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Data: Yahoo Finance; Chart: Axios Visuals 

Mobile investing startup Acorns Grow scrapped plans to go public via SPAC, calling off its $2.2 billion merger with Pioneer Merger Corp. 

Why it matters: The decision was made at the same time private valuations continue to skyrocket, which Acorns CEO Noah Kerner acknowledged in a statement announcing the news. 

“Given market conditions, we will be pivoting to a private capital raise at a higher pre-money valuation as we continue on our path to 10 million paid subscribers saving and investing for a better future,” Kerner said.

Context: 2021 was a banner year for private investment in fintech, as the sector drew a record number of VC dollars chasing a record number of VC deals. The same was not true for companies entering the public markets. 

According to SPAC Insider, fintech companies going public via a SPAC in 2021 lost an average of 40% in value since the day of their first trade.

It's not just SPACs: For the broader fintech sector, IPO listings (excluding insurtechs and proptechs) are down an average of 35.4% since their first-day closing price, according to Renaissance Capital.

Yes, the selloff is due to macroeconomic factors like expectations of higher interest rates in part — but fintechs also simply ran too hot in 2021 as retail traders flocked to the sector.

Acorns isn't alone in canceling its SPAC. After spending eight months trying to close a deal with Northern Star Investment Corp. II, RIA custodian Apex Clearing terminated its SPAC agreement in December. 

But more SPACs are waiting in the wings. Aspiration, Better.com and eToro all announced mergers with blank-check companies last year, but their likelihood of completion seems to diminish every day. eToro's valuation took a 15% haircut before it even hit the public markets.

The bottom line: More companies are expected to delay or cancel SPAC plans citing market conditions, but they can't stay private forever. Eventually, their investors are going to want some liquidity.

1 big thing: Fintech SPACs go splat

NFT investor and gaming company Animoca Brands raised $360 million in funding, more than doubling its valuation just three months after its last raise.

Why it's the BFD: While it is itself a gaming company, Animoca is also considered the most prolific NFT company investor, even beyond A16z, per Pitchbook. And, now, Australia-based Animoca is valued at over $5 billion.

With investments in OpenSea, Dapper Labs and Axie Infinity, Animoca says it plans to continue making acquisitions and investments. 

Liberty City Ventures led the round, with investors including Gemini Frontier Fund, Gobi Partners Greater Bay Area, Sequoia China, Soros Fund Management and Winklevoss Capital.

Yes, games tend to come and go in terms of popularity. But investors in Animoca and the broader NFT-gaming space are betting that these companies are the gateway to putting all kinds of assets on the blockchain.

As Manuel Stotz, CEO of Kingsway Capital, says in a statement, “The delivery of digital property rights might well be one of the most powerful ideas of the 21st century."

Of note: George Soros’ family office invested in the round. Often considered more of a traditional investor — a group historically split on their view of crypto as an asset — Soros’ office has been surprisingly early in the blockchain world. 

It first made preparations to trade crypto during the downturn of 2018.

The participation of the family office signals its deepening interests in the space since the start of the most recent boom. The fund invested in the $200 million March fundraising round for NYDIG, a maker of Bitcoin financial products.

2. The BFD: Animoca gets animated

Illustration of a pair of binoculars viewing falling 8-bit coins

Crypto exchange FTX is getting into the investment game with a new $2 billion venture fund, while competitor Crypto.com is expanding its VC commitment from $200 million to $500 million.

Why it matters: The same platforms consumers use to invest in crypto are themselves investing in the underlying startups that will power the next wave of web3 applications.

State of play:  In many ways, FTX and Crypto.com are simply playing catch-up in a sector that has seen a ton of corporate and VC money pour into it over the last several years.

Coinbase Ventures has been investing for over three years and has done nearly 200 deals in that time, according to Crunchbase. Binance Labs has also been around for over three years and is another quite active VC firm owned by an exchange.

Meanwhile, there have been plenty of other big crypto-focused fundraises over the last year. 

Rattling off the list: A16z's most recent $2.2 billion crypto fund; former a16z partner Katie Haun's potential $900 million fund; Paradigm's $2.5 billion fund; and Pantera Capital's potential $1 billion fund. Not to mention, a third of Europe-focused Blossom Capital's most recent $432 million fund is earmarked for crypto startups.

