SoFi Acquires Galileo for $1.2B; Morgan Stanley Leads $34M Round in Aussie Neobank 86 400; ABN Amro Joins $80M Privitar Series C; Yapily Raises $13M

Amid fighting the Coronavirus globally, this week (6-10 April) was yet another interesting and exciting one in the world of FinTech. Another major exit in the FinTech space just happened - consumer financial services platform SoFi is acquiring payments and bank account infrastructure company Galileo for $1.2 billion in total cash and stock; UK-based data privacy startup Privitar has raised $80 million in a Series C; Visa has joined $11 million funding round in Hong Kong's Neat and has also backed Railsbank, and much much more.

Without further ado, let us dive into what has happened in the financial technology sector this week.

Open Banking Platform Yapily Raises $13M

Open API platform Yapily has raised $13 million in a Series A funding round led by Lakestar.

Yapily boasts Fortune 500 companies and fast growth FinTechs as clients, including Intuit QuickBooks, where Yapily’s API is used by the accounting software provider to help thousands of its SME customers access insights and financial information from bank accounts in UK, France & Ireland. Other customers and partners of Yapily include IBM and GoCardless.

Founded by ex-Goldman Sachs employee Stefano Vaccino, the company has raised $18 million funding to date. Over the last six months monthly recurring revenue has grown over 500%, with the firm quadrupling its headcount in London to 45 and expanding into Italy, Ireland and France.

Existing investors HV Holtzbrinck Ventures and LocalGlobe joined Lakestar in the latest round of financing. Angel investors also include TransferWise's Taavet Hinrikus, Twilio CTO Ott Kaukver, former UniCredit deputy CEO Roberto Nicastro, and Frank Strauss, former CEO of Deutsche Postbank.

ABN Amro Joins $80M Privitar Funding Round

UK-based data privacy startup Privitar has raised $80 million in a Series C funding round led by Warburg Pincus and joined by ABN AMro Ventures. Accel, Partech, IQ Capital, and Salesforce Ventures all joined the round, which comes less than a year after a $40 million Series B. 

Established in 2014, Privitar helps banks and others make the most of big data while ensuring customer information is kept private. The firm, which counts Citi and HSBC among its clients, says that its centralised platform to protect and manage sensitive data is essential for firms looking to move to modern data platforms such as cloud data lakes.

Last year it saw annual recurring revenue more than triple year-over-year while global headcount increased 80% to more than 140. The latest funding will be used to continue hiring across sales, services and product development as the company focuses on international expansion.

Jason du Preez, CEO of Privitar, said:

Managing sensitive data at enterprise scale and complexity is a real challenge for even the most sophisticated data organisations. 

By automating the enforcement of data protection strategies, Privitar’s platform makes this achievable in any data-driven organisation.

SoFi Acquires Banking and Payments Platform Galileo for $1.2B

Another major exit in the FinTech space just happened. Consumer financial services platform SoFi announced on Tuesday that it is acquiring payments and bank account infrastructure company Galileo for $1.2 billion in total cash and stock. The acquisition is dependent on customary closing conditions.

Salt Lake City-based Galileo was founded in 2000 by Clay Wilkes and was bootstrapped to profitability over the intervening two decades. Galileo provides APIs that allow FinTech companies like Monzo and Chime to easily create bank accounts and issue physical and virtual credit cards, among myriad other services. While simple in theory, banking regulations and financial rules place a huge regulatory burden on FinTech companies, burdens that Galileo takes on as part of its platform.

The company has found particular success in the United Kingdom, where all five of the country’s largest FinTechs are customers. Globally, it processed an annualized $45 billion in transaction volume last month, up from $26 billion in October 2019 — nearly doubling in just six months.

From a strategic perspective, SoFi’s objective is that Galileo will help power its expanding suite of finance products and offer it another revenue source outside of consumer services. While SoFi was founded a decade ago to offer ways to secure better financial terms for student loans, it now offers a bevy of consumer financial options, including loan, investment and insurance products as well as cash and wealth management tools. With Galileo, it now has a clear B2B revenue component as well.

SoFi, which is now led by ex-Twitter COO Anthony Noto,  has also raised hundreds of millions of new capital from the likes of Qatar in recent years. The company was most recently valued at $4.3 billion.

Galileo will operate as an independent division of SoFi, and will be continuing its operations with founder Wilkes remaining as chief executive.

Visa Joined $11M Funding Round in Hong Kong FinTech Neat

Neat, a Hong Kong-based FinTech offering multicurrency accounts to SMEs and startups, has raised $11 million in a funding round supported by Pacific Century Group, MassMutual Ventures Southeast Asia, and new commercial partner Visa.

With a global count of 500M+ startups and other SMEs, funds from this round will be used to further Neat’s international expansion. 

After opening an office in Shenzhen in 2019 targeting Chinese exporters, Neat has just opened a new office in London and is set to kick off local operations in Western Europe to also serve the other side of the market: European entrepreneurs trading with China. 

Visa's participation in the raise comes as Neat begins issuing corporate expense cards to SMEs for online and offline shopping and ATM withdrawals.

“Our goal is to offer a truly global solution for businesses that trade across borders, regardless of their size or how long they’ve been in the market. Corporate credit cards, for example, can be incredibly difficult for young businesses to get,” says David Rosa, CEO and co-founder of Neat. “We’re excited to partner with Visa, one of the leaders in digital payments, to offer a product that hasn’t always been accessible to young SMEs.”

He says Neat's ultimate goal beyond cross-border money movement, is to provide small businesses with a wide-range of tools in payroll, accounting and supply chain logisitics to remove the friction from trading overseas.

