Fintech M&A gets a big boost with Visa-Pismo deal

1 year ago 141

It was a very busy week in the world of fintech, which certainly kept us on our toes. We covered a couple of notable M&A deals (including one of the biggest of the year so far), a different kind of financial services startup aimed at undocumented immigrants, Brex’s official recommitment to the startup community and more.

End-of-quarter frenzy

As the generative AI craze rages on, Ramp acquires customer support startup Cohere.io

We started the week with some M&A news out of corporate spend management company Ramp. The team shared with us exclusively that it had scooped up an AI-powered customer support called Cohere.io, which had raised $3.5 million in seed funding over its lifetime from backers such as Initialized Capital, Y Combinator and…Ramp co-founders Eric Glyman and Karim Atiyeh. Notably, Ramp (and companies like Deel and Rippling) were also customers. Glyman told us that it was evident from early on that once his company started using Cohere.io, “suddenly the majority of tickets were being answered properly in an automated fashion. […] It actually really worked,” he said. “The technical sophistication of the team was far beyond anything we had ever seen.”

Visa acquires Brazilian fintech startup Pismo in $1B blockbuster deal

Then later in the week came confirmation of one of the biggest, if not the biggest, fintech M&A deals of the year. It was rumored for months that Visa, Mastercard and potentially a bank and private equity firm were all courting Brazilian payments infrastructure startup Pismo. The acquisition was definitely a coup for the Latin American startup community, considering that Visa could have likely considered companies from all over the world. Pismo has apparently seen some explosive growth in recent years — jumping from 10 million accounts at the end of 2020 to 80 million today. Also, at the beginning of 2021, Pismo was doing less than $1 billion per month in transaction volume compared to processing $40 billion in transaction volumes annually today.

However, as noted by KBW managing director Sanjay Sakhrani, the $1 billion purchase price is roughly 30% below the $1.4 billion that Visa was rumored to have offered for Pismo earlier this year. We don’t know what Pismo was valued at when it raised $108 million in a round co-led by SoftBank, Amazon and Accel in 2021. But Accel partner Ethan Choi told us the sales price was “a very strategic multiple.”

Sakhrani also said in a report that in addition to beefing up Visa’s issuer processing capabilities across card products, Pismo also brings “differentiated core banking capabilities and will allow Visa to provide connectivity and support to emerging payment rails like Pix in Brazil.”

The last week in recent memory where we remember seeing such a flurry of fintech M&A activity was in mid-January, when Jonah Crane, partner at Klaros Group, predicted we would continue to see more acquisitions in 2023 thanks to the continued venture slowdown and practically dead IPO and SPAC markets. And according to CB Insights, fintech M&A exits rebounded in the first quarter, but not as much as one might have expected. They were up 15% QoQ to 172 deals. Most of Q1’23’s top M&A deals involved fintechs based outside of the U.S. For the first time in the previous year, the top M&A valuation fell below $500 million.

Side note: The acquisition represented a rare win for SoftBank, which has had a number of high-profile disappointments in recent years with investments in the likes of WeWork, the now defunct Katerra and FTX. Alex and I talk more about that on Friday’s episode of Equity Podcast here.

Brex refocuses on startups with hire of SVB veteran, ex-a16z operating partner

Last summer, Brex made headlines for announcing it would stop serving SMBs and non-funded startups. This summer, it’s making headlines for pledging its recommitment to the startup community. After Silicon Valley Bank imploded in March, Brex (along with the likes of Arc and Mercury) saw an influx of new customers. Specifically, the company says it opened 4,000 new accounts and received $2 billion in deposits in the first week after the SVB shutdown alone. That obviously led the company to rethink its strategy. Last week, Brex told us exclusively that it had hired Jason Mok, a former operating partner at Andreessen Horowitz (a16z) and 16-plus-year veteran of Silicon Valley Bank to serve as its head of startups. I talked with Mok about his previous experience and how he thinks that will help him in his new role, which includes providing more “Brex ambassadors” who can serve as the face of the brand that founders, operators and VCs can go to for advice, perspective and connections to other founders.

No SSN, no problem, says Maza, a fintech startup aimed at undocumented immigrants

I also wrote about Maza, a fintech startup that raised $8 million in a seed-funding round led by a16z to help undocumented immigrants get an ITIN (individual tax identification number) and access the U.S. financial system. TechCrunch has previously reported on a number of startups focused on the immigrant community — including Welcome Technologies, Fair, Majority and TomoCredit. (It’s unclear whether Fair is still around considering its website appears to no longer exist or is down.) But what makes Maza different is its focus on undocumented immigrants specifically. “We’re doing much more than just providing a bank account — we’re really giving immigrants a stable and legal financial foundation from which to build credit and wealth indefinitely,” said co-founder and COO Robbie Figueroa.

