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TabaPay to pay about $9.7M in Synapse deal

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Apr 23, 2024
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Illustration: Brendan Lynch/Axios

TabaPay will pay about $9.7 million in cash to buy the assets of bankrupt fintech player Synapse, per court filings yesterday.

Why it matters: It's a far cry from Synapse's former valuation, but it will be enough to pay back Synapse's secured creditors.

Between the lines: The $9.7 million was negotiated with the express purpose of covering Synapse's secured debts owed to Silicon Valley Bank and First Citizens Bank.

  • As of this month, those lenders are owed $8.7 million, per the filing.
  • Unsecured creditors, which include Kroll Associates, are also expected to receive some payout.
  • Synapse, per PitchBook, was once valued at $180 million, but its shareholders, including a16z, will not see any of the $9.7 million.

What we're watching: The figure is still subject to court approval, meaning the value could change.

By the numbers: Synapse — which helps fintechs open bank accounts on behalf of their customers — works with some 20 financial institutions and 100 fintechs, reaching about 10 million end users.

Behind the scenes: According to the filing, Synapse had anticipated a slowdown in the BaaS ecosystem and had begun seeking funding to pivot its strategy sometime prior to mid-2023.

  • But unnamed "investor directors" vetoed a $100 million term sheet that would have allowed the company to change gears, launch in-house products and potentially even buy a bank, it alleges.
  • Mercury, one of Synapse's largest customers, then cut ties with Synapse and directly entered a relationship with Evolve Bank.
  • It also sued the BaaS company seeking $30 million. Synapse countersued, seeking over $36 million.
  • Synapse hired William Blair and, later, Sherwood Partners to explore a sale.

The bottom line: The TabaPay deal is a lifeline for Synapse, enabling it to continue serving customers and cutting off the likelihood of additional messy lawsuits from that group.

  • It doesn't, however, end the battle with Mercury, with a spokesperson at the neobank writing in a statement to Axios: "Mercury has significant claims against Synapse. We are pursuing those in the appropriate forums, which may include the bankruptcy process."
  • For its part, Synapse claims in the bankruptcy filing that it expects to "recover substantial funds" from Mercury.
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