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Palenca, a LatAm-based income and employment verification startup, received a round of strategic funding from Serasa Experian, the startup tells Ryan exclusively.

Why it matters: By providing banks with consumer income data, the company hopes to expand access to credit products in Latin America.

How it works: Palenca has built an API that enables banks and fintechs to verify income details and employment history for salaried and gig workers in Latin America.

The company partners with local payroll providers and employers, entering revenue-share agreements with them to access workers' employment data.

Palenca's customers then use that data to help in their underwriting processes for various financial products, including credit cards, mortgages, auto loans and payroll lending.

Between the lines: Unlike other income verification API startups, Palenca does not rely on consumer credentials to access their payroll accounts.

"We build direct integrations with the payroll systems, so we have real-time income information," Palenca founder José Carlos Aguilar says.

State of play: Palenca's coverage now reaches more than 100 million workers in Mexico and Brazil, and it has serviced more than 4 million consumers seeking access to financial products in those markets.

"Our vision is to expand consumer lending as a percentage of GDP," Aguilar says.

Between the lines: The funding by Serasa Experian, the leading credit bureau in Brazil and a division of Experian, brings the total funding the startup has raised to $5 million.

As part of the deal, Serasa Experian will resell Palenca's income verification product alongside its services in Brazil, enabling banks to access both credit and income data through a single API.

Flashback: In early 2022, Palenca raised $2.6 million from investors that include Gilgamesh Ventures, Foundation Capital, Y Combinator and 500 Startups.

1 big thing: Palenca gets funding from Experian

Illustration of hand cursor holding a manilla folder

Station 70, a crypto recovery and backup startup founded by BlockFi's former chief security officer, raised $5 million in seed funding, it tells Lucinda exclusively.

Why it's the BFD: The company helps crypto owners who have lost access to their wallets — an all-too-common problem.

Zoom in: Station 70, whose seed round was led by Castle Island, acts as a kind of secure password manager for institutional crypto keys.

It focuses on self-custody wallets, which surged in popularity in the aftermath of FTX.

Considered a more secure storage method, self-custody wallets are less user-friendly and generally lack a "forgot my password" option.

How it works: Station 70 requires a quorum to confirm a key backup request is legitimate.

The default requires three of five authorized users within the customer's organization. Each user also is equipped with a YubiKey — a physical cryptographic device that helps verify identity.

The user is then sent an encrypted backup. Station 70 itself has no access to the actual keys, says CEO Adam Healy.

In the case of a wallet provider outage or hack, Station 70 users can move their keys to a different wallet without downloading the key onto a device.

What they're saying: "There are backup keys sitting on a USB drive or laptop in the CFO's safe in his office, and we want to avoid that," says Healy. "We want to mature the industry."

The laptop could break, a hacker could steal the keys, and it could be a new nightmare if an employee decided to go rogue.

The big picture: Self-custody wallets are not foolproof. Over $100 million was stolen after North Korean hackers broke into decentralized, self-custody wallet Atomic last summer.

In 2013, a hard drive containing the keys to a bitcoin stash now worth over $555 million was mistakenly binned, according to its owner, IT engineer James Howell.

Over a decade later, he is still petitioning to excavate the landfill that he claims houses his golden goose.

More egregiously, crypto custodian Prime Trust filed for bankruptcy last year in due to its inability to access a wallet that houses tokens now worth over $85 million.

Prime Trust lost the physical, engraved plates needed to access the wallets.

Between the lines: Launched 2023, Station 70 currently serves only Fireblock customers, though it plans to expand to other wallets and to retail customers.

Fireblocks, Notation Capital, SCB 10X and CoinShares joined lead investor Castle Island in the round.

The company formally closed the round in November, valuing it at $20 million.

Zoom out: Station 70 isn't the only one out there with a wallet recovery solution, with recent entrants also relying on a social aspect.

Fireblocks competitor Ledger last year launched Recover for its own users, splitting the key among three companies.

Safe launched a service that allows for help from collaborators to restore crypto assets.

2. The BFD: BlockFi CSO's new startup

Illustration of a key floating in a glass dome. 

