The FinTech M&A Market is about to Boom??; Venture capital hasn't been more accessible for investors as it is today ??

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???Hey,?Linas here!?Welcome to a????weekly free edition????of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.

If you’re not a subscriber, here’s what you missed in the last few weeks:

1. Millennials are disrupting the Generational Wealth Transfer ?? [this is a huge and super important change]
2. Amazon is taking another step into the FinTech World ??
3. Commerce 2.0: a Social Evolution ???? [if you don't have this strategy, you're missing out]
4. NYDIG, or another reminder you should never put all your eggs in one basket ??
5. Here's why 2022 is the worst year in cryptocurrency history ??
6. Welcome to Apple Bank - your everyday Banking from Apple, NOT a Bank ????
7. Revolut's big e-commerce push and the Super App play ??
8. How much is Bitpanda really worth? ?? [you will be surprised, I promise!]

and more! Don't miss out and join the community here????

Last week (24-28 October) was another super intense and intriguing week in FinTech.?We will look at the FinTech M&A market that is about to Boom (grab some popcorn!); venture capital which hasn't been more accessible for investors as it is today (what are you waiting for??), and other interesting news and developments.

Without further ado, let us dive into what happened in the financial technology sector last week. Let’s connect the dots.

The FinTech M&A Market is about to Boom??

Following the news ???Not only the cryptocurrency space is currently in Winter Mode - FinTech has been equally affected too. In addition to some nasty layoffs, the outlook for many FinTech companies' ability?to raise fresh funding rounds is looking somewhat grim. In the last month or so, we saw a number of FinTech companies winding down:

• Bank North, the middle market regional SME lending neobank, announced that it was set to close after failing to raise a new funding round [read the lessons below].
• Flux,?an early UK?FinTech company founded by three ex-Revolut employees, will shutter its receipts and cashback network.
• Nuri?(formerly Bitwala), a crypto-focused neobank, also failed to raise new funding or find an acquired one and hence had to shut down [lessons below].
• Even?Marcus, the ambitious project to turn investment bank Goldman Sachs into a FinTech consumer powerhouse, looks uncertain [read more about it below].

Why does this matter? ???The above, though not exclusive, very well points to an accelerating mergers and acquisitions (M&A) trend in the FinTech space.?In fact, we can already say that the global FinTech M&A saw a sharp rise in the first half of 2022, according to a recent report from Hampleton Partners. Here’s more on that:

• The shart rise represented a 46% increase in the same period in 2021 when there were 406 FinTech deals as well as a 70% increase (348 Fintech deals) in the same period in 2019 before the pandemic set in.
• Data from Dealroom reported by Sifted also points to another healthy year for fintech M&A in Europe, with 190 FinTech acquisitions in Europe, versus 241 in 2021.?
• Finally, the trend also comes at a time of declining venture funding for FinTech startups and a seemingly ever-worsening macroeconomic backdrop as major countries including the UK and the US brace for an anticipated recession.

?? THE TAKEAWAY

Looking ahead ???As a recession looms, the climate for end-of-2022 deals seems very interesting. Deployable private capital has reached its highest-ever level at $3.6 trillion, according to Hampleton, representing around three times more than in 2008. That’s massive! This should help fuel potential deals given that FinTech valuations are falling (or stagnating) and some are being forced into down rounds (hint: Klarna). Also, it’s important to note that investment firms have to deploy all the capital that is currently just?sitting?out there because every fund has an investment period, which is usually around 5 years. Sure, you can extend that usually by 1 or possibly 2 years, but the clock is still ticking for them to deploy that money and that’s going to be a huge catalyst. Zooming out, we must note that while many FinTechs will definitely face a stricter climate, with more layoffs and lower valuations possible, the well-positioned ones will definitely be on the hunt for deals as they enter a period of market consolidation. It’s going to be a wild ride, so get some ??

Bonus: Lessons from another failed neobank ??

Crypto Winter takes another victim - a crypto exchange turned neobank ??

Goldman Sachs' Marcus shows just how difficult FinTech really is ??

