Robinhood Raises $3.4B to Manage Customer Growth; Shopify is a FinTech; Stripe's Massive Valuation; Square's Crypto Bullishness

Hey, ?? fellow FinTechers! Trust you are all keeping well and safe.

It's been a while since the last monthly recap. But I have some great news for you - this is the most interesting and the best Month in FinTech thus far!

P.S. Before we dive into what happened in FinTech in February, check out my Connecting the Dots Newsletter, where you will get much more. Every week (February & March editions are out there)????

February was super busy both personally and for the FinTech industry (hence, the delayed monthly issue ??). So many things were happening that it was sometimes even hard to follow everything closely (that’s why you have this newsletter! ??).

Robinhood has added a couple of billions to its bank accounts to manage customer growth; Shopify is going more aggressively for payments dominance; Stripe’s valuation on steroids, and more super exciting developments and insights!

Without further ado, let us dive into what has happened in the new age of finance last month. Let’s connect the dots.

Robinhood Raises $3.4B to Cope With Customer Growth

Stock trading app Robinhood has raised $3.4B recently to continue to support its record customer growth, including $1B in funding announced on 29 January 2021.

The first week of February was undoubtedly won by Robinhood. The massive round was led by Ribbit Capital, with participation from existing investors including ICONIQ Capital, Andreessen Horowitz, Sequoia, Index Ventures, and NEA with terms being finalized.

The $3.4 billion it has mobilized since Thursday exceeds the total amount it has raised since its founding in 2013. It has raised $5.6 billion to date.

The fresh infusion will allow Robinhood to meet the demands of the National Securities Clearing Corporation (NSCC), which requested the trading app to come up with a $3 billion deposit in order to cover trading risks. The clearing agency, however, has since cut down the figure to $700 million.

THE TAKEAWAY

Is Robinhood already too Big to fail? Such a huge amount of funding in such a short period of time is a massive sign of confidence in Robinhood from its investors and backers. The GameStop Stock Pop Saga didn’t seem to have a major influence on the stock broker’s popularity as it successfully continued to add massive new customer numbers. Maybe their IPO won’t end up badly after all? ??

Shopify Expands its Payment Option, Shop Pay, to Merchants on Facebook & Instagram

Facebook is integrating Shopify's Shop Pay buy button into Instagram and Facebook Shops. This may help it decrease checkout friction and grow its social commerce footprint.

The second week of the month was all about Shopify. Shop Pay is a buy button that stores payment and shipping credentials, allowing registered users to choose the payment method at checkout to quickly make online transactions without having to manually input payment information. The system, which has 60 million global users, also offers package tracking capabilities and an installment lending service at checkout.

This move is the first time Shop Pay will be made available outside of Shopify’s own platform and thus represents a significant expansion for the e-commerce platform’s payments technology.

Shop Pay will first become available to all Shopify merchants using checkout on Instagram in the US, and will then be rolled out to Facebook in the following weeks.

One must note that Facebook has been one of Shopify’s most popular sales and marketing channels for their merchants.

Over 40 million buyers now regularly use Shop Pay at a number of top direct-to-consumer and newer brands, including Allbirds, Kith, Beyond Yoga, Kylie Cosmetics, Jonathan Adler, Loeffler Randall, Blueland, among others.

THE TAKEAWAY

Shopify is FinTech. Consumers have been spending more time on social networks hence contributing to the rise of social commerce (which Shopify wants to dominate). Expanding the payment option will not only further fuel Shop Pay’s growth but also will help Facebook expand social commerce accessibility, enabling it to lead the growing space. It must be noted that Shop Pay adds to Facebook's standing payment offerings, including standard credit and debit card checkout as well as PayPal checkout.

Stripe is Worth $115 Billion

Stripe is reportedly valued at $115 billion by investors in the “secondary market”, according to Forbes.

The 3rd week of February was all about Stripe. Investors are valuing Stripe at a $115 billion valuation in the “secondary market”. This is up more x3 from the $36 billion Stripe got when it raised money in April 2020 from top-tier VCs including Andreessen Horowitz, General Catalyst, and Sequoia. 

Stripe is also planning new primary funding round at a valuation close to $100 billion, according to a person familiar with the matter, Forbes reported.

Founded in 2010, Stripe is a major player in all things FinTech. It counts Shopify (a FinTech itself), Amazon, Lyft, Spotify, and thousands of others as its customers. It is estimated that Stripe processed $200-250 billion in transactions in 2019 and grew roughly 50% in 2020. 

