Issue #54: Treasury Prime Snags $20m In Funding, Paypal Gets Into The Returns Management Game And Revolut Drops a Chrome Extention
👋 Hi, FR fam. I hope you’ve all had a great week.
Let’s kick things off this week with a great thread of stories about the Paypal Mafia’s views on company culture.
📣 The News Grab Bag
Whoops, Buzzfeed found Joe Biddens's secret Venmo account ◌ Are NBA Top Shots securities? ◌ Mode might have plans to become a “Bitcoin Bank” ◌ Keeping fintech’s promise: A modest proposal ◌ Swift makes its case for a place in the CBDC world ◌ Fed sides with retailers on debit swipe fees ◌ Robinhood’s big gamble ◌ AMEX buddies up to Tink for an open banking integration ◌ Simple Bank shutdown goes awry ◌ Porsche wants to become a fintech.
📈 Notable Funding Announcements
It was another bumper week of financing announcements in fintech. In total, 67 funding rounds were announced, totaling $2.1b.
🏛️ Treasury Prime Raises $20m →
Last week BaaS provider, Treasury Prime, announced a $20 million Series B insider round. The round was co-led by QED Investors and Deciens Capital and had participation from SaaStr Fund and Susa Ventures.
🤓 My Take: This is another great data point that highlights just how hot fintech infrastructure is. An inside round for $20m is a serious commitment from the current investors and shows that something impressive is going down over at Treasury Prime.
According to their press release, they now serve “50 leading fintech customers,” and earlier this year, they announced an intriguing partnership with card issuing platform, Marqueta that allows their customers to manage more of the nuts and bolts of spinning up a consumer banking service all on one platform.
There’s no doubt that fintech is experiencing its “AWS moment” — the pipes are getting easier, much easier to access, and it’s faster than ever to go from idea to launch. However, along with the growing interest in the space has come a whole cohort of entrants all offering very similar products. If you stripped away the branding from a BaaS provider’s site, there’s little chance you’d be able to distinguish one website from another. They all read the same; “we help you launch fast,” “your bank in a box,” “a modern API for banking.” You get the idea. However, it’s not until you start the laborious process of integrating these solutions into your services that you realise which ones are just marketing hype, sticky tape, and Blu Tack and which ones are actually thoughtfully built.
Beyond this, from the BaaS provider’s side of the fence, it’s hard to differentiate picks and shovels. For example, it’s pretty hard to distinguish your “GET https://api.BaaSCo.com/account/:id” from your competitor’s offering. This is where most in the space continue to be challenged — showing that the magical APIs they offer is materially better than then the next fintech hardware store’s offering.
The race is on to crown the winner in this space, and as much as BaaS company founders will tell you that there’s room for more than one player, the reality is this is a winner takes most market. It’ll be interesting to see which company ends up being AWS and which ones end up being Opsware.
🏃♀️ Relay Raises $19.4m →
Relay last week announced that they raised $19.4m Series A led by Bain Capital Ventures with participation from Better Tomorrow Ventures, Garage Capital, Tribe Capital, Panache, and Amaranthine.
🤓 My Take: In previous issues of FR, I’ve spoken at length about the SME banking space, and it continues to be a segment I’m incredibly excited about.
What’s interesting to observe in this segment is the different approaches being taken by entrants as they attempt to differentiate their offerings. Some have taken a leaf out of the OG challenger banks’ playbook and launched a “barebones” offering — a prepaid card, a lightweight way to categorize transactions, and the ability to spin up cards for your team. While others have launched with a charge card, and some have attempted to do an end-run and offer a more complete lending product from day 1. There are even some SME challenger banks who are trying to build a complete accounting and invoicing suite in their product — which is just madness in my book.
In many ways, this is very different from what we saw in the early days of consumer challenger banking — where everyone took the same product approach at launch. In the SME challenger banking segment, the diversity of approaches being taken by entrants shows just how much white space there is to innovate due to incumbent bank lethargy.
It’s probably too early to say which product offering and GTM will work best, but it’s clear that SMEs will be the winners with better product offerings that actually meet their needs and not just what banks can be bothered offering.
☝️ Things You Should Know About
🥳 Paypal to Acquire Happy Returns →
It’s official. Return management platforms are soooo hot right now.
