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BFD Expert Voices - Private Credit

BFD Expert Voices

Small-business-banking startup Bluevine is aiming to file for an IPO in the next 18 to 24 months, CEO Eyal Lifshitz tells Lucinda exclusively.

Why it matters: The IPO market has started to reopen, and some fintechs — among the hardest-hit segments on the stock market — are working up the courage to peek back in.

Context: Stock-trading startup DriveWealth is weighing an IPO listing in the same time frame.

Be smart: These companies aren't rushing their IPOs, but it's clear that some feel pressure to give hope to employees for liquidity and to investors for returns.

Catch up quick: Founded a decade ago, BlueVine boomed during the pandemic as small businesses flocked to fintechs to access the government's paycheck protection program loans.

It continued to gather users through 2022 and now expects to hit $200 million in revenue for 2023 — which would represent 80% growth compared with the same period a year earlier.

Bluevine has since expanded its revenue streams but is not yet profitable. Now about 70% of its revenue stems from lending and credit, while the rest stems from a mix of interchange, payment fees, and interest from deposits.

"When you look at our scale and the pace of growth, and as we approach going public, I think we would be in a position where we could become profitable,' Lifshitz says of his IPO timeline.

Of note: SMBs have been a historically difficult segment to scale off, with corporate card startup Brex recently exiting in favor of enterprise clients.

Liftshitz sees these retreats as an opportunity for Bluevine to expand and become a one-stop banking shop. It recently launched accounts payable and plans to expand with treasury management options this year.

Yes, but: Bluevine's rapid disbursement of PPP loans have not come without controversy. A December congressional report accused fintech players —including Kabbage and Bluevine — of inadequate fraud controls and reporting standards during the process.

The congressional committee said Bluevine adapted to fraud threats better than its peers had but that it still fell behind on reporting fraud to law enforcement.

Background: Bluevine last raised $102.5 million in Series F funding in 2019 led by ION Crossover Partners. Other investors included Lightspeed Venture Partners, Menlo Ventures, 83North, SVB Capital, Nationwide, Citi Ventures and M12.

The company did not disclose its valuation, though Lifshitz confirms the company was not a unicorn.

1 big thing: Bluevine angles for an IPO

Illustration of a hundred dollar bill as an open sign

Crypto custody startup BitGo has raised $100 million in Series C funding at a $1.75 billion valuation, Ryan writes.

Why it's the BFD: The deal bucks crypto industry trends and provides BitGo a war chest to pursue acquisitions at a time when valuations are low and competitors are struggling.

State of play: BitGo's clients include the creditors of bankrupt digital asset exchange FTX, as well as going concerns like Swan Bitcoin, Mysten Labs and Nike.

The startup says it has more than 1,500 customers in over 50 countries and processes 20% of all bitcoin transactions by value.

Since the beginning of the year, BitGo says it has seen a 60% increase in new clients, 20% growth in assets under custody, and 40x growth in assets staked.

What's next: BitGo says it will use the funding to pursue strategic acquisitions and expand its custody and Wallet as a Service offerings globally. 

Yes, but: It wasn't that long ago that BitGo itself was set to be acquired. In May 2021, the company agreed to be bought by Galaxy Digital Holdings for $1.2 billion.

That deal was scrapped a year later, and BitGo sued Galaxy Digital for calling off the deal. (That suit was ultimately dismissed in June.)

More recently, BitGo agreed to acquire the assets of Prime Trust in June but backed away from that deal just a few weeks later.

Of note: BitGo did not disclose investors who participated in this round, but previous backers include Goldman Sachs, Craft Ventures, DRW, Galaxy Digital Ventures, Redpoint Ventures and Valor Equity Partners. 

2. The BFD: BitGo's $100M war chest

Illustration of a crypto block with an image of a one hundred dollar bill on one side.

✅ Coinbase wins approval to list crypto futures (CoinDesk)

The National Futures Association approved the company to operate as a futures commission merchant.

The go-ahead makes Coinbase the first crypto-focused platform in the U.S. to offer regulated and leveraged crypto futures alongside traditional spot trading.