🪙 Binance names its first board of directors (Bloomberg)

Gabriel Abed, who served as ambassador of Barbados to the U.A.E., was named chairman. The board also includes CEO Richard Teng, Heina Chen, Jinkai He, Lilai Wang, Arnaud Ventura and Xin Wang.

🗑️ Judge sides with PayPal in CFPB suit (Law360)

In doing so, the judge agrees that the bureau cannot place digital wallets under certain fee disclosure rules.

💸 Immigration bond company fined $375m (Law360)

A Virginia federal judge ordered Libre by Nexus, a bonding company, to pay $375 million as part of a CFPB lawsuit against it. The CFPB alleged that it engages in predatory bonding practices targeting immigrant detainees.

3. Credit score

Illustration of a dart in the bullseye of a dartboard that says "credit score."

Go deeper into our full database with the Axios Pro Deals Tracker.

• Constantinople, an Australian banking software provider, raised an A$50 million Series A led by Prosus Ventures. Insiders Square Peg and AirTree also participated. https://axios.link/3U4eqla

• Xion, a blockchain for consumer-focused developers, raised $25m from Animoca Brands, Nomura, Multicoin, Arrington Capital, Draper Dragon, Sfermion and GoldenTree. https://axios.link/49zBvkd

• Bizplay, a Korean expense management and business travel company, raised $22.5m from JB Financial Group. https://axios.link/3J3IrLs

• Scrut Automation, a Milpitas, Calif.-based governance, risk, and compliance startup, raised $10m from insiders Lightspeed, MassMutual Ventures and Endiya Partners. https://axios.link/3U1jRRO

• Lockchain.ai, an Athens, Ga.-based blockchain risk management startup, raised $4.6m in seed funding led by Lerer Hippeau Ventures. www.lockchain.ai

• Coadjute, a London-based proptech startup, raised £3m led by Lloyds Banking Group. NatWest, Nationwide and Rightmove also participated. https://axios.link/3TZV7Jx

• Merkle Trade, a decentralized trading platform, raised $2.1m in seed funding led by Hashed and Arrington Capital, with participation by Morningstar Ventures, Amber Group, Aptos Labs, Re7 Capital and Dorahacks. https://axios.link/3vAXj0E

• EQT agreed to buy Avetta, a Lehi, Utah-based supply chain risk management platform, from Welsh Carson Anderson & Stowe for a reported $3b (including debt). https://axios.link/3TJJm8E

• Steve Singh, founder of Concur, led an acquisition of Direct Travel, a Centennial, Colo.-based corporate travel management firm. His co-investors were Durable Capital Partners, Madrona Ventures, Top Tier Capital Partners, and Blackstone Credit & Insurance. www.dt.com

• Advent International agreed to pay $6.3 billion for Canadian payment processor Nuvei (Nasdaq: NVEI).  At $34 per share, Advent will offer Nuvei shareholders a 56% premium to the stock's last close on the Nasdaq before media reports of a possible acquisition. https://axios.link/3vsEw7U

• Clearwater Analytics (NYSE: CWAN) agreed to acquire Wilshire AxiomSM, Wilshire AtlasSM, Wilshire Abacus, and Wilshire iQComposite, from Wilshire Advisors for about $40m. It will form a new business known as Clearwater Wilshire Analytics. clearwateranalytics.com

• iCapital, an alts platform provider for the wealth management industry, agreed to acquire investment data aggregation and financial reporting firm Mirador. https://axios.link/3J8Ea9n

• Tiger Global raised $2.2b for its 16th private markets fund, falling well short of its $6b target, per Bloomberg. https://axios.link/43Gn6kG

4. Deals!

• Swati Bhatia, the former head of Goldman Sachs' Marcus business, was hired at Santander's US arm to heap up retail operations and lead a digital transformation program. https://axios.link/3vxRW2r

5. It's personnel

📉 Situational awareness: Nearly one year after it launched in the U.S., the Apple Card's high-yield savings account will be receiving its first-ever interest rate decrease.

🚆 @Ryan is on a train to meet up with his Pro colleagues for a few days. (Editor's note: Same!)

🐔 @Lucinda had her fill of fried chicken for a year.

Thanks to George Moriarty and Rob Reinalda for today's edits.

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

April 02, 2024

1 big thing: Palenca gets funding from Experian