The demise of BaaS fintech Synapse could derail the funding prospects for other startups in the space
Welcome to TechCrunch Fintech! This week, we’re looking at the long-term implications of Synapse’s bankruptcy on the fintech sector, Majority’s impressive ARR milestone, and more!
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The big story
Last week, we reported on how Copper Banking, a digital banking service aimed at teens, abruptly discontinued its bank deposit accounts and debit cards. The startup stated that its banking middleware provider, Synapse, was sunsetting its service “imminently.” The situation was just one of many where companies and consumers are being impacted by the implosion of banking-as-a-service company (BaaS) Synapse. I wrote a deep dive into the potential short- and long-term implications of its demise for the fintech sector. Though certainly not the only bit of bad news, it shows just how treacherous things are for the often-interdependent fintech world when one key player hits trouble.
Analysis of the week
Besides Copper, so many niche digital banks have struggled as of late that it was even more notable to see immigrant banking platform Majority not only raise more money, but also reveal that it had achieved $40 million in ARR as of April. That’s no easy feat, especially in a crowded space that includes competitors such as Comun, Maza, Alza and Welcome Technologies. Founded in 2019 by Swedish immigrant Magnus Larsson, Majority says that over the past year, the company grew its revenue three times while the number of users doubled.
Dollars and cents
U.K. fintech Vitesse, which targets insurance companies with an all-in-one treasury and payment management platform, closed a $93 million Series C round of funding led by investment giant KKR. The company said it’s doubling down on its U.S. expansion efforts.
Finout, an enterprise-focused toolset designed to help manage and optimize cloud costs, last week closed a $26 million Series B round led by Red Dot Capital. We covered the company’s launch out of stealth in 2022. Finout says it has attracted high-profile customers like The New York Times, Tenable and Wiz in spite of this crowded market and has grown annual recurring revenue ninefold from 2022 to 2023.
Peter Thiel-founded Valar Ventures — which has backed a number of fintechs — raised a $300 million fund, half the size of its last one.
What else we’re writing
Google Pay announced last week the rollout of several updates that capitalize on its integrations with other Google products, like Android and the Chrome browser. People who check out with Google Pay can now see their card benefits and perks before selecting a card. In addition, they can use “buy now, pay later” through partners like Affirm and Zip and can fill in their card details through biometrics or a PIN, instead of by entering their security code. The changes are designed to enhance the consumer experience of using Google Pay and make it a more competitive option against other payment methods.
Indian digital payments platform Paytm warned of job cuts after reporting that its net loss widened in the fourth quarter as it grapples with a recent regulatory clampdown.
High-interest headlines
Stripe launches new payments and financing tools to accelerate UK business growth
Rho partners with Navan for travel and expense management
Capchase secures $114 million to provide funding for SaaS businesses
ICYMI: Federal prosecutors are examining financial transactions at Block, owner of Cash App and Square
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