Braid shuts down, Stash marches toward an IPO and what happens when a fintech relationship fizzles out

October 15, 2023 ndowd

Welcome back to The Interchange, where we take a look at the hottest fintech news of the previous week. If you want to receive The Interchange directly in your inbox every Sunday, head here to sign up! We covered lots of happenings in the world of fintech this past week — including raises, a startup closure, some drama between a couple of fintechs and a bank, and much more.

Female leaders in fintech

I don’t get to report on female leaders in fintech as often as I’d like. This week, I had the opportunity to talk to, and write about, two. Their stories were very different — but both very important.

Early last week, I stumbled upon a blog post written by Amanda Peyton, who co-founded Braid, a startup marketing a shared wallet for friends and family to pool their money together for certain things such as a trip. Peyton was refreshingly candid about the demise of the company, which shut down last month. She not only accepted responsibility for its failure, but she also detailed — almost excruciatingly so — what she believes went wrong. The concept was a good one but execution was not easy. Problems with finding a sponsor bank set the company behind. Relying on third-party software was another issue.

But Peyton, who has founded other companies in the past — one of which sold to Etsy — is not letting Braid’s closure get her down. She scooped up the IP for Braid and hinted there’s more to come. Her attitude was upbeat. She told me that startup failure is simply a part of the life cycle. And she’s right. Over 90% of startups fail. That’s 9-0. With such a great attitude, something tells me we’ll be hearing about a new venture involving Peyton sooner rather than later. Read all about her experience with Braid — which was backed by Index Ventures and Accel — here.

Listen to me and the rest of the Equity team talk more about it here.

I also wrote about Stash, an investing app that is aimed at lower- to middle-income consumers. The company just secured $40 million in a convertible note led by existing and early backer T. Rowe Price. While many companies don’t always like to admit they’ve let go of workers, CEO Liza Landsman shared with me that Stash had trimmed its staff by over 35% in the past 22 months or so — from 500 at the start of 2022 to about 320 now. The company is working hard to ready itself for the public markets. And investors often like it when a company takes steps such as layoffs to reduce burn. As part of its goal to go public, Stash also revealed it has tapped Amy Butte to serve as its first independent audit chair, something she believes is crucial for a consumer fintech in particular that is planning to go public. Butte is no stranger to fintech and seemed genuinely enthusiastic about Stash and its mission.

I also got a comment from an investor — Rebecca Kaden, managing partner at Union Square Ventures. I can’t remember if I’ve ever talked to three different women for one fintech story before. Love to see it!

You can read all the details about Stash here. — Mary Ann

The Synapse, Evolve saga

What happens when companies don’t want to work with each other anymore? Synapse, which operates a platform enabling banks and fintech companies to easily develop financial services, was providing those types of services as an intermediary between banking partner Evolve Bank & Trust and business banking startup Mercury.

When Evolve just wanted to work with Mercury, the bank notified Synapse of that and discussed how it would work with Synapse to wind down the relationship. Only that turned into a mess when Evolve’s and Synapse’s private letters became public in a lengthy Fintech Business Weekly post from October 8 that claimed the companies were at odds with each other after Evolve decided to end the relationship with Synapse.

Naturally, both companies wanted to clear the air. Here’s what they had to say. — Christine

Weekly news

After a fruitful second quarter, funding to fintech startups took a tumble in the third quarter, according to figures released by Tracxn. Total funding fell 51% to $2.7 billion compared with $5.5 billion in capital infusions into the industry in the same quarter of 2022. There was just one unicorn born, Kin Insurance (read some of our earlier Kin coverage), while seven companies raised over $100 million.

Rob Curtis, who co-founded LGBTQ+-focused neobank Daylight, shared on LinkedIn that he has officially moved on from fintech. (In May, TechCrunch reported on the company’s decision to shutter after being sued by employees.) We don’t know much yet about his new venture other than it’s a consumer tequila company based in Mexico City. He also mentioned that Daylight had been acquired, but when we reached out to learn more, he declined to comment.

Several stories came out of India this week, both reported by Manish Singh: First, Mastercard CFO Sachin Mehra, while praising the country’s digital payment system, known as UPI, also panned it while speaking at a UBS conference, saying, “It is an incredibly painful experience for ecosystem participants who all end up losing money as part of that proposition.” Meanwhile, banks are the hot new investment target for venture capital and private equity investors, and they are working on investment vehicles to set that in motion.

As reported by Aisha Malik: Last week, Klarna introduced a suite of new features, including an AI-powered image-search tool called Shopping lens. The Swedish fintech giant is also launching shoppable videos in Europe, in-store product scanning, a new cashback program, express refunds and more.

Manish Singh also reports that Brazil, the second largest market for WhatsApp, has suspended the instant messaging app’s mobile payments service in the country a week after its rollout in what is the latest setback for Facebook. In a statement, Brazil’s central bank said it was taking the decision to “preserve an adequate competitive environment” in the mobile payments space and to ensure “functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap.”

Block, the Jack Dorsey–founded fintech company previously known as Square, has acquired Hifi, a music-focused fintech startup, for an undisclosed amount. Hifi launched in 2020 as a financial rights organization for artists, enabling users to track their royalty income through a dashboard that aggregates data from music labels, distribution services, music publishers and performing rights organizations (PROs). This marks Block’s second investment in music tech after buying music streaming service Tidal in 2021. More here from Lauren Forristal.

Adyen lost $13 billion in market cap last month when investors scrambled to sell shares after the payments company missed quarterly revenue targets. But it’s not the only one facing the music in fintech. Shares in SumUp, a privately held European payment technology business that focuses on point-of-sale transactions, are currently being sold in inside sales (to other existing investors in the company) at a valuation that might be as low as $4.1 billion — a drop of nearly 52% on SumUp’s previous valuation of $8.5 billion, achieved when it raised $624 million in June 2022. More here.

Greentoe, an e-commerce negotiation site and graduate of Y Combinator that has facilitated over $700 million in transactions, has acquired DiscountBandit.com. TechCrunch originally reported on Greentoe, which developed a “Name Your Price” feature, in 2014.

Other items we are reading:

Tiny banks that powered Cash App grew like crazy. Then the Feds came calling

Banking Startup Rho in talks to buy MrBeast-backed Creative Juice

Deel launches AI-powered HR assistant to simplify global hiring

Orum launches first product built on FedNow

Kushki becomes first next-gen payment acquirer in LatAm, giving PSPs ‘more control’

Federal judge dismisses Dodd-Frank Act violations, other claims against Better

Grow Credit Inc., financial inclusion offers is a game changer (Read TC’s previous coverage of Grow Credit.)

Future of fintech: SVB’s outlook on innovation in the fintech industry