THE TAKEAWAY

Valuations are totally nuts these days… ?? But it doesn’t mean Stripe isn’t worth $100B+. Netherlands-based Adyen, Stripe’s closest competitor, has seen its stock jump 150% over the past year, reaching $66 billion today. PayPal is worth over $336 billion, and it also competes with Stripe through its Braintree payment processing service that it acquired back in 2013. Being tech-first, growing faster, and going towards all things FinTech, Stripe is a force to be reckoned with and will undoubtedly be a $120B+ IPO.

Square is Doubling Down on Crypto

Square posted major volume and revenue growth driven mostly by Cash App's crypto service. Now it’s looking to ramp up its crypto offerings further with its massive Bitcoin investment.

The last week of the month was closed by payments major Square. Jack Dorsey’s Square has processed $32 billion in gross payment volume (GPV) in Q4 2020, posting a 12% increase from Q4 2019, according to it its latest earnings release. Square's growth is similar to the previous quarter when it processed $31.7 billion in GPV as it bounced back from the initial impact of the coronavirus pandemic.

Square's Cash App was the absolute winner of Q4: the peer-to-peer payments app closed out December with 36 million active customers, surging 50% YoY—likely driven by the increased momentum of its crypto trading service. Square is now looking to strengthen its crypto business by investing a massive $170 million in Bitcoin, following its $50 million investment in October, according to the company's earnings call.

THE TAKEAWAY

As more consumers are exploring crypto, Square is winning. Cash App's Bitcoin revenues skyrocketed nearly 900% year over year (YoY) in Q4, reaching a value of $1.76 billion. More importantly, app engagement is growing - more than 3 million users bought or sold cryptocurrencies using Cash App in 2020, according to Square CEO Jack Dorsey. With the growing platform engagement and leveraging digital assets as a priority, Square is well-positioned to continue to be among the key players leveraging the new age of finance.

Quick Takes

• Visa’s CEO Alfred Kelly has revealed his company’s plans to enable cryptocurrencies trading on its network.
• PayPal posted 4-quarter results Wednesday that showed continued tailwinds under the rise of digital, and, specifically, contactless payments. Total payments volume stood at $277B across 4.4B transactions. Dollar volume was up 39% year over year, the transaction count grew by 27%.
• P2P payments heavyweight Venmo has announced it is going to expand into budgeting, savings, and cryptocurrency. Venmo's new features escalate its threat to neobanks.
• Sweden-based FinTech Klarna has announced it will be turning its mobile app into a banking app in Germany offering customers a consumer bank account and a Visa debit card.
• Ikea's owner acquired a 49% stake in Ikano Bank. The bank's retailer-friendly products could enable Ikea to follow the lead of other large retailers exploring buy now, pay later offerings.
• Affirm earnings top expectations, but stock slips.
• Dwindling cash use is pushing central banks to race toward digital currencies.
• South Africa-based IMTO FinTech Mama Money has observed growth of over 500% in volumes during 2020, according to the official press release. 
• Marqeta, the US-based payment card issuing startup, has filed confidentially for an initial public offering (IPO) with the Securities and Exchanges Commission (SEC), according to Reuters.
• The Federal Reserve’s system that allows financial institutions to send money back and forth electronically went down for several hours on the last week of Feb.
• Swedish BNPL giant Klarna is expected to announce new funding in the coming days that will value the company at $31 billion, Bloomberg reported. The amount is around three times more than what the company was valued at after its last round in September.
• Finance company Affirm announced that it will soon begin offering a debit card to consumers that will allow them to make installment payments on any purchase at any merchant.

??Money Moves??