⏸️ Hippo Insurance hits pause on home insurance (The Insurer)

Valued at $232 million in trading on the NYSE, Hippo has pressed pause on writing new home insurance business. Hippo says the pause is temporary and does not affect its Insurance as a Service or Services segments.

🛑 CFPB to crack down on data brokers (CNBC)

At a White House roundtable, CFPB director Rohit Chopra touted a slate of proposed new rules under the Fair Credit Reporting Act to address the business practices of brokers that collect and monetize customer data.

📁 Prime Trust files for bankruptcy (Decrypt)

Regulators are saying Las Vegas-based Prime Trust had improperly used customer funds to pay for withdrawals. BitGo had planned to acquire the business but backed out.

3. Credit score

Illustration of an exam answer sheet with the words "credit score" hand written in red ink.

• Neo Group, an Indian asset management and financial advisory firm, is raising $50m from Peak XV Partners, per TechCrunch. https://axios.link/45x9F6g

• ZetaChain, a Layer 1 blockchain operator, raised $27m from Blockchain.com, Human Capital, VY Capital, Sky9 Capital, Jane Street Capital, VistaLabs, CMT Digital, Foundation Capital, Lingfeng Capital, GSR, Kudasai and Krust. https://axios.link/458b2c3

• DynamoFL, a San Francisco-based privacy- and compliance-focused generative AI business, raised $15.1m in Series A funding. Canapi Ventures and Nexus Venture Partners led and were joined by Formus Capital and Soma Capital. https://axios.link/3DYOwWU

• Caden, a New York-based app, raised $15m in Series A funding. Nava Ventures led the round and was joined by Jerry Yang's AME Cloud Ventures, Streamlined Ventures, Montage Ventures, Industry Ventures, 1707 Capital and AAF Management. www.caden.io

• Dinari, a San Francisco-based startup tokenizing real-world assets, raised $7.5m in seed funding from SPEILLLP, 500 Global, Third Kind Venture Capital, Sancus Ventures, Version One VC and Balaji Srinivasan. https://axios.link/3KGRqDw

• Splitit, a BNPL player, is planning to delist from the ASX after securing up to $50m from Motive Partners. https://axios.link/45aT7kU

• Stellar Development Foundation has taken a stake in MoneyGram International, the forex business taken private by Madison Dearborn Partners. Denelle Dixion is taking a seat on MoneyGram's board. https://axios.link/3YxDrpr

• Monument Re, a Bermuda-based buyer of European life insurance portfolios, hired Citi and Fenchurch Advisory to explore strategic options, including a possible sale, per Reuters. https://axios.link/44eEDz7

• Inbenta, backed by Tritium Partners, acquired Horizn, a Canada-based embedded interactive product demo company focused on the financial services industry. https://axios.link/44cSJAQ

• UK FinTech Growth Partners, a London-based investment firm, launched its FinTech Growth Fund with up to £1b. It is backed by Barclays, London Stock Exchange Group, Mastercard, NatWest and Peel Hunt. https://axios.link/3YEdynQ

4. Deals!

• Taryn Naidu, former COO of quantum computing company Rigetti, joined Arrington Capital as a partner and COO. www.arringtoncapital.com

• Silvergate CEO Alan Lane and chief legal officer John Bonino have left the company. CFO Antonio Martino will depart Sept. 30. https://axios.link/3QH9hxN

• Okan Ozaltin joined cloud banking infrastructure provider 10x Banking as chief product officer. https://axios.link/3OVOw06

• Geoffroy Gailly has joined Luxembourg-based open banking startup Luxhub as its new COO and "authorised manager." https://axios.link/45dLjiq

5. It's personnel

🐪 It's hump day. Today we have Lucinda's exclusive chat with Bluevine's CEO and Ryan's take on BitGo's big deal. 

@Lucinda had some delicious curry last night. 🍛

@Ryan has been reunited with his puppy. 🐶

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.

August 16, 2023

1 big thing: Bluevine angles for an IPO