-Harris administration outlined three actions to “promote responsible American innovation in artificial intelligence (AI) and protect people’s rights and safety.” These include:

  • New investments to power responsible American AI R&D.
  • Public assessments of existing generative AI systems.
  • Policies to ensure the U.S. Government is leading by example in mitigating AI risks and harnessing AI opportunities.

New investments

Regarding new investments, The National Science Foundation’s $140 million in funding to launch seven new National AI Research Institutes pales in comparison to what has been raised by private companies.

While directionally correct, the U.S. Government’s investment in AI broadly is microscopic compared to other countries’ government investments, namely China, which started investments in 2017. An immediate opportunity exists to amplify the impact of investment through academic partnerships for workforce development and research. The government should fund AI centers alongside academic and corporate institutions already at the forefront of AI research and development, driving innovation and creating new opportunities for businesses with the power of AI.

The collaborations between AI centers and top academic institutions, such as MIT’s Schwarzman College and Northeastern’s Institute for Experiential AI, help to bridge the gap between theory and practical application by bringing together experts from academic, industry and government to collaborate on cutting-edge research and development projects that have real-world applications. By partnering with major enterprises, these centers can help companies better integrate AI into their operations, improving efficiency, cost savings and better consumer outcomes.

Additionally, these centers help to educate the next generation of AI experts by providing students with access to state-of-the-art technology, hands-on experience with real-world projects and mentorship from industry leaders. By taking a proactive and collaborative approach to AI, the U.S. government can help shape a future in which AI enhances, rather than replaces, human work. As a result, all members of society can benefit from the opportunities created by this powerful technology.

Public assessments

Model assessment is critical to ensuring that AI models are accurate, reliable and bias-free, essential for successful deployment in real-world applications. For example, imagine an urban planning use case in which generative AI is trained on redlined cities with historically underrepresented poor populations. Unfortunately, it is just going to lead to more of the same. The same goes for bias in lending, as more financial institutions are using AI algorithms to make lending decisions.

If these algorithms are trained on data discriminatory against certain demographic groups, they may unfairly deny loans to those groups, leading to economic and social disparities. Although these are just a few examples of bias in AI, this must stay top of mind regardless of how quickly new AI technologies and techniques are being developed and deployed.

To combat bias in AI, the administration has announced a new opportunity for model assessment at the DEFCON 31 AI Village, a forum for researchers, practitioners and enthusiasts to come together and explore the latest advances in artificial intelligence and machine learning. The model assessment is a collaborative initiative with some of the key players in the space, including Anthropic, Google, Hugging Face, Microsoft, Nvidia, OpenAI and Stability AI, leveraging a platform offered by Scale AI.

In addition, it will measure how the models align with the principles and practices outlined in the Biden-Harris administration’s Blueprint for an AI Bill of Rights and the National Institute of Standards and Technology’s (NIST) AI Risk Management Framework. This is a positive development whereby the administration is directly engaging with enterprises and capitalizing on the expertise of technical leaders in the space, which have become corporate AI labs.

Government policies

With respect to the third action regarding policies to ensure the U.S. government is leading by example in mitigating AI risks and harnessing AI opportunities, the Office of Management and Budget is to draft policy guidance on the use of AI systems by the U.S. Government for public comment. Again, no timeline or details for these policies has been given, but an executive order on racial equity issued earlier this year is expected to be at the forefront.

The executive order includes a provision directing government agencies to use AI and automated systems in a manner that advances equity. For these policies to have a meaningful impact, they must include incentives and repercussions; they cannot merely be optional guidance. For example, NIST standards for security are effective requirements for deployment by most governmental bodies. Failure to adhere to them is, at minimum, incredibly embarrassing for the individuals involved and grounds for personnel action in some parts of the government. Governmental AI policies, as part of NIST or otherwise, must be comparable to be effective.

Additionally, the cost of adhering to such regulations must not be an obstacle to startup-driven innovation. For instance, what can be achieved in a framework for which cost to regulatory compliance scales with the size of the business? Finally, as the government becomes a significant buyer of AI platforms and tools, it is paramount that its policies become the guiding principle for building such tools. Make adherence to this guidance a literal, or even effective, requirement for purchase (e.g., The FedRamp security standard), and these policies can move the needle.

As generative AI systems become more powerful and widespread, it is essential for all stakeholders — including founders, operators, investors, technologists, consumers and regulators — to be thoughtful and intentional in pursuing and engaging with these technologies. While generative AI and AI more broadly have the potential to revolutionize industries and create new opportunities, it also poses significant challenges, particularly around issues of bias, privacy and ethical considerations.

Therefore, all stakeholders must prioritize transparency, accountability and collaboration to ensure that AI is developed and used responsibly and beneficially. This means investing in ethical AI research and development, engaging with diverse perspectives and communities, and establishing clear guidelines and regulations for developing and deploying these technologies.

US tech policy must keep pace with AI innovation by Walter Thompson originally published on TechCrunch

https://techcrunch.com/2023/05/14/u-s-tech-policy-must-keep-pace-with-ai-innovation/

An open letter to tech workers about careers in public service

Dear Tech Workers,

Careers are defined by moments.

Sometimes, these moments are meticulously planned out, and carefully strategized — a culmination of years of effort. A dream job, a long-awaited promotion or the successful completion of a noteworthy project. These moments recharge our professional batteries and propel us forward in our careers. Often, they also inspire us to achieve more.

