Exits & Deep Reads

How do startups choose their bank and corporate card? (TWIF 5/12)

Hello Fintech Friends,

Following up on Matthew Goldman's latest Signals piece on fintech banking, we are conducting a new survey to understand how fintech startups choose to bank and use corporate cards.

Please help us out by taking this quick survey!

One respondent will be randomly selected to win an annual subscription to TWIF’s premium content edition, Signals.

Please find another week of fintech exits and deep reads below. (👍👎 Have feedback for us? Let us know!)

Big if true.

Just over the last two years @twifintech we’ve seen large deals get done, rounds get filled, acquisitions occur, and even (believe it or not) a literal marriage as a result of the community we’ve built.

This from a long time partner of ours recently: https://t.co/kwDNMqKnXY pic.twitter.com/LbGycWVEcp
— Alex (@CallMeGillette) January 24, 2024

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📖 Read of the Week

This read from Ayo discusses the phenomenon that fiat-backed (specifically: US dollar-backed) stablecoins are becoming a holder of systemic importance for US treasuries. The implication is that there is unsaturated retail global demand for the dollar as a reserve currency.

This finding wouldn't be too surprising: Taking an example from one of our portfolio companies, LetsBit – they originally built an Argentinian crypto exchange and found that many of their users were just buying and holding USDC. When they interviewed these users, they realized that the in-demand use case for their platform was avoiding the devaluation and volatility of the Argentine Peso. That led the company to start building out consumer banking and savings products, small business banking, and a stablecoin-backed Mastercard.

We take for granted the benefit of having a boring, relatively stable currency as our transaction base in the US – as well as having the majority of our online commerce denominated in dollars. But volatility is more often the norm for global consumers, making stablecoins an elegant regulatory arbitrage (stability-as-a-service)...

...While it lasts. If Chinese capital controls or Nigerian interventions to stabilize the Naira are any indication, central banks don't love the idea that their constituents can quickly pivot to other currencies. Hence the rush to pilot CBDCs restricted to bank-approved uses. As privately-issued stablecoins like Circle and Tether continue to gain market share, they'll probably butt heads with regulators. Facebook's attempt to create a global reserve currency with its Libra / Novi / Diem product is a cautionary tale in this genre.

An interesting thing happening with fiat-backed stablecoins. They benefit from the deeply underserved demand for USD as a reserve currency and are creeping into the top 10 holders of US Treasurys (source @brendanpmalone)

Some potential implications pic.twitter.com/6jacQNufiK
— kunle.app (@ay_o) May 10, 2024

☯️ Exits

🤝 M&A - Fintech

iyzico, a Turkish payment acceptance provider that services 120,000 merchants and 6 million consumers, will acquire B2B payments and collections solutions provider Paynet for $87 million.
Lesaka Technologies, a South African provider of transaction channels between formal business and un-banked and under-bank individuals, agreed to acquire paytech Adumo for around $85.9 million.
Private equity firm Gallant Capital acquired payments consultancy and testing specialist Fime and payments testing business UL Solutions and merged the two.
Basware, a provider of AP automation and invoice processing, acquired AP Matching, a provider of cloud-based solutions for managing invoices and reconciling statements.
Trimble, a software provider to the construction industry, acquired Flashtract, a construction billing software company.
Paymerang, which offers advanced solutions that integrate AI, data capture technologies, and electronic document workflows to address accounts payable challenges, was sold by Aldrich Capital to Corpay, a provider of B2B payments for education, healthcare, hospitality, and manufacturing.
Regulatory intelligence firm Cube acquired Reg-Room, which provides regulatory change monitoring and analysis to the financial services industry.
Accounts payable automation specialist TranscendAP spun out from IT services firm Optima Global Solutions.

🏦 M&A - Bank and FinServ

The Australian wealth management and corporate trust businesses Perpetual announced that they will be acquired by KKR for A$2.18 billion.
Canada's Brookfield Asset Management will invest about $1.5 billion in American private credit manager Castlelake.
Charlesbank Capital Partners took a majority stake in Perspective Financial, a financial advisor with £8 billion under management.
Spain's Banco Sabadell rejected the latest attempt by Banco Bilbao Vizcaya Argentaria to initiate takeover talks (the second attempt).
US investor Eldridge Industries is in talks to acquire private credit firm Hayfin Capital Management.

Stablecoins are estimated to pass Visa in total payments volume in Q2.

Anyone know where most of these volumes are coming from? And what they're being used for? pic.twitter.com/LEZbpnZGLO
— Turner Novak 🍌🧢 (@TurnerNovak) May 5, 2024