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Stablecoin heavyweight Circle projected earlier this month its revenue would grow over 6x in 2022, to $562 million.

In one of his first interviews since the deal, CEO Jeremy Allaire told Lucinda why the company believes it will grow so dramatically, despite a pull back in bitcoin prices and SPAC valuations.

Allaire also talked through Circle's missed 2021 expectations.

Catchup quick: Circle's USDC stablecoin is backed by a mix of cash and U.S. Treasurys — meaning rising interest rates will likely bolster its interest income. 

The company is also seeing a greater diversification of its revenue streams within the broader crypto ecosystem. If bitcoin falls, Circle can still gain from other areas.

"We're starting to move into categories that have long been the promise of this technology, but are now actually starting to take hold," says Allaire, pointing to the booms in NFTS, DAOs, and decentralized finance lending all benefiting the business.

 “We've seen very, very significant growth in borrowing and lending markets for USDC.”

It’s also worth noting that stablecoins are often billed as as a safe haven in time of turmoil, and do decouple from the value of bitcoin.

Of note: Previously, Circle estimated $115 million in 2021 revenues, but instead posted $85 million. Allaire attributed the shortfall largely to two factors:

The later-than-expected launch of its high-yield lending product, Circle Yield.

Taking on an even more "conservative approach" with its USDC reserves, which are now entirely backed by short-duration Treasurys and cash after taking into account "market feedback and regulatory signaling" over the summer. 

What to watch: Circle doubled its valuation, from $4.5 billion to $9 billion, at the same time as it gave new guidance. But the new figure not yet been tested in public markets, or been floated to potential PIPE investors. 

The company does have the option of raising about $750 million after its PIPE from last summer was cancelled with the new valuation. 

But Allaire is staying mum on any actual fundraising. (And, I promise, I asked thrice!)

We will go deeper with Allaire on March 2 at 2:00 p.m. ET when Ryan interviews him as part of our Axios Pro Insights event.

1 big thing: Squaring Circle’s numbers

Photo illustration of Jeremy Allaire, co-Founder, chairman and CEO of Circle, and Circle's logo.

Circle CEO Jeremy Allaire. Photo illustration: Gabriella Turrisi/Axios. Photo: Eóin Noonan/Sportsfile via Getty Images

Australia-based "buy now, pay later" company Zip (ASX: Z1P) agreed to acquire its smaller brethren Sezzle (ASX: SZL) in an all-stock deal valuing the latter at A$491 million ($352 million).

Why it matters: Zip's acquisition of the Minneapolis-based company ramps up the BNPL battle for U.S.-based acquisition targets and will give the combined company much-needed scale in a market now slowing from its pandemic high.

Details: The valuation is roughly 22% above Sezzle's closing price on Friday. Zip also plans to raise about A$200 million ($143.7 million) via equity sales.

The deal will allow Zip to achieve positive cash earnings by 2024, the company says.

Context: Public investors have grown wary of high-growth companies quickly burning through their cash. This gives some private companies in the space an edge in fundraising.

Sezzle was valued at around A$2.3 billion ($1.7 billion) at its peak in February 2021. Affirm shares fell dramatically this month after it posted disappointing revenues.

What they're saying: The Zip-Sezzle deal "certainly makes sense given the importance of scale and access to capital," Chris Brendler, an analyst with D.A. Davidson, wrote in an email to Lucinda. 

Brendler also said he was "encouraged" by Zip's agreement to list its securities via American Depository Receipts as part of the deal.

Zooming out: Post-merger, the combined duo will still be relatively small when compared to their peers, with revenue of about $486.5 million in 2021, according to estimates from S&P Capital IQ. 

Affirm, by contrast, had about $1.1 billion in revenue last year, while Klarna posted about $1.4 billion for what it dubs net operating income.

2. The BFD: Zip buys Sezzle

Illustration of an iPhone displaying the time "$$:$$" and an alarm snooze button.

Half of SPACs with under $10 million in revenue fail to meet projections (WSJ)

Nearly half of all companies that chose to go public via a merger with a blank check company and less than $10 million in annual revenue will fail to meet 2021 earnings targets.

U.S. and allies announce SWIFT sanctions against Russian banks (Reuters) 

The U.S., along with several other Western nations, decided to block certain Russian banks from the SWIFT payments system over the weekend in a rapid escalation of sanctions against Russia.

Klarna partners with Brookfield properties as in-person shopping returns (WWD)

Klarna is partnering with property giant Brookfield to place its payment solution in more than 150 U.S. shopping centers. 

BNPL is better known for its ties to e-commerce but, as in-person shipping comes back, expect to see the payment method in more physical stores.

The story of Jesse Binga, a titan of banking in the early 20th century (Axios)

The Binga State Bank, which he founded in 1908 in Chicago, was one of two preeminent Black-owned financial institutions in the U.S. until its collapse during the Great Depression.

3. Credit score

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

• Hack VC launched a $200m crypto seed fund, led by organizers of the hack.summit(). http://axios.link/BGRt 

• FPL Technologies, the Indian startup behind OneCard, is raising more than $100m at a valuation of around $1.5b in a round led by Temasek, TechCrunch reports. http://axios.link/vSY1

• Perfios, a Bengaluru-based fintech startup, raised over $70m in Series C funding from existing investors Warburg Pincus LLC and Bessemer Venture Partners. http://axios.link/rK7a

• Leasy, a Latin America-focused auto financing company for ride-hailing drivers, raised $2m in equity seed funding and $15 million in debt. Magma Partners led the seed round. http://axios.link/EZl2

• Nosso, a U.K.-based family finance startup, raised $2.8m in seed funding co-led by Octopus Ventures and Anthemis, with participation from Entrepreneur First, Ventures Together, Errol Damelin, Tracy Doree, and Peter Hetherington. http://axios.link/56Zk

5. Deals of the day

• Katherine Wu is leaving Coinbase Ventures for Archetype, an early stage crypto firm. http://axios.link/NnGw

• Melio appointed former Meta and PayPal executive Tomer Barel as its Chief Operating Officer. http://axios.link/kZrO

6. It's personnel

7. Memes and mumbles

A good friend told me he had six Ukrainians in his dev team. I asked if they were safe: -it’s complicated. Most don’t want to get out, they want to stay and fight. 

Situational Awareness: Our newsroom continues to follow the Ukraine-Russia crisis. Check out our around-the-clock coverage here. 

One last thing: We have our first Pro Insights events this week, and Axios’ retail maven, Richard Collings, will be interviewing Forerunner Ventures’ founder Kirsten Green on March 3. Sign up for Retail Deals by EOD Monday to gain access to this great event!

February 28, 2022

1 big thing: Squaring Circle’s numbers