For me (Camille), accepting an appointment to be part of the team starting a cyber policy office at the United States Department of Homeland Security changed my career trajectory. My understanding of how my career could evolve and the contributions I could make in and through cyber changed when I realized the benefits of a career that allowed me to move between sectors. I was able to support the drafting of Presidential Policy Directive-41 that outlines how the federal government organizes itself during a significant cyber incident.

I was then able to take that understanding and build out a federated security program at a large tech company, where I helped lead Log4j shell response efforts. Each sector provides a unique experience that, when combined, enhances your personal professional toolkit.

The federal civilian service has an opportunity that would greatly benefit from the expertise of talented technologists like yourself.

Other moments are unexpected. They catch us off-guard and force us to rethink everything. Maybe they even cause us to rechart our future.

For me (Thomas) — I graduated in 2000 during massive layoffs in Silicon Valley. I was laid off from my first job within three months. Although I was able to get another job and survive multiple rounds of layoffs, the instability made me rethink what was important to me. Service was always a part of my life, and I searched for opportunities to apply my tech skills to make a difference. It was the United States Peace Corps’ mission of world peace and friendship and its intention to promote mutual understanding between Americans and foreign peoples that drew me to apply as a volunteer for the agency.

During my two-year tenure as an Information and Communications Technology volunteer in the Philippines, I applied my tech skills to projects including the integration of technology into classrooms, developing an apprentice program for youth interested in computer repairs and developing a student information system for local teachers. The ability to foster innovation in a new environment and context changed the course of my career.

Despite record low unemployment five months into this new year, more than 170,000 workers at United States-based tech companies have been laid off – and suddenly face a unique, unscripted moment.  In 2022, more than 140,000 tech workers were shown the door. This is a lot of highly skilled tech talent that is poised to take steps in new directions.

As senior leaders within our respective government organizations who have each faced similar unscripted, unanticipated moments; we invite you to view this inflection point in history as your chance to dive into government service. The federal government has a unique role in cybersecurity and IT, which creates distinctive career opportunities for people with your technology skill set.

We recognize that government work can have a reputation for being too bureaucratic. Additionally, budget cycles, set hiring authorities and traditional organizational structures sometimes make it difficult to quickly hire and onboard talent. But things are changing.

We are working hard to overcome these challenges and increase opportunities for technologists to join the federal workforce. The federal government has already taken many steps to capitalize upon this moment and ease the challenges associated with swift hiring into the public sector. The Office of Personnel Management (OPM), the lead United States government office overseeing the federal civilian service, has championed careers in federal IT for those impacted by recent layoffs. OPM has hosted industry-specific job fairs, issued new pay guidance to agencies to leverage funding from previous legislation and streamlined the process for applicants to find opportunities within government service — including working remotely.

If you’re not ready to make a permanent switch to a federal career, many short-term, high-impact, public-sector opportunities have emerged that allow for specialized and highly skilled digital talent to plug into existing avenues. For example, at the Peace Corps, we have Peace Corps Response, which recruits professionals with diverse skills who know how to hit the ground running in three-to-12-month volunteer assignments. In addition, we have launched the Virtual Service Pilot, an expanded service opportunity for Returned Peace Corps Volunteers to donate their time as private citizens by engaging virtually with host country counterparts on projects.

The government cybersecurity landscape is equally in need of talent like yours. Recent estimates cite that demand for public-sector cybersecurity employees grew 25% through 2022, with more than 45,708 new job postings. This continued need for cyber talent ranges from cybersecurity engineers and network security architects to cybersecurity analysts and policymakers.

The Office of the National Cyber Director was tasked in the recently released National Cybersecurity Strategy to craft a cyber workforce and education strategy that will, among other things, develop concrete mechanisms through which a more diverse group of individuals with various education backgrounds and professional experiences can more easily find their fit within government service.

We have helped to champion interagency initiatives, such as techtogov.org, to serve as a resource for technologists transitioning into government service. This includes helping ease the transition of workers from the Big Tech culture to federal IT, organizing job fairs and standing up actionable hiring resources on the techtogov.org website.

As you survey the job landscape and think about your next steps, we strongly encourage you to consider federal service. From improved incentives to streamlined hiring processes, serving the American people with the United States government has never been easier or more fruitful. For those still unsure, short-term opportunities like those presented at the Peace Corps allow for fixed-period stops while Big Tech looks to reposition itself.

We both are incredibly confident that the federal civilian service has an opportunity that would greatly benefit from the expertise of talented technologists like yourself. We are excited for you to embark on your own journey to find that perfect fit, and we look forward to serving alongside you.

For jobseekers looking for tech opportunities within the federal government, visit usajobs.gov and techtogov.org for more information.

An open letter to tech workers about careers in public service by Walter Thompson originally published on TechCrunch

https://techcrunch.com/2023/05/14/an-open-letter-to-tech-workers-about-careers-in-public-service/

Hate Passwords? It’s Time to Try Passkeys

A new type of login is easier and safer to use than passwords—with caveats.

https://www.wsj.com/articles/hate-passwords-its-time-to-try-passkeys-e7088bb7?mod=rss_Technology

Before His Killing, Tech Executive Bob Lee Ledan Underground Life of Sex and Drugs

After the Cash App founder died in a stabbing, some were quick to blame San Francisco’s street violence. The truth was more shocking.

https://www.wsj.com/articles/bob-lee-stabbing-sex-drugs-lifestyle-san-francisco-5a7da970?mod=rss_Technology