Smaller startups could benefit from the halo effect of having a crypto giant like FTX or Coinbase behind them. But when tech titans invest in younger companies, it also raises concerns around conflicts of interest.

Coinbase, for example, is an investor in NFT marketplace OpenSea — but is on track to launch its own product centered around the buzzy new digital asset class.

Counterpoint: Coinbase COO Emilie Choi previously told Lucinda that crypto is still a growing industry that can house multiple players. The sector's greatest cheerleaders believe it can replace the current internet. 

Plus, with $329.9 billion poured into the entire venture ecosystem in 2021 (per Pitchbook), the $9 billion-plus mentioned above is just a drop in the bucket for those who believe in the web3 vision.

The big picture: Crypto has not taken over the world yet, and timing matters in investing. So the real question is: Can the underlying crypto industry, which came back to the mainstream only in 2020, keep up with the pace of investment? 

As Ripplenet general manager Asheesh Birla wrote in a recent tweet: "It's a great time to become a Web3/crypto entrepreneur. Are we far enough to absorb the... incoming venture capital? Only time will tell..."

3. Crypto exchanges go VC

Illustration of a bitcoin surrounded by hundred dollar bills.

Coinbase users will soon be able to buy NFTs using Mastercard debit and credit cards (Mastercard)

Despite a surge in retail interest around NFTs, the process of buying one is still onerous. But with the Mastercard partnership, Coinbase is potentially opening the NFT world to a whole new raft of consumers.

SoFi (finally) gets the nod of approval to become a national bank from the FDIC and Fed (SoFi)

In a move that sent shares of the company up 15% after hours Tuesday, SoFi and the Office of the Comptroller of Currency revealed that the Federal Reserve and OCC had approved the lending company to become a national bank. It first applied for a bank charter back in 2017.

Analysts expect the change to benefit its bottom line: Becoming a bank itself vs. relying on a partner institution (the typical mode of operation) will allow SoFi to cut out the middle man, lower costs, and offer more competitive rates to its customers.

Amazon backs off its threat to ban U.K.-issued Visa credit cards (The Wall Street Journal)

Amazon is known to drive a hard bargain. But, on Monday, the company didn't follow through on a threat to block Visa transactions over high transaction fees. 

Banking titan JPMorgan will spend $12 billion on tech in 2022 — up 30% from a year earlier (The Financial Times) 

JPMorgan is taking the fintech threat seriously. The company shelled out $2.5 billion more last year for travel and compensation-related expenses and plans to amp up its tech spend by 30%, for a total of $12 billion in 2022.

4. Credit report

Illustration of a credit score meter with emoji faces showing sad, neutral, and happy emotions.

Moss, a German spend management startup, raised €75m in Series B funding at a valuation north of €500m from firms like Tiger Global and A-Star. www.getmoss.com

BillEase, a Philippines-based BNPL startup, raised $11m in Series B funding. BurdaPrincipal Investments led, and was joined by Centauri and Tamaz Georgadze. http://axios.link/1DvX

Hashdex, a crypto-focused asset manager, announced the approval of its decentralized finance ETF. The ETF will be listed on the Brazilian stock exchange under the ticker DEFI11 on Feb. 17. www.hashdex.com

Routefusion, an Austin-based payments company, raised another $10.5 million in a “seed prime” round, bringing the company’s total institutional funding raised to date to $14.1m. New investor Canvas Ventures led the most recent round. http://axios.link/JzCX

Rain Financial, a Bahrain-based crypto brokerage, raised $110m in Series B funding at a $500m valuation. Kleiner Perkins and Paradigm led and were joined by Coinbase Ventures, Global Founders Capital, MEVP, Cadenza Ventures, JIMCO and CMT Digital. http://axios.link/z1qh 

OpenSea acquired Dharma Labs, a digital wallet for cryptocurrencies, for an undisclosed amount. Axios' Kia Kokalitcheva previously reported the deal was valued between $110m to $130m. 

