All Access

Fintech Deals

Standard

Fintech Deals Alerts

Alert

Fintech Deals Thought Bubble

Thought Bubble

mustard

BFD Expert Voices - Private Credit

BFD Expert Voices

What do you do if you've built a crypto startup, and you look around, and all you see are dumpster fires? You pivot fast, or you wait it out.

Why it matters: The crypto contagion is spreading fast and forcing many companies connected to the space to rethink or rebrand.

Driving the news: Zurp, a neobank for fans to earn points to use on creators, announced that it raised $5 million in pre-seed funding.

Of note: Originally conceived as a crypto company when it raised the capital, Zurp pivoted its focus to traditional fintech after the crash. It won't be alone.

Details: "We were originally building a crypto company in the DeFi space," co-CEO Troy Osinoff tells Lucinda. "When we saw the writing on the walls with Luna, we decided to do a hard pivot."

Zurp raised part of that $5 million in November 2021, when the company was still focused on selling a DeFi yield product. Shortly before launching, Luna-tied Terra USD came crashing down in spring 2022.

Investors in the round included New Form, Launchpad VC, OVO Fund, Darling Ventures and Animal Capital.

How it works: Officially launching later this quarter, Zurp offers users a secured credit card tied to a creator within the company's network.

Swiping the card gives fans points to redeem rewards with said creator. That might include early access to event tickets, a meet-and-greet, a personalized video, or plus-one invite to a streaming award.

The creator — who could be a YouTuber, e-sports team, TikToker — then gets a cut of the interchange fees, says Osinoff.

Of note: Former FTX Ventures head Amy Wu is also an investor, though she made this particular investment before she joined the now-bankrupt exchange.

Creator loyalty neobank Zurp raises $5M, pivots from crypto

1 big thing: Pay no attention to the crypto thing

Illustration of a cane pulling a pixelated coin off stage.

Sandbar, which builds anti-money-laundering software for fintechs, has raised $4.8 million in seed funding, the company tells Ryan exclusively, in a round led by Lachy Groom and Abstract Ventures.

Why it's the BFD: The fundraising comes as regulators are cracking down on lax risk and compliance practices at fintech companies. 

How it works: Sandbar builds an API-based transaction monitoring system to give fintechs more visibility into user activity and to flag suspicious transactions. 

Its product is designed to help detect large-scale fraud, money laundering, or illicit funding for users. It also helps risk and compliance teams manage, prioritize and solve cases that have been flagged.

"We are trying to provide more signal and less noise ... to produce fewer false positives without missing any true positives," Sandbar founder and CEO Brock Bontrager says. 

State of play: Although financial institutions are required to monitor transactions for illicit activity, many fintechs don't have the right tools to do so effectively. 

Coinbase, for instance, just agreed to a $100 million settlement with New York's Department of Financial Services (NYDFS) related to compliance program deficiencies dating to 2018.

Coinbase's compliance program failed to keep up with its growth and was overwhelmed with a backlog of 100,000-plus unreviewed transaction monitoring alerts.

Of note: Other investors in the round include BoxGroup and founders and executives from Ramp, Stripe, Plaid and Square.  

2. The BFD: AML startup Sandbar raises $4.8M

Illustration of money hanging from a clothesline. 

SEC scrutiny blocks some crypto firms from going public (WSJ)

Bullish Global, Circle, and eToro failed to secure the SEC approvals required of companies going public. The SEC didn’t set out to stop the companies from going public, but crypto firms believe the pace of the agency’s review stymied their efforts.

The unknown hedge fund that got $4o0m from SBF (NYTimes)

Modulo Capital got some $400 million from Sam Bankman-Fried's empire, making it one of the company's biggest external investments. 

PayPal investigated over potential market dominance (Bloomberg)

Germany’s competition watchdog is reportedly investigating PayPal over possible obstruction of its competitors. PayPal's terms allegedly block businesses from offering products at lower prices if their customers choose other payment services.

Amazon to ‘significantly expand’ use of Stripe (PYMNTS)

Stripe will become a strategic payments partner for Amazon in the U.S., Europe and Canada, the company said in a press release. Stripe, meanwhile, will expand its use of Amazon Web Services (AWS).

BlockFi to sell bitcoin mining machine-backed loans (Bloomberg)

The bankrupt crypto lender plans to sell about $160 million of loans backed by around 68,000 bitcoin mining machines, Bloomberg reports.