“We believe in making frictionless cross-border trade a reality for ambitious businesses around the world. This capital injection is going to power our growth in enabling young SMEs to operate smoothly between Europe and Asia,” says Rosa. “The success of this round has been a clear endorsement that we’re headed in the right direction.”

Morgan Stanley Leads $34M Round in Australian Neobank 86 400

Australian challenger bank 86 400 has closed a $34 million Series A round, taking total equity capital to $90 million as it aims to build a $2 billion mortgage book.

The raise, led by international investment bank Morgan Stanley, is one of the largest Australian FinTech Series A rounds to date and includes investment from an Australian superannuation fund, fund managers, high net worth individuals and family offices. 

To date, 86 400 has more than 170,000 accounts on its platform and sees more than 350,000 transactions and balance updates each day. The mortgage book currently stands at $20 million, but is expected to grow rapidly as more brokers are brought onboard.

“At our current rate of growth, we should hit 500,000 accounts on the platform in the next 12 months,” says CEO Robert Bell. “Of course, that will be balanced by growing the lending side of our business and we anticipate having a mortgage book of close to $2bn by the end of 2021.” 

Since launching in September 2019, 86 400 has launched seven products in six months and expects to deliver a further three by the end of 2020, says Bell. He claims it is the only retail neobank in the Australian market to offer home loans and shared accounts - which are currently in pilot. .

MAS Rolls Out $125M Covid-19 Support Package for Banks and FinTechs

The Monetary Authority of Singapore has put together a S$125 million Covid-19 support package to help FinTech firms and financial institutions ride out the current slump in economic activity.

The package, funded by the Financial Sector Development Fund, will be used to support workforce training and manpower costs, strengthen operational resilience and extend access to the central bank's innovation sandbox. Ninety million dollars will be ploughed into a new Training Allowance Grant (TAG) to encourage FIs and fintech firms to make use of the downtime in business activity to reskill their employees and take on new talent.

MAS will also set up a new Digital Acceleration Grant (DAG) to support digitalisation in smaller financial institutions and fintech firms with fewer than 200 employees.. The accelerator programme will support the the adoption of digital tools and upgrading of systems that facilitate business continuity.

The central bank will additionally provide all Singapore-based fintech firms with six months’ free access to API Exchange (Apix), an online global marketplace and sandbox for collaboration and sales. Through Apix, fintech firms and FIs can integrate and test solutions via a cloud-based architecture.

As part of this, MAS will work with the Singapore FinTech Association to set up a new digital self-assessment framework for MAS’ Outsourcing and TRM Guidelines hosted on Apix. 

Jacqueline Loh, Deputy Managing Director at MAS, commented:

We have significantly enhanced existing initiatives and introduced new schemes to help our FIs and fintech firms not only navigate the current headwinds but at the same time build deeper competencies, skills, and networks, so that we can emerge stronger for the longer term. We encourage FIs, fintech firms and financial sector professionals to actively tap on these opportunities.

Visa Backs Railsbank

London-based open banking and RegTech platform Railsbank has topped up its Series A funding round with investments from Visa and Japanese VC Global Brain.

Railsbank picked up $10 million in September 2019 for its Series A. The size of the new investments has not been disclosed but is in the millions of dollars, according to TechCrunch. In addition to the money, Visa has agreed a five-year partnership with Railsbank to help push its Banking-as-a-Service offering in Singapore, the Philippines, Vietnam and Thailand. Railsbank has also become a Visa principal issuing member.

The startup, led by Currencycloud founder Nigel Verdon, recently opened a Singapore office to lead the effort to bring its platform of APIs for banking, payments and compliance services to Asia.

Verdon commented:

I personally moved to live in Singapore to open our regional head office here so we can offer our unique platform to a far wider audience and be an enabler of financial inclusion, which is one of the core principles my co-founder Clive Mitchell and I setup Railsbank to achieve.

Our partnership with Visa signals our intent to be the most innovative banking platform business in Asia-Pacific. Our API focussed platform is the simplest way for any business or brand to quickly conceptualise, build and launch digital finance products that easily incorporate Visa’s product suite and capabilities.

Visa's interest in Railsbank comes sharply on the heels of a commercial agreement and investment in Hong Kong-based business account startup Neat.

Sila Raises $7.7M

Sila, the banking and API payment platform set up by former Simple co-founder Shamir Karkal, has closed a $7.7 million seed funding round.

The round is co-led by VC firms Madrona Venture Group and Oregon Venture Fund, with support from Mucker Capital, 99 Tartans, Taavet Kinrikus, CEO & Co-founder of Transferwise, and investor & entrepreneur Jerry Neumann. 

Sila launched its Infrastructure-as-a-Service (IaaS) platform in April 2019 to help companies integrate their business applications with financial networks. The firm's REST APIs provide a layer on top of the existing ACH network, with applications for identity/KYC verification, bank account linking, and digital wallet deposits baked in. 

The API includes a built-in stablecoin - Sila - which is an ERC-20 token pegged 100:1 to the US Dollar, with fully insured funds held by an FDIC member bank. The coin supplants fiat for the purpose of money movement, settling transactions within minutes rather than the two-day timeline on the US ACH network.

Karkal says that global payments networks are too expensive, inefficient, tightly regulated, and difficult to integrate into fintech applications. Having been hired from Simple to head up BBVA's Open API platform, Karkal moved on to pastures new after becoming frustrated by the burdensome compliance demands that come form working with a big bank.

"Despite money being effectively digital for decades, the world of finance has still not truly been disrupted by the Internet," he says. "The global financial system isn't controlled by PayPal or Stripe, but by 30,000 global banks that still run on outdated payment systems like ACH. Our mission is to unite all the payment systems in one programmable layer to spur the next phase of financial innovation."

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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 company's expansion into Europe , I'm an active member of FinTech community and a TechFin evangelist.

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