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BFD Expert Voices - Private Credit

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Today in crypto hacks: Wormhole, which offers a popular bridge between different blockchains, said hackers exploited a vulnerability in its code and made off with around $320 million in crypto. 

Why it matters: This is just the latest in a series of hacks and exploits that have led to crypto thieves making off with large bounties of digital assets. It's hard to think of a time a bank dealt with so severe a heist.

According to blockchain analytics firm Elliptic, this was the fourth-largest crypto heist of all time.

Despite these hacks, investors are not deterred. Funding for blockchain startups reached $25.2 billion last year, up 713% from $3.1 billion in 2020. 

And with mega funds from a16z, Katie Haun, Paradigm, and Pantera in market, that funding will continue to flow.

The Wormhole network was taken down Wednesday afternoon soon after the exploit was discovered. 

Hours later, the team said the vulnerability had been patched and ETH would be added to ensure users' funds were safe.

Wormhole developers have since offered the hackers a $10 million bug bounty for exploit details and a return of the funds.

The details: Attackers exploited Wormhole's bridge between the Ethereum and Solana blockchains and made off with 120,000 wETH (wrapped ethereum) tokens.

An analysis of the transactions by Paradigm research partner samczsun showed the hack resulted from Wormhole’s failure to validate guardian accounts, which enabled the attackers to fraudulently "mint" wETH out of thin air.

About 96,000 of the wETH tokens have been sent to the ethereum blockchain, according to blockchain forensics provider TRM Labs. 

The big picture: As long as crypto assets seem vulnerable to these types of attacks, they will look risky to mainstream users, which could tamp down adoption in the short term. 

1 big thing: Another giant crypto heist

Illustration of a computer floating above a space/time grid

Just as super apps have emerged in consumer finance, they are also gaining traction in the corporate world, and attracting gobs of money in the process.

Ramp, a corporate credit card company, has raised over $200 million at an $8 billion valuation — an eye-popping 80 times its annualized revenue, The Information reports.

Why it matters: This is a sector where money currently matters perhaps more than innovation. It’s a brutal funding battle.

Usually, you'd see startups fundraise on an annual basis, but this round comes just four months after Ramp was valued at $3.9 billion, and two months after competitor Brex raised $300 million at a $12.3 billion valuation.

Divvy raised $165 million in January 2021 before being acquired by Bill.com. Airbase raised $60 million in June, Mesh Payments raised $50 million in December, and an even younger player, Torpago, raised $2 million in seed funding in October.

TripActions, which launched as a corporate travel booking company, segued into spend management and raised at a $7.3 billion valuation in October.

The bottom line: This is a red-hot space with companies being built from the ground up and others moving sideways into the arena. Downturn or not, we should expect even more fundraising. Whether all these players survive is an entirely different question.

2. The BFD: Corporate spending spigot💰

Illustration of a hundred dollar bill being slid through a credit card machine.

Just a decade ago, fintech companies raised about $2.3 billion from venture funds, according to F-Prime Capital's report accompanying its Tuesday Fintech Index.

In 2021, that figure ballooned to $119 billion.

Why it matters: It's a sign of just how bullish investors have become over the fintech space as a whole. 

According to F-Prime Capital, as of the end of 2021, the 54 companies on its public stock index have collectively reached a $1 trillion market cap. The companies on the list include PayPal, Affirm, Shopify, Coinbase, and Sofi.

In 2021 alone, 77 fintech companies went public — for a value of $393 billion.

The big question: As fintech valuations waver, will the IPO market slow down this year? Fintech IPOs as of mid-January were down an average of 35.4% since their first-day closing price, according to Renaissance Capital.

3. 2021's fintech boom

Illustration of a hand cursor holding hundred dollar bills.

After an 18-month-long "will they, won't they," U.K. challenger bank Monzo is getting ready to launch in the U.S., the company said.

PayPal warns that consumer spending is falling (CNN)

PayPal lowered its revenue forecast in its earnings report, warning of weaker consumer spending amid inflationary pressures.

Crypto bros saved luxury from "common prosperity" (WaPo)

First the crypto bros spurred a luxury house boom. Now they are here to save luxury fashion.

Related: Crypto ads set to invade Super Bowl 56 (Decrypt)

FTX and Crypto.com have already paid millions for ad space during the Super Bowl, but they might not be alone. 

Stocktwits launches crypto trading with FTX (WSJ)

After raising $30 million in funding from Sam Bankman-Fried's Alameda Research, Stocktwits added crypto trading to its platform, with Bankman-Fried's FTX as its infrastructure provider.

4. Credit score

Illustration of a Scrabble board with letter tiles spelling "credit."

• Zepz, a London-based money transfer firm, is considering an initial public offering at a valuation of about $6b, according to a Bloomberg report. Goldman Sachs, JPMorgan Chase, and Barclays are advising on the listing. http://axios.link/WZvZ 

• PalmPay, a U.K.-based, Africa-focused payments company, raised $100 million in Series A funding. Investors included Chuangshi Capital, Yunshi Equity Investment Management, Trust Capital, Chengyu Capital, and AfricaInvest. http://axios.link/D5Qh

• Pixel Vault, a superheroes and comic book NFT collection, raised $100m from 01 Advisors and Velvet Sea Ventures. http://axios.link/wa9f

• Bold, a Colombian digital payments startup, raised $55m in Series B funding. Tiger Global led, and was joined by General Atlantic, Endeavor Catalyst and insiders Piton Capital, GFC, InQLab, Kingsway Capital, Solid Ventures, Grupo Auteco, Amador and Condor Inverlink. www.bold.co

• Mos, a challenger bank focused on student loans, raised $40m in Series B funding at a $400m valuation. Tiger Global led, and was joined by Sequoia Capital, Lux Capital, Emerson Collective and Plural VC. http://axios.link/TBVd 

• ClearEstate, a Montreal-based estate settlement and planning platform, raised $13m in Series A funding. OMERS Ventures led, and was joined by Diagram Ventures, Torstar, Triangle Capital and NAVentures. www.clearestate.com 

• Billhop, a Swedish straight-through processing payments startup, raised €10.5m led by EQT Ventures. www.billhop.com 

• RareCircles, a New York City-based NFT memberships platform, raised $7.5m in seed funding. Tiger Global led the round and investors who joined included White Star Capital, Hashed, Alpaca, Crew Capital, Global Founders Capital, Alumni Ventures, and Detroit Venture Partners. www.rarecircles.com 

• Pluto, a corporate spend management startup focused on the Middle East, has announced a $6m seed round of funding led by GFC, with participation from Adapt VC, Soma Capital, Graph Ventures, and OldSlip group. www.plutocard.io

• ICHI, which provides a white-label stablecoin solution for DeFi projects, raised $3.5m in a token sale. Fundamental Labs, TRGC Limited, Lattice Capital, Lightshift Capital, and several others participated. http://axios.link/fdU8 

• Method Financial, a debt repayment rails startup, raised $2.5m from YC, Ardent Ventures, LiveOak Venture Partners and Runa Capital. www.methodfi.com 

• SoFi completed its acquisition of Golden Pacific Bancorp, a Sacramento, Ca.-based community bank that is regulated by the OCC and has approximately $150 million in assets. http://axios.link/JD6Y

5. Deals of the day

On Twitter, Casey Newton opines on the nature of crypto hacks

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6. Memes and mumbles

Situational awareness: Nearly $500 million were transferred through peer-to-peer payments service Zelle in 2021, which was up 49% from the previous year. 

February 03, 2022

1 big thing: Another giant crypto heist