Brex fires 10,000+ small business clients; Immutable X $500MM GameFi fund; Cube raises $30MM for FP&A fintech

Hi Fintech Futurists —?

You are the best, today’s agenda below.

1. GAMEFI: Ethereum Layer-2 Immutable X Plots $500M Fund for NFT, Game Developers
2. DIGITAL LENDING: Brex, which started out serving startups, now says it is ‘less suited to meet the needs of smaller customers’
3. FINANCIAL PLANNING: Cube Closes $30M Series B Funding
4. LONG TAKE: Learning to notice the shape of Liquidity, and its impact (e.g., stETH, Celsius, 3AC) (link?here)
5. PODCAST: Our top 5 Fintech & DeFi 2022 Podcasts (link?here)

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Short Takes

GAMEFI: Ethereum Layer-2 Immutable X Plots $500M Fund for NFT, Game Developers (link?here)

Immutable, creators of the Immutable X layer-2 blockchain, have announced a $500MM fund for grants and investments into projects building on their blockchain. The funds awarded will be in a combination of cash and IMX tokens, and are in part contributed by a myriad of VCs and ecosystem players, including Animoca Brands, GameStop, AirTree, and more.

Source

Using Immutable X allows for cheaper, faster and more energy-efficient transactions than on Ethereum mainnet. It is able to do this through the use of StarkWare’s StarkEx rollup that completes transactions in batches on a separate chain before they are finalised on the Ethereum blockchain. This makes it suited to NFT projects and blockchain-based games, where transactions are frequent. Reducing costs lowers the barrier to entry for the average user since usage is affordable.

GameStop is launching its?NFT gaming marketplace?on Immutable X, with $100MM going towards grants for crypto game developers (separate from the main $500MM fund). TikTok, Gary Vaynerchuck, and ESL are all partnered with the network, providing a solid foundation for Immutable to act as the crypto gaming and NFT platform of choice in the future. Some of the top games featured on the platform include Illuvium, Gods Unchained, and Guild of Guardians. As an example of commercial potential of such games,?Illuvium has just raised $72MM from the sale of virtual plots of land as NFTs.

In the current market, lots of things are going down and demand skepticism. While that is fair, the fundamental thesis of building virtual experiences on top of digital economies is still a compelling long term vector. We like that Illuvium scales Ethereum, rather than creating a separate and distinct environment like Flow.

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DIGITAL LENDING: Brex, which started out serving startups, now says it is ‘less suited to meet the needs of smaller customers’ (link?here)

Brex, the SMB corporate card fintech, is moving away from its roots of serving SMBs, instead?upping its focus on software and enterprise solutions. Reportedly “tens of thousands” of startup customers have been notified that they have until August 15th before they are removed from the platform, and must move their funds into an external bank account. The criteria for removal is if a company doesn’t have professional funding from a VC, angel, or accelerator funding — another way of saying “credit risk” and “low growth”.

Source

Brex was created on the idea of providing corporate cards for startups, using the financial product of lending as a way to install software. This eventually pivoted its business model to “financial operating system” for companies, which we interpret to mean a cashflow accounting engine with spend management on top — part of the?fintech for the CFO suite. In turn, its revenue model moved away from primarily interchange fees to recurring revenue from software subscriptions.

We see the macro environment as the main reason behind this move. Growth clients under a SaaS model provide a more stable cashflow than either payments money in motion, or digital lending. Right now cash is king, so the right strategy is to generate cash without taking on additional market risk. And second, cards are an underwriting business. If your core capability is not extending credit to small businesses, maybe you have to stop marketing yourself as such. To be fair,?there is a real distinction between underwriting for startups and other SMBs. For general comparisons in digital lending, think about?Klarna raising money at a valuation <50% of its prior round, not to mention the digital commerce issues around Bolt and Fast.

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FINANCIAL PLANNING: Cube Closes $30M Series B Funding?(link?here)

Speaking of the CFO suite! Cube, an institutional FP&A fintech, has received a $30MM cash injection in Series B funding, bringing total funds raised to $45MM since founding in 2018. The start-up offers financial planning and analysis software that is able to aggregate data from a variety of systems and spreadsheets within an organisation, to create a holistic view of financial data. ARR has grown by 400% in the past year with Cube adding companies like Acorns, Hinge Health, Masterworks, Truepill, and Wealthfront to their roster.

Key to Cube’s strategy is that ...

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Long Take: Learning to notice the shape of Liquidity, and its impact (e.g., stETH, Celsius, 3AC) (link?here)

In this analysis, we propose a framework of looking at market activity akin to that of mindfulness. In meditation, you can notice the patterns of your thoughts in addition to the substance and experience of your thoughts. In markets, we can notice the shape of liquidity and market participants, in addition to the substance of their fundamental or macro investment philosophies.

This helps us think about the issues leading to the incredible pressure of stETH, Celsius, and the ETH price.

?? Read More

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Our top 5 Fintech & DeFi 2022 Podcasts (link?here)

Last week we reflected on the year, and shared 5 of the most significant and popular podcasts so far. These conversations should anchor you to think about fundamentals over the long term, rather than short-term market volatility.

?? Listen on Apple Podcasts

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Rest of the Best

Here are the rest of the updates hitting radar.

• AI:?Able.ai exits stealth with $20M to help big lenders speed up making high-value loans
• INVESTING:?BlackRock to Launch Perpetual Infrastructure Strategy
• INVESTING:?Wealthsimple, valued at $4B last year, joins the fintech layoffs list
• INSURTECH:?Sana Benefits raises $60 million

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