Fintech Startup Acquisition and Funding Activity Strong in December

By Luigi Wewege Saturday, December 19, 2020

The COVID-19 vaccines rollout has evidently improved the global risk sentiment. Investors are very interested in booming online payment markets, where continued and sustainable growth is expected. Here are some of the biggest and most important deals that took place recently in the fintech space.

Lydia Completes Another Funding Round

Mobile payment app startup Lydia secured an additional $86 million in the Series B round, with Accel running the extension. The fintech startup has now raised a total of $131 million total in both of its rounds.

“The value of the company has really significantly increased between the two parts of the B round,” said Cyril Chiche, co-founder and chief executive of Lydia. However, the valuation of the round remains undisclosed.

All of the major shareholders took part in the Series B round, with Amit Jhawar leading Accel’s investments. Jhawar became Accel’s venture partner this summer and is expected to join Lydia’s board of directors.

Jhawar also served as COO and CFO at full-stack payments platform Braintree, which bought Venmo shortly afterward.

“When we acquired Venmo it was only 15 people. They had just released their mobile app in April of 2012,” said Jhawar.

PayPal then bought Venmo and Braintree, and Jhawar stayed at Venmo until earlier this year. He believes that P2P payments are the start of a long-term consumer relationship.

IBM to Increase Payments Offerings

IBM said it has acquired a Canadian fintech Expertus Technologies, which provides a payments-as-a-service solution that will improve IBM’s payments system in its hybrid cloud.

Mark Foster, senior VP at IBM Services pointed out that financial institutions have to balance increased demand for safe digital solutions while abiding by “rapidly evolving regulation." He added that Expertus’s solutions are expected to facilitate the innovation process in financial institutions and help them keep up with ever-changing consumer demands.

Similar to its acquisition of Spanugo earlier this year, IBM bought Expertus to step up its offerings for clients who do business in heavily regulated sectors.

"Expertus built an efficient and trusted financial services enterprise that in many ways was ahead of its time," said Leblanc.

"Together with IBM, we now can offer businesses worldwide the benefits and security of seamless end-to-end financial transactions,” said Jacques Leblanc, chief executive of Expertus.

Expertus’s solutions are used by more than 1,000 banks, regulatory bodies, credit unions, and others which handle over $50 billion in transactions on a daily basis. The company is also one of the biggest service bureaus of the Society for Worldwide Interbank Financial Telecommunication.

Wahed Gets Strong Attention on Shariah-Compliant Products

Islamic-finance fintech company Wahed said it will purchase Niyah, a UK mobile-only digital Islamic banking app. Wahed is a US-based startup backed by the oil giant Saudi Aramco. With this purchase, Wahed said it hopes to expand its services and become a one-stop-shop for Islamic law-abiding digital financial solutions.

The acquisition will expand its interest-free offerings, including digital bank accounts and debit cards both in Britain and in the rest of the world.

Shariah, the Islamic religious law, strongly forbids charging interest. Wahed is a Shariah-abiding digital banking app which lets its consumers keep minimum amounts of their funds in cash, preventing their deposits from being used for lending and allowing them to invest the remaining money, said Wahed’s chief executive Junaid Wahedna.

“All the money you keep with us will be invested according to your preference, ” Wahedna said.

The startup started operating in 2017 in the US It is an online investment management platform whose portfolio doesn’t include investments in firms that operate in prohibited sectors like gambling, firearms, and alcohol.

GoCardless Nears $1 Billion Valuation

The UK digital payments company GoCardless secured $95 million in its investment round. The round was led by Bain Capital Ventures while GoCardless is now close to a $1 billion valuation.

GoCardless plans to use the money it raised to invest in its open-banking strategy, allowing companies to conduct bank-to-bank payments rather than making transactions with cards. The company provides direct debit payment solutions, which represent regular transactions withdrawn straight from customer bank accounts.

Including the latest round, GoCardless has raised a total of $240 million so far. GoCardless’ revenue surged by 46% from November 2019 to last month. The company said it handles $18 billion in transactions per year in more than 30 countries.

Summary

Digital payment companies have been on a frenzy this year as a result of the coronavirus pandemic that forced people to stay at home. Judging by the recent activity, it is more than evident that promising fintech startups have no difficulties in raising the necessary funds to continue their growth.

About the Author


Headshot for author Luigi Wewege

Luigi Wewege is the Senior Vice President, and Head of Private Banking at Caye International Bank. Outside of the bank, he serves as an Instructor at the FinTech School which provides online training courses on the latest technological and innovation developments within the financial services industry. Luigi is also the published author of: The Digital Banking Revolution.

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