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BFD Expert Voices - Private Credit

BFD Expert Voices

Daylight, a neobank startup for the LGBTQIA+ community, is shutting down following a lawsuit brought by three former employees and a recent exposé detailing questionable management practices at the company, Ryan writes.

Driving the news: In a blog post yesterday, CEO Rob Curtis announced Daylight would cease operations June 30.

Flashback: Daylight was founded in 2020 to provide digital banking services and improve financial inclusion for Americans who identify as LGBTQIA+.

To that end, the startup raised $20 million in funding, including a $15 million Series A round led by Anthemis Group announced in November.

Between the lines: Things got murky this spring when a feature in New York magazine called into question Curtis' management of the company.

Citing conversations with 15 current and former employees, as well as Slack conversations and other records, it claimed Curtis had inflated numbers and created a “psychologically unsafe" work environment.

The article was published the same day that three former employees filed a lawsuit against the company alleging age and wage discrimination, whistleblower retaliation, and fraud.

What they're saying: "Daylight had a great run paving the way for U.S. LGBTQ+ customers — we opened thousands of trans-inclusive debit accounts, supported thousands of prospective LGBTQ+ parents’ plans for their families," Curtis wrote in the blog post announcing the shutdown.

"Ultimately, though, we couldn’t provide these services in a way that covered our costs — this is likely a job for big banks and I hope they pick up the torch and carry forward our legacy."

1 big thing: LGBTQIA+ neobank Daylight shuts down 

Illustration of a piggy bank on its back with X's for eyes

Nubank- and Credit Karma-backer QED Investors has raised $925 million for a pair of funds, the firm announced today, Lucinda writes.

Why it's the BFD: Fintech-focused funds like QED are giving a floor to an industry that has recently fallen off its funding highs.

Details: QED raised $650 million for its eighth early stage fund, as well as $275 million for its second growth-stage fund. It will continue investing in companies in the U.S., the U.K. and Europe, Latin America, India and Southeast Asia, and Africa.

The firm previously raised $550 million for its seventh early stage fund and $500 million for its first growth-stage fund in September 2021.

Of note: This most recent growth-stage fund focuses specifically on "early" growth-stage companies, according a press release.

Fintech-focused QED raises $925 million for two funds

2. The BFD: QED's $925 million dry powder

Illustration of a blank check with a magnifying glass hovering over it, revealing a one hundred dollar bill within the glass

Federal prosecutors building the criminal case against Sam Bankman-Fried have assembled a vast and unusually varied array of evidence, including more than 6 million pages of emails, Slack messages and other digital records. 

Sotheby’s auctions off 3AC’s NFT collection for $2.5M (Blockworks)

Seven NFTs belonging to failed crypto hedge fund firm Three Arrows Capital were sold at auction as part of liquidation proceedings.

Binance commingled customer funds and company revenue, former insiders say (Reuters)

The crypto giant allegedly commingled funds in 2020 and 2021, breaching U.S. financial rules requiring that customer money stays separate. One bank record showed that Binance mixed some $20 million from its corporate account with $15 million from an account that took customer funding. Binance denied the allegations.

3. Credit score

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

• Tyme, a South African digital bank majority owned by African Rainbow Capital, raised $77.8m co-led by Norrsken22 and Blue Earth Capital. https://axios.link/43hWODY

• Nue.io, a San Mateo, California-based pricing and sales software maker, raised $9m in seed extension funding. Bluefish Ventures and Penny Jar Capital led with participation from NJP Ventures and Operator Stack and existing investors Information Venture Partners and NextWorld Capital. Nue.io

• Unlimited, a New York City-based alternative investing platform, raised $8m in Series A funding. FirstMark and Citi Ventures led the round. www.unlimitedfunds.com

• Strike Graph, a Seattle-based compliance automation startup, raised $7m led by Bamcap, with participation from Madrona Venture Group and Information Venture Partners. https://axios.link/3MOmYsq

• Manigo, a London-based fintech infrastructure startup, raised $5.3m from unnamed investors. https://axios.link/3IwfaJh

• Ballerine, a Tel Aviv-based open source KYC software maker, raised $5m in seed funding led by Team8, with participation from YC, Vera Equity, and others. https://axios.link/3WvRgn7

• Onyx Private, a Miami-based digital bank focused on affluent young professionals, raised $4.1m from Village Global, YC, Global Founders Capital, One Way Ventures, 186 Ventures and Olive Tree Capital. https://axios.link/3q4aKDm

• Sort, a Web3 app development infrastructure startup, raised $3.5m in seed funding led by Lemniscap and The General Partnership, with participation from Alliance DAO, Punk DAO, Orange DAO, Blizzard Fund, Parasol, Red Rooster Ventures and others. https://axios.link/3MQ3MKS

• Plenty, a millennial couples-focused wealth management startup, raised $2.8m in pre-seed capital. Investors include Phenomenal Ventures, Kevin Durant and Rich Kleiman’s 35V, former Wealthfront CEO Adam Nash, Xtripe Angels, and Inovia Capital. https://axios.link/3ol9UBI

• Fifth Third Bancorp (NASDAQ: FITB) acquired Arlington, Virginia-based payments infrastructure startup Rize Money. Terms were not disclosed. https://axios.link/3IznQyG

• Setpoint, an Austin-based real estate funding platform, acquired Park City, Utah-backed asset-level due diligence provider Resolute Diligence Solutions for an undisclosed sum. https://axios.link/43DQyH1

• PayTabs, a Dubai-based online payment gateway for the MENA region, has acquired a 100% stake in Chennai, India-based cloud payment startup OGS PayLab. https://axios.link/3BPSNLh

• Anthemis, a London-based VC firm focused on fintech, is raising up to $200m for its third fund, per an SEC filing.

• Dispersion Capital has raised a $40m first fund to invest in decentralized infrastructure. https://axios.link/3OuaVC2

4. Deals!

• Trustly, a Stockholm-based online payments firm, appointed Anna Bjurefeldt as head of internal audit and Mia Bjurkell as director of risk and compliance. https://axios.link/3q0x68F

5. It's personnel

6. Consumer fintechs lose mindshare

Situational awareness: FTX and bitcoin took reputational hits in this year's Axios Harris Poll 100 brand reputation survey, while American Express and JPMorgan Chase jumped.

@Lucinda enjoyed a night at the New York City Ballet last week, featuring the dulcet tunes of Solange Knowles.

@Ryan is in the middle of a battle between his car insurance company and his local body shop.

Thanks to George Moriarty 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.

May 23, 2023

1 big thing: LGBTQIA+ neobank Daylight shuts down