Spendesk, a French corporate spend management platform, raised €100m in Series C funding at a valuation north of €1b. Tiger Global led, and was joined by General Atlantic, Eight Roads Ventures, Index Ventures and eFounders. http://axios.link/mbsM 

iTrustCapital, a New York-based platform for buying and selling cryptocurrencies through IRAs, raised $125m in a Series A funding led by Left Lane Capital.

Facet Wealth, a Baltimore-based company with personalized financial advice, raised $100m in Series C funding. Durable Capital Partners led and was joined by other investors, including Warburg Pincus, Telesoft Partners and Green Cow Venture Capital. https://facetwealth.com/

Personetics, an Israel-based provider of customer engagement software for financial services companies, raised $85m in growth funding from Thoma Bravo. http://www.personetics.com/

Pinwheel, a New York-based payroll API, raised $50m in Series B funding at a $500m valuation. GGV Capital led, and was joined by First Round Capital, Coatue, Upfront Ventures, American Express, Indeed, Kraken Ventures and Franklin Templeton. http://axios.link/S4JU 

Arya, an Indian storage, sales and credit marketplace for farmers, raised $46m in Series C funding co-led by Asia Impact SA, Lightrock India and Quona Capital. http://axios.link/Cezx 

Coinhouse, a French crypto trading platform, raised €15m in Series B funding led by True Global Ventures with participation from blockchain software company ConsenSys. http://axios.link/KMvn 

April, an Israeli payments startup, raised $10m in seed funding.  Team8 led and was joined by investors including NYCA Partners, Bolt by QED, Treasury, Euclidean Capital, and iAngels. http://axios.link/KlXw

Burnt Finance, a decentralized auction protocol built on the Solana blockchain, raised $8m in Series A funding led by Animoca Brands. http://axios.link/6AaJ 

Float, a Ghanaian provider of business cashflow solutions, raised $7m co-led by Tiger Global and JAM Fund. It also secured $10m in debt from Cauris. http://axios.link/Qjqs 

WealthKernel, a London-based provider of digital investment services and infrastructure, raised a $7m Series A extension led by XTX Ventures, with participation from Digital Horizon, Big Start Ventures, and ETFS Capital. http://axios.link/Izch 

Zanifu, a Kenyan SMB financing fintech, raised $1m in Seed funding from Saviu Ventures, with participation from Launch Africa Ventures, Sayani Investments and a number of angel investors from Kenya and Nigeria. http://axios.link/JbzC

BXM Operations AG, the parent of crypto firm BitMEX Group, announced plans to acquire Bankhaus von der Heydt, a 268-year-old private bank based in Germany. The deal is subject to the approval of German financial regulator BaFin. http://axios.link/ISMb

Blender, a Netherlands-based fintech startup, announced it had agreed to purchase 77% of Lithuanian credit union Šeimos Kredito Unija for NIS 18m ($5.8m). http://axios.link/VW4v

5. Deals of the day

QED Investors has hired Gbenga Ajayi to focus on Africa investments as part of QED’s international team. http://axios.link/Auw6

Crezco, a B2B payments provider, has appointed Ivelina Delcheva as its first chief financial officer and chief operations officer. http://axios.link/HxQB

Crypto.com Capital named former TechCrunch and The Ken journalist Jon Russell a partner in the firm. http://axios.link/Jveq

Adams Street Partners promoted Brian Dudley to partner on the Adams Street Growth Equity team.

6. It's personnel

7. Memes and mumbles

Barry Silbert gets a call from a Senate Candidate inquiring how they can help the crypto industry.

Situational awareness: Welcome to your first edition of this Axios Pro newsletter. 

You've got Ryan Lawler and Lucinda Shen here as your partners-in-crime for this newsletter. Our aim: To bring you a clear and concise one-sheet on everything you need to know in fintech for the day.

We want this conversation to go two ways. Feel free to slide into our DMs (Ryan is here and Lucinda is here). Or just respond to this email with tips, thoughts, feedback, and even disagreements. It'll come straight into our inboxes. 😉 

Save the date: Register for tomorrow’s virtual kickoff event, where Ryan will interview Affirm CEO Max Levchin about the company’s  ambitions.

January 19, 2022

1 big thing: Fintech SPACs go splat