Movers and Shakers
Homebrew’s Now Self-Funded
Big changes/milestone for my friends at Homebrew! The team is going to focus on more than just seed stage companies and will now have an open-ended fund structure with no termination date (allowing the team to put capital from returns back into the fund). Since inception, Homebrew has closed three core funds and two overage funds to support winners in its core funds. It’s known for being an early investor in Plaid, Mercury, Chime, Gusto, and my new company Orum ;)
Mercury Cuts Off Africa For Some Reason?
I hadn’t heard about this
until Charley brought it up at dinner this week since I wasn’t checking Twitter much. Mercury restricted several accounts linked to African tech startups without any notice. It took awhile to figure out why this was happening, but it appears that one of Mercury’s partner banks flagged some accounts. The number of companies involved with this restriction is unknown, but I feel awful for those that have been impacted.
Klarna’s Growing Losses
While Klarna is still growing dramatically, so are its losses
. The company reported operating losses of $748M for the full year 2021, growing by 408% compared to $150M reported in the year prior. Even so, GMV reached record levels of $80B and net operating income increased 38% to $1.6B. Klarna said the larger losses are largely due to it continuing to expand globally and underwriting. From the CEO:
“We are now serving more than 100M active customers across the world. I am pleased to say that 99% of our lending globally is repaid. But we have also continued to grow our Pay Now immediate settlement option that today represents 40% of our total transaction volume. With some truly exciting companies like Stocard and Hero joining Klarna, our active consumer number will grow to over 147M. We have also massively accelerated our global expansion with the addition of 10 new markets since the start of 2020.”
TD Bank Buys First Horizon
Memphis-based First Horizon is getting bought by Canada’s TD Bank for $13.4B in cash
, making TD the 6th largest bank in the US by assets. The deal is expected to close in early 2023 and TD said it expects to see $610M in pre-tax cost synergies and that it will incur merger costs totalling $1.3B. Analysts seem to be happy about the deal, saying that First Horizon will fill a geographical gap and get it more access to consumer lending.
Payroll Fintech Funding
Huge congrats to my friend Lindsay Davis (seen in female photo above) on Atomic’s new round
! The payroll API provider announced $40M in new funding led by Mercato Partners and Greylock just five months after announcing its Series A financing
. The company works with 70 banks, credit unions and fintech companies such as Coinbase, Dave and Propel, serving more than 120M Americans.
Australian BNPL Zip plans to buy Sezzle
for $352.59M. The two had previously disclosed that they were discussing a buyout. They said they agreed to terms on Monday, just as Zip confirmed a A$108.1M loss for July-December, versus a small underlying profit a year earlier. Zip said that the cost-savings by combining the two companies would see Zip turn a profit in 2024.
Fractional NFTs Under Scrutiny
NFTs are getting a closer look
from the SEC. The regulator is said to be concerned that some NFTs break the rules in terms of raising money like a traditional security. The key focus is fractional NFTs where users can break apart pieces of a whole NFT and sell it (kinda like a company selling stock when you think about it in some ways). This will just be part of a lot of regulatory developments in the crypto space this year.
More Crypto ETFs
A new regulatory filing points to Charles Schwab creating
a “Crypto Economy ETF.” Key feature that should help it become reality more quickly: it won’t invest directly in crypto.
According to the filing:
"The fund’s goal is to track as closely as possible, before fees and expenses, the total return of an index that is designed to deliver global exposure to companies that may benefit from the development or utilization of cryptocurrencies (including Bitcoin) and other digital assets, and the business activities connected to blockchain and other distributed ledger technology.”