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BFD Expert Voices - Private Credit

BFD Expert Voices

Republic Capital, the venture capital arm of private investing platform Republic, is in talks to raise a pair of crypto-heavy funds totaling $700 million, a source with knowledge of the matter tells Lucinda.

Why it matters: Republic Capital's fundraising plans come at a time when crypto asset prices are falling.  The results of its efforts will be an indicator of limited partners' appetite for the volatile sector. 

Details: Republic Capital is raising $200 million for a flagship venture capital fund, of which 20% will be set aside for token investments. The other 80% will be set aside for traditional equity in companies in web3, fintech and deeptech (a category that includes quantum computing and space).

Republic Capital is also in the process of raising a $500 million crypto fund of funds that will focus solely on investing in later-stage blockchain protocols. 

Between the lines: With an immense number of crypto developers and projects out there, the structure of the $500 million fund helps Republic Capital build out its deal pipeline.

Many blockchain protocols today come with an accompanying ecosystem growth fund.

For example, Republic Capital in January announced a token investment in Avalanche. Part of that pool went into Avalanche's own ecosystem fund.

That deal, therefore, also gave Republic Capital visibility into up-and-coming projects, with Republic Capital able to also co-invest.

Background: Republic Capital — with over $1 billion under management — previously raised $60 million for a fund focused on crypto seed deals, first announced back in October.

But it has been investing even before that, with bets in companies such as Carta, Dapper Labs, Klarna, Kraken, Pipe and Plaid. It has also made token investments in Avalanche, as well as in Polygon, Terra and Chingari.

Republic declined to comment for this article.

1 big thing: $700 million for Republic's funds

Illustration of Ben Franklin peering out from behind a pile of crypto coins.

Ness, the maker of a fintech app that rewards users for healthy behavior, raised $15.5 million in seed funding, the company tells Axios exclusively.

Why it matters: Behavior is notoriously difficult to change in the long-run. Ness is among a growing number of fintech and healthtech companies trying gamify the process and make consumers adopt healthier habits.

Details: Will Ventures led the round and was joined by Core Innovation Capital, Accomplice, Digitalis, GFC, Portage, Refactor Capital, Atypical and RiverPark Venture.

Other companies in the space include Paceline, which raised $29.5 million last year for its app that rewards users for physical activity, and YuLife, which raised $70 million last summer.

How it works: Consumers connect their credit card to the Ness rewards app and are given points for money spent at "healthy" places like Sweetgreen, the doctor's or Barry's Bootcamp.

Those points can in turn be used on gift cards or at one of Ness' 4,000-person network of health coaches, dietitians, therapists and doulas (which Ness got via its acquisition of Wellcare).

Later this year, Ness plans to launch a credit card that would allow the company to generate revenue from interchange and additional credit card fees.

Of note: The end game for CEO and co-founder Derek Flanzraich is to create an alternative to insurance. 

"In this country, the vast majority of people actually get health insurance from their employer," Flanzraich says. "The problem with that is that you're with your employer for a short period of time, so there's essentially no incentive for a health plan to care about your long-term health."

By incentivizing consumers to get healthier early on, Ness believes it can lower the chances of chronic illness as well as the cost of health care.

2. The BFD: Ness nabs a mega seed round

Illustration of an app square with an icon of a healthy person, and a red notification circle with a star.

Yesterday we wrote about TerraUSD (UST), a so-called algorithmic stablecoin that became untethered from its $1 peg over the weekend. 

Well, that token has only become less stable since, sinking as low as $0.69 in overnight trading.

Why it matters: The price volatility surrounding UST calls into question the overall reliability of algorithmic stablecoins at a time when regulators are trying to make sense of the market.

Driving the news: The Luna Foundation Guard (LFG), the governance organization overseeing all things Terra, said it would lend $750 million in bitcoin and $750 million in UST to over-the-counter market makers to help stabilize the token's price over the weekend.

But that announcement had limited effect, as a series of large sales of the cryptocurrency from Anchor Protocol, as well as crypto exchanges Binance and Curve, continued to drive the price down overnight.

Around the same time, the price of Terra's LUNA fell by around 60% as traders burning UST in exchange for the token exited their positions.

UST has since recovered some ground but is still well off its $1 target.

Of note: Things got so bad that Binance, the world's leading global crypto exchange by volume, announced it was temporarily suspending withdrawals of both LUNA and UST tokens.

3. More stablecoin instability

Better hires ex-Goldman partner Talwar with eyes on listing (Bloomberg)

Embattled online mortgage lender Better appointed Harit Talwar as non-executive chairman in an effort to help it pursue a public listing.

Cloud computing powers the world’s financial exchanges (FT)

Cloud computing provides a range of security and privacy benefits for financial institutions that hold vast amounts of sensitive data — and have become prime targets for cybercriminals.

Citigroup says Russia unit to be sold had $32M revenue in Q1 (Reuters)

Citi said its Russian consumer business had been hurt by sanctions, the bank's decision not to open new accounts, and a reduction in investment sales.

4. Credit score

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

• Paddle, a British provider of payments infrastructure for SaaS companies, raised $200m in Series D equity and debt funding at a $1.4b valuation. KKR led, and was joined by FTV Capital, 83North, Notion Capital, Kindred Capital and lender SVB. http://axios.link/loeS

• KuCoin, a Seychelles-based crypto exchange, raised $150m at a $10b valuation. Jump Crypto led, and was joined by Circle Ventures, IDG Capital and Matrix Partners. http://axios.link/NjlA

• Opn (fka Synqa), a Japanese payment processor, raised $120m at a valuation north of $1b from Japan Investment Corp., Mitsubishi UFJ Financial Group and Mars Growth Capital. http://axios.link/NO82

• Talos, a crypto trading infrastructure startup, raised $105m in a Series B round led by General Atlantic, with Citigroup, Wells Fargo Strategic Capital, BNY Mellon, DRW, SCB 10x, Stripes, Voyager, Andreessen Horowitz (a16z), PayPal Ventures, Castle Island Ventures and Fidelity Investments also participating. http://axios.link/t9br

• Arianee, a Paris-based provider of digital ownership and authenticity certificates for brands, raised €20m led by Tiger Global led, and was joined by Bpifrance, ISAI, Noia Capital, Cygni Labs, Commerce Ventures and Motier Ventures. http://axios.link/6xRQ

• Meld, a fintech devops atartup, raised an $8m seed round led by Coatue, with more than 20 angel investors participating. http://axios.link/3DVG

• Casa, a bitcoin storage startup, raised a $21m in a round of funding led by Acrew Capital, with participation from Positive Sum Ventures, Avon Ventures, Stillmark, Tioga Capital, Castle Island Ventures, Lerer Hippeau Ventures, Naval Ravikant and Scott Belsky. keys.casa

• U.K.-based open banking startup Yapily announced plans to acquire Munich's finAPI to expand its offering in Germany, Austria, Czech Republic, Hungary and Slovakia. http://axios.link/mRYQ

• The Flow blockchain platform announced a $725m ecosystem fund for developers backed by Andreessen Horowitz (a16z), Coatue, Greenfield One, Liberty City Ventures, Digital Currency Group and Dapper Ventures. http://axios.link/bs3d

5. Deals of the day

Happy Tuesday, fintech friends. Let's get to it. 

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May 10, 2022

1 big thing: $700 million for Republic's funds