3. Credit score

Illustration of a scoreboard with lights that spell out Credit Score

• QuickNode, a blockchain development platform, raised $60m in Series B funding at an $800m valuation. 10T Fund led, joined by Tiger Global, 776 and QED, among others. https://axios.link/3QZpRr3

• Dayforward, a New York-based life insurance startup, raised $25m. AXA Ventures led and was joined by insiders Juxtapose, HCSM Ventures and Munich Ventures. https://axios.link/3H3NKJw

• PayEm, a New York-based spend and procurement platform, raised $20m in Series A funding. It also acquired a $200m credit line. Viola Credit, Mitsubishi Financial Group, Collaborative Fund, Pitango First, NFX, LocalGlobe and Glilot+ contributed. https://axios.link/3H1Lfap

• Vartana, a San Francisco-based sales platform, raised a $12m Series A round led by Mayfield, with participation from Xerox Ventures, Flex Capital and Audacious Ventures. www.vartana.com

• Twinco Capital, a supply chain finance firm, raised $12m in equity and debt led by Quona Capital. Working Capital, Mundi Ventures and Finch Capital also participated in the equity round, while Zubi Capital provided the venture debt portion. https://axios.link/3JdvPCK

• Traction Complete, a Canadian developer of Salesforce-native revenue operations apps, raised US$5m co-led by Pender Ventures and Thomvest Ventures. https://axios.link/3DaBbL0

• Keyzy, a U.K.-based rent-to-own startup for key workers, raised £3m in seed funding. Axeleo Capital and Outward VC led,  joined by Seed X, Global Founders Capital and ActivumSG Ventures. https://axios.link/3XVfB5e

• Coverdash, an insurance startup for SMBs and gig economy workers, raised $2.5m in seed capital led by Bling Capital, with participation from Axis Digital Ventures, Tokio Marine Future Fund, Expansion VC and Cameron Ventures. https://axios.link/3XVdTAQ

• Hatchfi, a crypto integration platform, raised $1.2m in pre-seed funding from Golden.com CEO Jude Gomilla, Delta Blockchain Fund, OrangeDAO and other angels. 

• Tranch, a B2B BNPL startup for SaaS sellers, raised $100m in seed equity and debt financing. Soma Capital and FoundersX led the equity portion, and Clear Haven Capital Management provided a credit facility. https://axios.link/3HprgnA

• Floor, an NFT price tracking startup, acquired NFT analytics firm WGMI.io. https://axios.link/3XylFRx

• Doodles, a Canadian collectibles NFT platform that’s raised $54m in VC funding, acquired animation studio Golden Wolf. https://axios.link/3J8Xzs5 

4. Deals!

• Equipped, a U.K.-based analytics provider for asset management firms, named AnaCap partner Edward Green as CEO. https://axios.link/3wwYQl7

• Current hired Siva Gowrishankar as its first chief risk officer. https://axios.link/3J82WrH

• Marygold, a Denver-based mobile banking startup, named Timothy M. Rooney as its new president. https://axios.link/3XQULnM

• Modern Treasury, a money movement API startup, named former Salesforce exec Craig Nile as chief revenue officer. https://axios.link/3DcQumB

• Crypto exchange Kraken hired former Blockchain.com executive C.J. Rinaldi as its chief compliance officer. https://axios.link/3H6fddy

• nCino, a cloud banking infrastructure company, named Greg Orenstein as its new CFO. He will succeed David Rudow, who will leave the company at month's end. https://axios.link/3D71S3d

• Gemini is laying off another 10% of staff. https://axios.link/3HpCRD9

5. It's personnel

Danny Heifetz predicts the Rihanna Super Bowl halftime show

6. One fun thing

Situational awareness: North Korea-linked hackers were behind a $100 million attack last year, the FBI says.

@Lucinda's Lunar New Year battle continues. She hopes Venmo does not think she's a drug kingpin. 

@Ryan spent the morning fighting with Ticketmaster in an effort to acquire NFC Championship Game tickets.

Thanks to Michael Flaherty and Rob Reinalda for today's edits.

And thanks to you for reading. Please tell your fintech friends about this newsletter. They can sign up here.

January 24, 2023

1 big thing: Pay no attention to the crypto thing