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BFD Expert Voices - Private Credit

BFD Expert Voices

European fintech unicorns Revolut, Klarna, N26 and Wise were among the top companies to spin out new founders in Europe and Israel in 2023, according to a report from Accel and Dealroom.co.

Details: According to the latest version of the report, 248 of the region's 358 VC-backed companies with a valuation of $1 billion or more have spun out more than 1,450 startups, Ryan writes.

That number has jumped from 1,200 startups spun out of unicorns in a version of the report released earlier this year.

The latest report tracks new startup founders who had previously worked at European and Israeli VC-backed unicorns.

Between the lines: According to the report, 423 startups were founded by former employees of 70 fintech unicorns in the last 14 years, more than a third (35%) of all new companies tracked.

Collectively, Revolut, Klarna, N26 and Wise have produced more than 120 new tech companies among them.

Fintechs Monzo (17), Payoneer (16), Sumup (13), Wefox (13) and Billpanda (11) also ranked high on the list.

1 big thing: Euro fintechs are "founder factories"

SumUp, a London-based point-of-sale and payments startup for SMEs, has raised €285 million in new funding led by Sixth Street Growth, Ryan writes.

Why it's the BFD: The infusion arrives even as late-stage growth capital is difficult to come by — and often comes at a discount.

Details: The new financing, which consists of an undisclosed mix of debt and equity, included participation from Bain Capital Tech Opportunities, Fin Capital and Liquidity Group.

To date, SumUp has raised around $1.5 billion (€1.4 billion, per today's exchange rate), according to Pitchbook.

Between the lines: The company did not disclose its valuation but told CNBC it is higher than its €8 billion valuation when it raised €590 million in mid-2022.

Yes, but: That figure was well below the €20 billion valuation it was reportedly seeking to raise at earlier in 2022.

And earlier this year, SumUp shareholder Groupon disclosed in an SEC filing that it was selling shares in the company at a price that would value it at €3.9 billion.

State of play: The company raised an up round while other late-stage startups have raised at discounts.

In August, Ramp raised new funding at a 30% discount to its previous valuation.

Earlier in the year, Stripe's valuation was nearly halved in its fundraise.

Zoom out: Public comps haven't fared much better. Block — the company SumUp competes most directly with — has seen its shares fall by more than 50% since early 2022.

2. The BFD: SumUp's big sum

Illustration of a hundred dollar bill being slid through a credit card machine.

❌ Amazon drops Venmo as a payment option (CNBC)

Effective Jan. 10, Amazon will no longer let users pay using Venmo, according to a notice sent to customers. The move is an abrupt reversal, as Amazon added Venmo as a payment method at checkout just last October.

🏦 OCC warns banks of risks associated with BNPL loans (The Information)

"BNPL lending can result in credit, compliance, operational, strategic and reputation risks to banks," the OCC said, noting that borrowers can get confused about the terms of their loans and poor underwriting from lenders.

☑️ Check fraud is rising, and the thieves are winning (NYT)

What was once a routine way to pay your bills has become a high-risk endeavor: It provides the raw materials for low-level fraud artists and sophisticated crime rings, costing financial institutions billions.

🧊 Tether freezes all OFAC-sanctioned wallets (The Block)

The move was framed as a voluntary step to "proactively prevent any potential misuse of Tether tokens and enhance security measures," and it clarified that existing wallets on the OFAC list would be frozen along with any added in the future.

3. Credit score

Want more fintech deals? Check out the Axios Pro Deals Tracker beta.

• GFO-X, a London-based crypto derivatives exchange, raised $30m in new funding led by M&G Investments. https://axios.link/4agRWmY

• Lendo, a Saudi debt crowdfunding marketplace, raised $28m in Series B funding led by Sanabil Investments. Shorooq Partners, AB Ventures, and others also participated. https://axios.link/3tczISQ

• Cents, an Italian fintech developing software for businesses to integrate ESG frameworks, raised a ~€1.2m pre-seed round led by SICI. 40Jemz Ventures, Apside, Fin+Tech, CDP Venture Capital and XEquity joined. https://axios.link/3tcjWaB

• Permira agreed to acquire GGW Group, a German insurance brokerage for SMEs, from Hg. www.ggw.de

• Tax Systems, a British portfolio company of Bowmark Capital, acquired TaxModel, a Dutch provider of tax compliance software. www.taxsystems.com

• Marex Group, a British commodities broker, plans to go public in New York over London, per the Times. It could be valued at more than $1.8b. https://axios.link/3NlGTPy

• DTCC closed its acquisition of blockchain-based fintech startup Securrency. www.dtcc.com

• AnaCap raised €300m for a continuation fund that will cover German insurance broker consolidation platform MRHT and tax services SaaS provider GTT. www.anacap.com

• Meanwhile Group is seeking to raise $100m for a bitcoin private credit fund. https://axios.link/3teHL1t 

4. Deals!

• Sol Zlotchenko and Daniel Zayfman, both former execs at treasury management firm Hazeltree, have joined VersiFi as chief product and technology officer and chief information and security officer, respectively. https://axios.link/3Rym9qf

• Troy Bradley, a former executive at NCR, joined fintech solutions provider CSI as CTO. https://axios.link/3RhDanb

• Adam Goodall, one of Coconut's founders, has joined Funding Circle as vice president of product. https://axios.link/3TjrrXU

• State Street will lay off about 1,500 employees. https://axios.link/481k4IO

5. It's personnel

☕ Good morning. We hope you had a good weekend.

🚨 Situational awareness: Join Axios' Dan Primack and Kia Kokalitcheva tomorrow for a virtual event with Goldman co-head of Americas M&A Brian Haufrect and General Atlantic global head of life sciences Brett Zbar.

⁉️ @Ryan is not used to watching the Eagles lose.

🏠 @George is two days away from having all the kids under one roof for a month. 

Thanks to 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.

December 11, 2023

1 big thing: Euro fintechs are "founder factories"