• Flink, which calls itself as the first Latin American consumer stock-trading platform, raised $12M in a Series A round led by Accel.
• CapBay, a Malaysia-based peer-to-peer (P2P) supply chain financing platform, gets $20M in Series A funding.
• Singapore’s super-app Grab said it has closed on a $2B, 5-year term loan facility amid speculation that it is readying an initial public offering.
• Austin-based Routefusion, provider of an application programming interface to embed bank-to-bank cross-border payments for customers, secured its first institutional funding of $3.6M in seed financing led by Silverton Partners.
• Mesh Payments, a FinTech that is transforming the way corporate payments are processed, paid, and managed, has raised a $13M financing round.
• BharatPe raises $108M in Series D financing round.
• Sweden-based challenger Northmill Bank has raised around $30M in new funding.
• Fintech Libeo raises $20M.
• The multilingual neobank Fair raised $20M and is preparing to launch to the general public in April, with early bird memberships available in March. The backers were not disclosed.
• British neobank Monzo is looking to top up its Series G funding round by ￡50M ($69M) on a lower valuation, UK Tech News reported.
• Banking-as-a-service (BaaS) startup Nymbus raised $53M in a Series C funding round led by existing investor Insight Partners
• Corporate expense and revenue management company Corcentric has acquired Vendorin from Juvo Technologies for $100M.
• Cashplus to raise $69M in first outside investment.
• Billhop, the Swedish company which makes every invoice and bill payable by card, has closed a €4M Series A investment round from financial technology VC Element Ventures.
• Mirato, an Israeli firm that has built an AI-driven third-party risk management platform (TPRM) for financial institutions, has raised $9M in funding.
• San Francisco-based SeedFi, a startup developing a platform for lower-income Americans to build credit and save money, raised $65M in debt and equity funding.
• Personetics, a provider of personalization and customer engagement tools for banks and financial services companies, raised $75M in growth funding from Warburg Pincus.
• KreditBee, a digital lending platform developed to assist young professionals with their personal finances, has raised $75M in a Series C funding round.
• M&T Bank Corp is closing in on an acquisition deal to buy People’s United Financial for more than $7B, The Wall Street Journal reported on Monday, citing sources.
• Orka Technology Group has raised ￡29M in its latest funding round, a capital that will be used to fuel the growth of its earned wage access product Orka Pay.
• Germany-based challenger bank Penta raises €7.5M to top up Series B.
• Wallapop, a Spain-based virtual marketplace that lets people resell their used items, has raised €157M.
• Brazil-based mobile payments platform RecargaPay has announced that it has raised $70M through its Series C funding round.
• Fintech API startup Stitch raises $4M seed round for African expansion
• US-based Episode Six, a provider of payment processing and banking infrastructure, has announced that it has secured an additional $30M of investment.
• LSE-listed FinTech Mode has raised ￡6M in fresh capital on an oversubscribed placement of 10,909,091 new ordinary shares at a price of ￡0.55p each.
• Monument, a digital banking startup for the well-heeled, has landed ￡28M in new funding from existing backers and a trio of angel investors.
• Zelf, a messenger-based neobank targeting Generation Z, has raised $2M in a pre-seed funding round led by 3VC.
• TreeCard, the provider of a wooden Mastercard debit card that channels profits from merchant surcharges into reforestation programmes, has raised $5.1M in a funding round led by EQT Ventures
• South African digital lender TymeBank has raised $109M in a round joined by an Apis Partners fund and Philippines-based JG Summit.
• Middle Eastern Open Banking platform Tarabut Gateway has raised $13M in what it claims is the largest FinTech seed round in Mena history.
• GoodBox has raised ￡9M for its digital giving platform that uses contactless technology to help charities raise money in an increasingly cashless society.
• UK’s Atom Bank nets ￡40M in a plan for an IPO.
• Petal closed on more than $126.6M in a debt facility backed by Silicon Valley Bank and Trinity Capital. The New York-based company will use the financing to expand its credit card program, which uses machine learning to extend credit to people often overlooked by big banks.

Quote of the Month/??Food for Thought??

Africa - where FinTech innovation is just everywhere.

Graph of the Month

Yet another illustration that there’s no such thing as bad press…

February in Brief

Stock trading app Robinhood has raised $3.4B recently to continue to support its record customer growth, including $1B in funding announced on 29 January 2021.

Facebook is integrating Shopify's Shop Pay buy button into Instagram and Facebook Shops. This may help it decrease checkout friction and grow its social commerce footprint.

Stripe is reportedly valued at $115 billion by investors in the “secondary market”, according to Forbes.

Square posted major volume and revenue growth driven mostly by Cash App's crypto service. Now it’s looking to ramp up its crypto offerings further with its massive Bitcoin investment.

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Continue reading by subscribing to Connecting the Dots Newsletter. You will receive fresh news about FinTech with hot takeaways every week (Feb & Mar editions are out too!)

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

?? The Perfect Pitch Deck: How Coinbase Raised Seed Capital and Began Journey Towards $100B Worth Public Company

?? Cutting Through the Noise: Bitcoin Fundamentals & Why it Was Created

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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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