Welcome to TechCrunch Fintech (formerly The Interchange)! In this edition, I’m going to explore the latest developments in the world of financial technology, including Brex’s recent round of layoffs, the state of fintech investing in 2023, and more. While I may be taking some time off in the coming weeks, rest assured that TechCrunch Fintech is not going anywhere. We’ll be back soon to keep you updated on all things fintech. But for now, let’s dive into the big stories of the week.
The big story
What goes up must come down. This old adage proved true for spend management startup Brex, as its employee headcount experienced a sharp decline. During a time of low interest rates, the company saw a surge in business and attracted significant venture capital funding. At its peak, Brex’s staff reached a staggering 1,300 employees. However, with the recent economic downturn, Brex decided to restructure and cut 282 employees, equating to almost 20% of its workforce. This move comes after reports that the company was burning through $17 million in cash per month during the fourth quarter, leading to its efforts to preserve runway.
Analysis of the week
Oh, fintech. 2023 was not an easy year for you. According to PitchBook data, fintech investors poured $34.6 billion into startups across 2,055 deals, marking a decrease of 43.8% and 32.4% year-over-year, respectively. Not only that, but valuations also suffered, with the median dropping by 13% to $19.4 million. Exits also took a hit, with only $5.9 billion in exit value generated across 185 deals, a decrease of 76.1% and 22.3% year-over-year. However, the fourth quarter brought some positive news. CB Insights reports that fintech saw eight new unicorns and a double-digit increase in equity funding during this period.
Dollars and cents
Bilt Rewards, a platform that allows consumers to earn rewards on rent and daily neighborhood spending, recently announced a $200 million raise at a valuation of $3.1 billion. The financing was led by General Catalyst and more than doubled the company’s valuation compared to its previous raise of $150 million in October 2022. This raise and valuation surge are particularly noteworthy in a climate where deals worth over $100 million are uncommon. According to CB Insights’ State of Venture Report 2023, mega-rounds were abundant in 2021 but fell to their lowest level since 2017 in Q4’23, with only 78 taking place.
What else we’re writing
Klarna, a Swedish fintech company, announced its first subscription plan called “Klarna Plus.” For $7.99 per month, subscribers will gain access to benefits such as no service fees when using Klarna’s One Time Card, double rewards points, and exclusive discounts with popular brands. This new offering is an attempt to expand Klarna’s offerings and provide added value to its customers.
GGV US recently released a list of 50 fintech startups that venture capitalists are particularly excited about. We also sat down with GGV managing partner Hans Tung to discuss his insights on the current state of the fintech sector.
PayPal is starting to roll out some new updates to its service, including enhanced personalization through AI. Among these updates is “CashPass,” a cash-back offering, and “Smart Receipts,” which provides personalized recommendations. These features are part of PayPal’s strategy to stay competitive and meet evolving customer needs.
Other high-interest headlines
Rainbow raises $12 million
Sequence raises $5.5 million in funding
Sunbit secures $310 million debt warehouse facility led by Citi
Investing platform Public launches options trading – and pays customers for their orders
Colombian fintech company FinZi acquired by Girasol Payment Solution
BillingPlatform lands $90 million growth equity investment from FTV Capital
Fintech predictions from Plaid’s CEO
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