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BFD Expert Voices - Private Credit

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Please take a moment to remember all the lives lost on this day 23 years ago.

Data: FT Partners; Note: 2024 data is YTD; Chart: Axios Visuals

The dollar value of 2024 fintech tie-ups has already topped last year's total amid a surge in mega-deals, data from FT Partners shows.

Why it matters: It marks a reversal following consecutive years of declines.

By the numbers: Some $149.8 billion worth of fintech M&A deals have been announced through August 2024, compared with $102.7 billion for all of 2023, per FT Partners.

TowerBrook Capital Partners and CD&R notably brokered an $8.9 billion deal in August, agreeing to take R1 RCM (Nasdaq RCM) private.

And 2024 volumes remain on track to surpass 2023 levels, even if Capital One's $35.3 billion deal to buy Discover falls apart. 

Between the lines: Though fintech M&A transaction volume has already dwarfed 2023 levels, the number of deals has not yet caught up — though it may be on track to top that figure by year-end.

That means the average deal size has grown to $169.4 million for the first eight months of 2024 from $91.4 million in 2023.

Zoom out: Beyond fintech, M&A activity has been bolstered in part by broader macro trends and is expected to surpass 2023 levels — though probably to a more modest extent.

That comes as private equity buyers have returned to the market, and companies have grown more confident about interest rate levels.

Big deals driving 2024 fintech M&A 

Brico, a SaaS platform for managing fintech and financial institution licenses, raised $8 million in seed funding, it tells Axios exclusively. 

Why it's the BFD: Applying for and maintaining the licenses necessary to operate a financial services business in the U.S. is manual and expensive.

How it works: Brico's automated license management tool facilitates the entire lifecycle, including applying, maintaining license status and meeting ongoing regulatory requirements.

It provides a single repository for licensing information, past reports, submitted documents, and updates for state-specific licensing requirements.

Today, the company supports credit, money transmitter, and mortgage loan originator licenses.

Between the lines: Brico uses AI to automate filling out forms, understand submitted documents, and ingest publicly available information to simplify the application process. 

Brico also offers enhanced documentation and human-in-the-loop support from its own compliance professionals.

"We help people acquire licenses across 50 states, but once they have the licenses, we help them with their quarterly reporting, annual reporting, renewables and continuous maintenance," CEO Snigdha Kumar says. 

Context: Before founding Brico, Kumar spent several years in business development and operations at automated savings startup Digit, which Oportun acquired in late 2021.

There, she saw the challenge that early-stage fintechs face when applying for licenses and maintaining them.

"We got an initial quote of $1.5 million to get money transmission licenses in all 50 states in the U.S. ... That just seemed like a huge barrier to even get into the space," she says. "The solution that existed were humans. So law firms, compliance consultants and obviously the way they know how to do things is manually."

Yes, but: The manual process of applying for and receiving those licenses doesn't end the process. Fintechs must maintain them by submitting quarterly reports to regulators.

"You have to do a lot of reporting, you have to upload financials, and you also have ad hoc regulator questions that you need to supply answers to throughout the year," Kumar says.

Zoom in: Pear Ventures led the funding, with Flourish Ventures, Cambrian Ventures and Restive Ventures also participating.

Brico seeks to automate fintech licensing

an illustration of a calculator containing a 100 dollar bill in the window surrounded by circles 

🏦 Regulators proposed that capital requirements for the largest banks would increase by 9%, down from a 19% increase proposed last year. (Axios)

💰 Apollo and State Street are partnering on an ETF that invests in both public and private credit. (FT)

⚠️ Revolut is grappling with a surge in authorized push payment scams. (Bloomberg)

💳 Goldman Sachs' transfer of its GM credit card business to Barclays is being held up due to the program's high charge-off rates. (WSJ)

💸 PayPal and Venmo added support for sending crypto payments to ENS usernames. (Decrypt)

🇰🇿 Kaspi.kz's billionaire chairman is weighing a takeover of Jusan Bank. (Bloomberg)

Credit score

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

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

• Neat, a Paris-based embedded insurance startup, raised €30m in equity financing led by Hedosophia, with participation from Alma Mundi Ventures, ETFS and Athletico Ventures. It also secured an additional €20m in debt. Go deeper 

• Polly, an SF-based mortgage capital markets technology provider, raised $25m in growth equity led by 8VC, with participation from Menlo Ventures, Meritech, Khosla Ventures and Fifth Wall. Go deeper

• Paymob, an Egyptian payments infrastructure, raised $22m in Series B funding. PayPal Ventures led and was joined by Endeavor Catalyst, British International Investment, FMO, A15, Nclude and Helios Digital Ventures. Go deeper

• Connectly, a Redwood City, Calif., conversational commerce startup, raised $20m in Series B funding. Alibaba led and was joined by Unusual Ventures, Volpe Capital, RX Ventures, Falabella Ventures and Philippos Kourkoulos Latsis. Go deeper

• Datricks, an Israeli financial integrity platform, raised $15m in Series A funding. Team8 led and was joined by SAP and insider JVP. datricks.com

• Nostra AI, a provider of e-commerce conversion optimization software, raised $8.9m in Series A extension funding led by High Alpha, per Axios Pro Retail Deals. Go deeper

• Cashmere, a wealthtech software maker, raised $3.6m in seed capital.  Canapi Ventures led the round. Go deeper

• Optalitix, a London-based insurance and finance software provider, raised $3m led by existing investor Calculus Capital with participation from 24Haymarket. optalitix.com

• Bitroot Network, a Bitcoin-based insurance protocol, raised $1m from Moore Foundation. Go deeper

• Emtech, a N.Y.-based SaaS technology provider to central banks, raised an undisclosed amount of funding from Accenture Ventures. Go deeper 

• LendInvest extended its funding agreement with JPMorgan by £500m, bringing the total value to £1.5 billion. Go deeper

• K Bank, a South Korean online lender, has announced a planned initial public offering to raise up to 984b won (~$732m). Go deeper

• UniCredit acquired a 9% equity stake in Commerzbank for €1.4b, including a 4.5% tranche from the German government. Go deeper

• Globant (NYSE: GLOB) acquired Blankfactor, a Miami-based IT service consulting firm for financial services, from backers like Balance Point Capital. blankfactor.com

• Rightmove (LSE: RMV), a British online real estate portal, rebuffed a $7.32b takeover approach from REA Group (ASX: REA), owned by Rupert Murdoch. Go deeper

Deals!

• Hope Mehlman is joining All Financial as its chief legal and corporate affairs officer. She previously was general counsel at Discover Financial Services. Go deeper

• Paul Hansford, former head of software development and CTO at Thredd, joined Clowd9 as CTO. Go deeper

It's Personnel

🎧  @Lucinda needs NYC to have better regulations on car horns. 

⚾  @Ryan feels terrible for all the baseball fans whose teams don't have 87 wins. (Editor's note: Rude.)

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 and fans of bad teams about this newsletter. They can sign up here.

September 11, 2024

1 big thing: Big deals driving 2024 fintech M&A