Issue #64: FreshBooks Secures The Bag, Robinhood Acquires Say And What's The Value Of Open Data?

👋 Hi, FR fam. I hope you’ve all had a great start to the week.

Yep, I did miss last week’s issue of FR. Apologies for that. To make up for it, I’ve got two issues dropping this week!

Beyond the weekly news roundup, I’ve also got a special break down issue on payment initiation services dropping this week. I’m sure all the open banking nerds are going to love that one 🤓

So let’s get into this week’s fintech news, starting with the News Grab Bag.

📣 The News Grab Bag

JPMorgan is piloting RTP with an unnamed fintech startup ⚬ Brex withdraws its applications for an ILC charter (but will likely reapply) ⚬ APRA raises the bar on becoming a bank in Australia ⚬ Sainsbury’s settle their UK interchange fee suit with Mastercard ⚬ NAB is planning to buy Citi's Australian consumer business Buy Now, Pay Later & Payment Ramifications ⚬ Embedded finance won’t make every firm into a fintech company Move fast, but be carefulBitMEX to pay $100m to regulators ⚬ Circle wants to become a bank

📈 Notable Funding Announcements

It was another big week of funding announcements in the world of fintech. In total, 53 funding rounds were announced, totalling $2.7b.

🔢 Dune Analytics Raises $8m

Last week, Dune Analytics announced they’d closed an $8m Series A round of funding led by USV and Redpoint Ventures. The round also had participation from existing investors Dragonfly Capital and Multicoin Capital.

🤓 My Take: You’re probably wondering why I’m discussing this raise, which is a fair question given blockchain data analytics companies aren’t exactly common fare for funding announcement discussions here at FR.

What makes Dune interesting is that it’s a great example of what financial data analytics companies could end up looking like in a world of data abundance. More specifically, it hints at how things might change in the world of financial data insights when reporting moves from quarterly to live and 24/7, as is the case in defi.

Unlike in the world of tradfi (that’s what the cool kids call ‘traditional finance’), defi takes a whole different spin on open data. In fact, in defi, the default is ‘open’ — which means that data is plentiful, really plentiful.

In the world of defi, data is 24/7, composable and abundant. Although some might see this as a neat function of the open nature of defi protocols, it’s more than that — if we extrapolate out where finance is headed, what we see on platforms like Dune might be a harbinger of what’s to come. For example, want to see SushiSwap’s “P&L” in real-time? No problems, there’s an open and community composed one that you can access.

On the face of it, Dune looks like just another blockchain explorer — which is sort of true. However, if you look under the hood, you also find an engaged community of casual (and sometimes more serious) data nerds sharing their data queries (dashboards in Dune parlance). In many ways, it feels like the making of a classic Dixonian ‘come for the tool, and stay for the network’ ecosystem play.

Although it feels like defi is its own island in the world of fintech, the ripple effects we’re seeing are sure to change the way people interact with tradfi in the future. Open, composable and abundant real-time data feels inevitable, and companies like Dune are showing how this might look.

🧾 FreshBooks Raises $130m And Hits $1b+ Valuation

Last week accounting software provider FreshBooks announced a new round of funding that pushes it past the much-coveted $1b+ valuation territory. The new $130m round of fund (that included $50m in debt) was led by longtime investor Accomplice. The round also had participation from J.P. Morgan, Gaingels, BMO, and Manulife and Barclays.

🤓 My Take: It’s an interesting time in the world of cloud accounting. The wave of businesses migrating to cloud accounting services has happened. Along with that, an ecosystem of tools has also sprung up to support entrepreneurs and accounts with everything from receipt storage to payroll. This has left many to wonder ‘what next?’. Some, like FreshBooks, are trying to expand their global footprint with acquisitions, while others are looking at ways to move beyond just being a SaaS offering to their customers.

As you might expect, some are turning to the world of fintech to see how they might become more integrated with their consumer’s finances. Most notably, last year, we saw Intuit acquire Kredit Karma for $8.1b in what was a big play to edge its way into fintech. While here in Australia, Xero decided it was time to get into SME lending by acquiring Waddle, and MYOB made a sizable investment into invoicing financing fintech Butn to also get deeper into the lending space.

Interestingly, most have stayed away from offering SME banking and instead been focused on solidifying their offering through bolt-on acquisitions or dabbling in lending. In some ways, this makes sense — after all, they are sitting on a trove of high-quality data that they can use for loan decisioning. However, it also seems strange that emerging players like Xero haven’t taken advantage of their brand and started offering banking services.

It’ll also be interesting to see if any of the cloud accounting providers wise up to the opportunity to become a PayFac and cut Stripe and Paypal out of the picture (which is an absolute no-brainer in my opinion). What’s less clear is if any providers are going to go big and dive into the world of SME banking.

In the case of FreshBooks, my guess is that investors in this latest round are betting on more than just geographic expansion; they’re also probably betting on FreshBooks leaning more into the world of fintech.

☝️ Things You Should Know About

💸 So What’s The Value Of Open Data?

As much as I like to make fun of management consulting reports, McKinsey seems to consistently drop some interesting ones on the state of the fintech sector.

Their latest report on open data provides some fascinating insights into the impact open finance could have on the sector. Although we all know that open data will be a boon for the finance industry, the ‘how’ and ‘where specifically’ are still, in many ways, the missing parts of the puzzle. This report shines some (consultant generated) light on some of the use cases and their financial impact.

🏹 Robinhood buys Say Technologies for $140M ⇢

If you’ve ever listened in on an earnings call, you know how stilted they can be. In most cases, they’re executives reading out reams of data with little interaction with anyone but for the lucky few analysts who are selected to ask what end up being softball questions.

Say provides tools to investor communications team make these interactions less robotic and allow smaller shareholders to ask questions to the companies they invest in.

In many ways, this acquisition by Robinhood makes a ton of sense. Specifically, creating a better and more immersive experience for shareholders to engage with the companies they invest in could end up being a real differentiator for Robinhood. It’s not hard to imagine Robinhood offering the ability for shareholders in, for example, Coinbase to drop their questions for the next earning call directly in the app.

This is an interesting move by Robinhood, and with a fresh stash of cash after their listing, I can’t wait to see what else is on their shopping list.

👀 Nubank Eyes $2B IPO

Nubank is so hot right now, and with a fresh bag of cash secured from investors that include the likes of Berkshire Hathaway, a listing seems like the next logical step.

After recently raising at a $25b valuation, it’ll be interesting to see what a post listing valuation will look like for this LatAm juggernaut.

🎧 Podcast Recommendations

Here are this week’s podcast recommendations. Enjoy👂

🔥 Institutional DeFi Infrastructure With Fireblocks' Michael Shaulov ⇢ You may not have heard of Fireblocks. Still, you’ve likely interacted with their product if you’ve ever bought crypto through a challenger bank like Revolut (who are a Fireblocks customer). This is a great episode of the Bankless Podcast that dives into why institutions use companies like Fireblocks.

🤑 News: It's still a great time to be a fintech investor! ⇢ Yep, it definitely is a great time to be a fintech investor. In this episode of Fintech Insider, the 11FS team chat with Andy Renshaw of Feedzal, Natasha Jones from Octopus Ventures and Sophie Winwood from Anthemis about investing in a red hot fintech market.

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