Here are the newly minted fintech unicorns | TechCrunch

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’re looking at a bunch of news — from new unicorns, to a fintech doing good, to one that shut down, to another that did layoffs. Here we go!

The first unicorn in 2024 is likely to be a fintech

It’s a bold statement, I know. Reaching the $1 billion valuation milestone — aka, becoming a unicorn — is what startups live for. The number of companies able to claim that title peaked in 2021 and slowed down since the second quarter of 2022, according to a chart created by colleagues Anna Heim, Alex Wilhelm and Miranda Halpern.

It hasn’t been much fun for already-minted unicorns either, as both Mary Ann and Rebecca Szkutak reported in December 2022. Valuations for companies like Stripe, Brex, Chime and Plaid all took a haircut during the last half of 2022. Others, like Chipper Cash, made layoffs.

It was so bad that we kept an eye on as many of them as we could to see who was turning it around and how. For example, Klarna, here and here. And in October, we saw Indian fintech Slice merge with North East Small Finance Bank.

However, there’s more good news. While just 86 unicorns were minted in 2023 so far, new research from Crunchbase shows that financial services companies dominated those that did reach $1 billion in valuation in November — one-third of all new unicorns minted last month. Most other sectors had one company.

Crunchbase’s Gené Teare reported that three fintech companies — buy now, pay later app Tabby; business rebate management company Enable; and lending platform inCred — joined the ranks of the unicorn.

Why are some fintechs doing so well? A number of reasons:

All said, we are keeping an eye on 2024 to see who gets their horn. If what we have just laid out is any indication, it will most likely be a fintech company.

— Christine

Fintech for good

Proptech has had a rough year, with high mortgage interest rates making it harder for many companies in the space to make money and in some cases, even stay afloat. So when I got a pitch for a proptech company in the space recently raising $22 million, I was interested. I was even more interested when I realized their mission.

So many real estate tech companies we hear from are focused on the middle and upper ends of the market. And that’s okay. But it’s very rare that we hear from companies actively focused on lower-income families.

Enter Simply Homes. The Portland, Maine–based startup is out to tackle the affordable housing crisis by buying single-family homes in blighted neighborhoods, renovating them and then renting them out to very low-income families, the elderly, and the disabled (or Section 8 voucher holders).

The opportunity to help people overcome poverty and improve their chances for social and economic mobility was what attracted Brian Bagdasarian and co-founder and CFO Robert Kavanagh to build Simply Homes’ model.

Founded in 2020, Simply Homes spent its first couple of years developing its platform and associated models before buying its first home in January of this year. By the end of this month, the startup is expected to have 108 units, or homes, in its portfolio. Since its first-quarter launch, it’s seen its revenue grow by more than 50% quarter over quarter.

Over 80% of Simply Homes’ tenant base are single parents who would need to work an estimated 150 hours a week to afford market-rate rent on a home.

I love the idea of people in this income bracket having more choices for housing, and that’s when fintech gets me really excited. Doing good while making money? The ideal definition of win-win. Read more.

— Mary Ann

Weekly News

Mary Ann wrote about how Navan, an expense management startup once known as TripActions, laid off 5% of its staff, or 145 people. The company said the move was aimed at helping it move faster toward profitability. Navan filed confidentially to go public this year in late 2022 but never took the plunge. Reports peg an IPO to take place in April of 2024. Navan once focused strictly on travel expense management but stepped up its overall spend management game at the beginning of the COVID-19 pandemic when its revenues literally hit zero. It now competes with the likes of Brex and Ramp. Read more.

Reporter Manish Singh brings us a few stories from India. The first is that a decision by Paytm to offer fewer low-value personal loans caused shares of the financial services company to decline 20% on December 7. During an analyst call this week, Paytm attributed the move to the “recent macro development and regulatory guidance,” as well as dialogue with lending partners. Read more. The second story is about buy now, pay later startup ZestMoney shutting down by the end of December. The company, backed by investors such as Goldman Sachs, was once valued at $445 million. Manish writes the decision follows leadership attempting to find a buyer for the company a year after its founders resigned in May. Read more.

Senior editor Sarah Perez writes that X is moving ahead with plans for a payment system she initially reported about in November 2022. At the time, X owner Elon Musk suggested that users would be able to send money to others via the platform, extract funds to authenticated bank accounts and may have access to a high-yield money market account. This week, X obtained additional money transmitter licenses in three U.S. states so that it could operate money transfer operations. Read more.

Over on TechCrunch+, editor in chief Alex Wilhelm compares the rush to funding artificial intelligence–powered startups with the one to infuse millions of dollars into fintech startups in 2021. In particular, during that time, one of every five venture dollars was going into fintech. Alex writes, “A bunch of fintech companies that had been valued akin to SaaS companies back in 2021 wound up being worth a lot less. Today, funding is down, the exit market is frozen, and fintech is now aboard the struggle bus instead of skating toward a warm horizon. Will AI see a similar boom-and-bust run of fortunes?” Read more.

Speaking of AI, reporter Aisha Malik reports on Mastercard’s new tool called Shopping Muse. It is an AI-powered shopping assistant that searches for clothing and accessories based on simple prompts like, “What should I wear to a summer wedding?” It will then make personalized recommendations. Not sure what you are looking for? That’s okay — Aisha says Shopping Muse is able to recommend items using image recognition and can enable retailers to do the same. Read more.

Aisha also reports on Amazon’s plans to drop PayPal-owned mobile payment service Venmo as a payment option next month. The official announcement came as Amazon notified users last week via email that Venmo would no longer be accepted on starting January 10, 2024. Amazon will still, however, accept Venmo debit and credit cards. More here. Also, read about how PayPal’s shares slid on the news.

Natasha Lomas reports from Europe on how credit scoring companies operating in the European Union could be facing tighter curbs under the bloc’s privacy laws following a ruling issued by the Court of Justice (CJEU) on December 7. The referral related to complaints brought against the practices of a German credit scoring company, called Schufa, but could have wider significance for credit information agencies operating in the region where the General Data Protection Regulation (GDPR) applies. Read more.

Other items we are reading:

$12 billion HR startup Deel changed global hiring — now it wants to change regulators’ minds

AI is helping new parents apply for paid leave

Robinhood CEO ‘keen’ to lead the 24/7 trading charge

Index Partner Mark Goldberg leaves to start fund

Online brokerage Public lets individual investors buy pieces of corporate bonds

Coming together:

Adyen to act as global acquiring bank for Klarna

Warren Buffett-backed Nubank collaborates with Circle and Talos to increase crypto access in Brazil

Mastercard and Brim Financial partner on credit card infrastructure

Extend and Concur Invoice unite for cutting-edge virtual card payments

Treasury Prime & Effectiv team to bring fraud detection to enterprises and banks

Funding and M&A

As seen on TechCrunch:

Kenyan insurtech Lami’s bid to acquire Bluewave collapses

YC-backed fintech Bujeti raises $2M for its corporate cards and spend management platform

European neobroker Scalable Capital raises $65M on a flat $1.4B valuation

Spade digs into credit card fraud detection intelligence following new capital raise

Seen elsewhere:

Fintech-focused Canapi Ventures raises $750M

Solvento pushing digitization with invoicing software, $53.5M in debt and new funding

Center secures $30M in Series C funding to expand card-first expense technology stack

EasyKnock acquires home equity co-ownership firm Balance Homes

KOHO secures $86M Series D extension funding

Hamilton Lane, TIFIN AI for private markets partnership raises $6M

Image Credits: Bryce Durbin

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