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Cross River wades into investment banking

Feb 26, 2024
Illustration of a piggy bank with glasses, a business tie and briefcase.

Illustration: Megan Robinson/Axios

Cross River Bank is launching a fintech-focused investment bank, the company tells Axios exclusively.

Why it matters: The specialist investment banking arm comes to market as fintech dealmaking shows signs of heating up.

Zoom in: The investment banking advisory team will be a part of CRB Group's CRB Securities subsidiary.

  • It will be led by Benjamin Samuels, former co-head of alternative capital solutions within the global capital markets group at Morgan Stanley, and Henry Pinnell, who had been senior managing director at SVB and led the fintech investment banking effort there.
  • Founded in 2008, Cross River has built a lucrative business by extending its banking, payments and lending capabilities to other fintechs.

Between the lines: To date, CRB Securities has focused mostly on connecting its fintech partners with privately placed credit transactions.

  • Adding investment banking will enable it to offer a full-stack approach to include equity fundraising, M&A and other corporate advisory functions.

"A lot of these companies are on their capital raising journey as we're working with them," Cross River's chief investment officer Noah Cooper says.

  • "We've already helped solve the debt part of the equation, but as they're becoming more successful, they're looking to do incremental capital raises, they may be looking to be acquisitive, they may be looking for your potential strategic partners."

Zoom out: The launch of the new arm comes as dealmaking — both in terms of venture capital funding and M&A — has fallen dramatically from its 2021 peak.

  • Venture financing to fintech companies fell 40% year over year in 2023, according to FT Partners data.
  • And M&A activity throughout the financial services sector is down by more than 50% from 2021 highs, according to McKinsey's annual M&A report.

Yes, but: Cross River sees dealmaking activity picking up in 2024, particularly in the back half of the year.

  • Samuels believes the advisory services it offers will be valuable at a time when fintechs will probably seek "creative solutions" as part of their capital raises.
  • "We're in a precarious time in the market where folks are going to take advantage of capital markets and M&A opportunities," Samuels says.

Flashback: Cross River Bank raised $620 million in funding in early 2022 at a $3 billion valuation.

  • That round was led by Eldridge and Andreessen Horowitz, with participation from T. Rowe Price, Whale Rock and Hanaco Ventures.
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