Venture capital hasn't been more accessible for investors as it is today ??

The launch ?? VC platform Vauban just launched Atom, the newest product that continues its mission to make venture capital more accessible for more investors.

The product ?? Atom is arguably the most cost-effective way to set up angel syndicate deals. Angels are now equipped with the basic essentials in a special purpose vehicle (SPV)? platform.?Think of SPVs as a pool of money used by a group of investors to invest in a single company.

• For $2,000 + 2% of the amount raised, you can now set up an Atom SPV on the Vauban platform.
• Atom SPVs are one of the most efficient and cost-effective solutions for investments under $200,000.
• It includes everything: legal docs, banking, and lifetime administration.
• Atom is currently available to UK and European investors.??

The USP ?? Founded in 2018 and HQed in London, Vauban positions itself as the easiest way to pool & deploy capital to invest in private companies. In June of this year, it was acquired by the equity service platform Carta. The terms of the deal were not disclosed.

Vauban's fully automated platform for syndicate leads and fund managers reportedly led over 500 investment vehicles to date. The company also manages over $2.5 billion in invested capital. That's pretty solid!

?? THE TAKEAWAY

Democratizing the VC market ???? Venture capital has long been an industry dominated and accessible only to the rich and extremely well-connected individuals. The key reasons for this are obviously the lack of extra capital to invest, and more importantly - limited knowledge and resources to actually put that capital to work. But that's changing with the help of platforms like Vauban. Now, smaller investors (think friends & family, angels, smaller syndicates) and a growing number?of UK & EU tech operators are much easier able to take the advantage?of their deal flow and spin-up investments. Zooming out, it's important to note that crypto and tech winter has left massive amounts of dry powder on the table. But there are still a lot of great companies out there, with strong fundamentals and transformative ideas, yet they are currently facing challenges getting funded. This is exactly where Atom comes in allowing smaller investors to fill the void left by larger?VCs that are slowing down and being more risk-averse. VC hasn't been more accessible for investors as it is today.

Bonus: The Private Markets are in a consolidation period ??

Extra Reads & Quick Bites for Curious Minds??

• Block's job listings ???Jack Dorsey’s?Block?is on an?expansion spree?as it builds out its Bitcoin mining and wallet hardware businesses. As seen on LinkedIn, Block is hiring heads of Bitcoin mining policy and partnerships. The firm is also looking for product and engineering talent "to develop the next generation of mining ASIC" and to build its "first mining rig" and "future mining rig product lines."?This is super interesting and ties very well into Block’s Ecosystem of Ecosystems.
• Digital to Analog ???C6 Bank, a?JP Morgan-backed digital bank, has revealed it is set to open its first 5 brick-and-mortar branches in Brazil. C6's head of high-income announced that the bank's goal for the coming months is to have at least one office in each of the country's capital cities and in other towns with a large number of potential wealthy clients. The move comes about a month after C6, established in 2019, launched Carbon, a platform focused on the roughly 20 million account holders with an income of more than $2,862 per month. C6's face-to-face units will have about 10 employees each and are expected to increase client engagement by providing a more detailed and customized approach than its larger rivals.

Money Moves??

• Former?Revolut?employees?raised?$6.5M for DeFi investment app?Boku, according to recent filings. But a co-founder denies any money changed hands.
• Tilia, a virtual payments system provider built for games, virtual worlds, and mobile application developers, has secured a strategic investment from?JP Morgan Payments.
• UK open finance and data platform?Moneyhub?has secured an initial ￡35M in funding from high-profile backers Legal & General and Lloyds Banking Group, with an additional ￡5m debt facility provided by Shawbrook.

Continue reading by subscribing to?Linas's Newsletter.?You will receive fresh news about FinTech with hot takeaways every day.

P.S.?You might enjoy my earlier pieces as well:

?? Bitcoin in 2021: a story in 5 graphs, and what might come in 2022

???A Wise pitch deck that led to London’s biggest and most successful direct listing ever

***

About: I am?a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading the company's expansion into Europe, I'm an active member of the FinTech community and a TechFin evangelist.

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