It was only two weeks ago (issue #52) that I was riffing on why Affrim acquired Returnly and this week, Paypal announces they’re buying Happy Returns. That’s right, Paypal is also heading into the world of returns management. To be fair, Paypal has been eyeing off Happy Returns for a while. In fact, way back in 2019 (or about ten years ago in COVID-19 time), Paypal made a strategic investment in Happy Returns. At the time, Robert Clarkson, Vice President, North America at PayPal, said of the investment:
Working with Happy Returns will help us learn more about how returns can decrease the friction in shopping online and how to help merchants address this growing problem.
Clearly, Paypal figured out that this was a great way to move down the e-comm stack and provide more value to their customers. It’ll be interesting to see how Paypal integrates Happy Returns into their offering. You could imagine them offering Happy Retunr’s product as a free value add to online sellers who use them for payments. This would be a great little bonus to sellers and might be enough to get some to switch over to Paypal as their primary payment process🤞
Now the bigger the question is, when will Stripe and Adyen make an acquisition in the returns management space 😆
🔤 Google Pay Launches International Money Transfers →
I have to admit I’ve been surprised by Google’s persistence with Google Pay. There’s no doubt that Google Pay has been crushing it in India, but to say it’s been a lackluster product for the longest time in other markets is probably an understatement.
Having said this, lately, it feels like the Google Pay team has been on a bit of a roll. It’s almost like the same bug that has bitten Twitter’s product team has also stung Google Pay’s product and it’s resulted in them shipping significant product updates at a high cadence.
The most exciting thing about this news is that Google is once again leaning in on a partnership model to get its product offering to market more rapidly. As you might recall, when they announced their revamped wallet back in November last year, they revealed they’d be partnering with 11(!) banks on their checking account product, Plex. In this case, they’re partnering with Wise and Western Union to allow their users to make international transfers.
So many tech companies talk the talk when it comes to partnering, but few have walked the walk. So it’s great to see Google realising they can move much faster if they partner with companies like Wise.
To be honest these last few product launches now have me actually interested in seeing what Google Pay releases next. Maybe crypto?
🛍️ Revolut Launches Discount Browser Extention →
When Paypal acquired Honey for $4b back in 2019, many laughed. It was a fair bit of coin to pay for ostensibly what many saw as a Chrome extension. However, the outward simplicity of the product belied its effectiveness as a product.
Honey was working with 30,000 merchant websites at the time of acquisition and had ~17m monthly active users. What Paypal bet on was that this was going to be a new way to connect the two sides of the market they served — merchants and consumers. Along with a great distribution channel for the core Paypal payments product.
In a move that has shades of the Paypal x Honey acquisition, Revolut released a Chrome app that allows users to find savings at stores they’re buying from online. It also enables Revolut customers to use their virtual or disposable cards to buy online — all in the browser.
In a segment where CACs are soaring, this is a super clever way to keep Revolut top of mind when purchasing (and thus helping grown TPV). At the same time, using the Chrome store for distribution, I think, is a massively underrated distribution channel and will likely allow them to acquire some new users. It’s a super clever product distribution strategy and I think we’ll see a few other challenger banks follow suit.
🎧 Podcast Recommendations
As always, here are some great podcasts for you to load up on your next run.
How Safe Is My Crypto Yield? with Zac Prince (CEO, BlockFi) and Matt Ballensweig (Genesis) → This is a podcast from Kevin Rose's new show, Modern Finance. If you’re interested in the world of yield farming and want to hear about what BlockFi is up to (who I think are one of the more exciting companies at the intersection of fintech and crypto), this is a podcast you’ll want to listen to.
Coen Jonker, Co-Founder of Africa’s Tyme – Fintech for Inclusion & Importance of Persistence → Tyme is a really interesting South African challenger bank. They’ve been going at it since 2015 and recently raised a monster $109m round of funding (which is something for a fintech on the Continent). This is a great episode where Tyme’s co-founder talks about how they launched in South Africa and their future plans. Well worth a listen.
❤️ Show Some Love For FR
📈 You can check out Radar, an open database of Australia's fintech ecosystem. You can find it here → 📡 SideFund Radar
📧 Feel free to reach out if you want to connect. I'm me@alantsen.com and @alantsen on the Twitters.
📸 As always, our cover image is provided by Death To Stock Photos. You should get your stock images from them too.
Ps. If you like what I'm doing with FR, please feel free to share it on your social disinformation network of choice. I'd also appreciate it if you forwarded this newsletter to a friend you think might enjoy it.
🙏 What did you think of this week's issue of FR?
I love it! ◌ I Like It ◌ Not Bad ◌ I Don’t Like It ◌It’s Awful