Fun fact: The name Maza came from a song about perseverance called “La Maza” that co-founder and CEO Luciano Arango used to listen to with his mom growing up.

Nubank’s CEO explains what the US could learn from LatAm fintech

In one of the Equity podcasts this week, I spoke with David Vélez, the co-founder and CEO of digital bank giant Nubank. (Did you know it has a market cap of $37 billion?!) Digital banking is always top-of-mind over here at TechCrunch, so we quickly got into discussing Nubank’s strategy for achieving profitability and how the company has been able to maintain that in a challenging macroeconomic environment. Vélez also compared and contrasted the Latin American and U.S. fintech markets and dished on how he sees banking evolving in the next few years. One particularly interesting part of the conversation, as one Equity listener pointed out: Vélez’s reasoning for only expanding Nubank in three markets over 10 years: “‘I am extremely wary of any deck where people tell me ‘18 markets in 2 years.’”

Announcing the Fintech Stage agenda at TechCrunch Disrupt

And last but not least, we’re incredibly excited to share that this year at TechCrunch Disrupt (held from September 19–21), we’ll have a dedicated Fintech Stage, where we’ll have plenty of time to talk about the most interesting fintech topics at length. Here is your first peek at the agenda — but stay tuned for more to come! — Mary Ann

Image Credits: Pismo

Weekly News

For TechCrunch+, Alex Wilhelm reports on Gusto, a payroll management software company that reached a big milestone this week — $500 million in revenue. He also goes over Gusto’s path toward profitability, its new partnership with Remote and why an IPO could be in its future. Read more.

Now let’s go over to Ivan Mehta’s story on PayPal. The company rolled out a “tap-to-pay” feature for both Venmo business users and Zettle users in the U.S. This enables sellers to accept payment from cards and digital wallets (support for payment via iPhone coming soon) without any additional hardware. Find out more.

Financial super app Revolut now has an automated investing tool for U.S. users. The robo-adviser enables customers to invest in one of five portfolios, according to their risk tolerance, which rebalances automatically on a monthly basis. This offering has lower fees as well, including an annual fee of 0.25% and a monthly minimum of 25 cents. In 2022, Revolut launched a stock trading tool for the U.S.

Consumers’ love-hate relationship with buy now, pay later continues. According to a recent report from J.D. Power, “more than half (60%) of customers who are aware of BNPL say the option is helpful, but the majority (64%) of those customers don’t believe using the option improves their financial health.” More here.

Other headlines

Stripe lays off dozens, mostly in recruiting (Stripe’s comms team sent us the following statement: “We’ve made a series of structural changes within our People team to better align with the evolving needs of Stripe’s business. These changes are never easy, and we had to say goodbye to about 40 very talented employees, in areas like recruiting.”)

Square rounds out banking services with rewards that pay for processing

Five fintechs join Mastercard startup program to bring digital economy ‘promise’ to more people

Dock embeds financial education with responsible credit solutions

Amadeus and Emburse partner on business travel and expense solution

Fundings and M&A

Seen on TechCrunch

Social trading app Shares receives EU stock trading license

Flowie wants to make invoices flow freely

Socure acquires identity verification startup Berbix for $70M

TreasurySpring raises $29M to expand its investment platform aimed at businesses with excess cash

Seen elsewhere

JustPaid debuts suite of AI-powered finance services

Gr4vy secures investment from W23 to expand in APAC

Nuvocargo bumps valuation to $250 million, snags new funds to expand U.S.-Mexico shipping efforts (Fintech-focused VC firm QED Investors led the round, telling TechCrunch that while Nuvocargo is primarily a digital logistics platform, the company’s embedded fintech is where it sees itself being able to add value. TechCrunch covered Nuvocargo’s last raise, where co-founder and CEO Deepak Chhugani explained that technology to us.)

Join us at TechCrunch Disrupt 2023 in San Francisco this September as we explore the impact of fintech on our world today. New this year, we will have a whole day dedicated to all things fintech, featuring some of today’s leading fintech figures. Save up to $600 when you buy your pass now through August 11, and save 15% on top of that with promo code INTERCHANGE. Learn more.