JPMorgan Chase got tricked by startup
Good morning FinTech Fanatic,
Since Friday the 13th is considered an unlucky day in Western superstition, it could just be that the FinTech scene is holding its breath for what is to come.
And at first glance, the news about Stripe’s drop in valuation fits exactly into that narrative.
The digital payments firm, once valued at $95 billion, has cut the internal value of its shares by about 11%, implying a valuation of $63 billion, according to news source The Information.
At the same time the news deserves some nuance, as the valuation was not triggered by a new funding round, but instead a new 409A price change.
On some occasions founders and industry experts see a company receiving a 409A valuation that is lower than its investor-led valuation as a good thing.
A 409A valuation - set by third parties, which means that they are not tied to what a venture backer or other investor thinks - cuts the price of new stock-based compensation issued to employees and could also help Stripe reset investor expectations ahead of any public listing.
If Friday the 13th is a harbinger of bad luck, the JPMorgan Chase story is something to keep an eye on.
The largest bank of America bought student financial aid startup Frank in 2021, assuming it would also attract 4.25 million Frank-users with the deal.
Only, Frank (allegedly) didn't really have 4.25 million users, but rather fewer than 300,000.
Now JPMorgan Chase is suing the founder of the startup it acquired for allegedly lying about its scale and success by creating an enormous list of fake users to entice the financial giant to buy it, according to the Forbes-article
Is it just bad luck? Or bad due diligence? What do you think? Leave your thoughts in the comments.
I’m definitely curious to see if there will be more cases like this in the forthcoming period.
The future will tell, but first have a nice day and find the other FinTech news listed below👇
BREAKING NEWS
ABN AMRO issues first digital bond with Fireblocks and becomes the first bank in Europe to register a digital bond on the public blockchain. ABN AMRO’s bond issuance sets an innovative precedent in bringing more real world use cases of blockchain technology to traditional financial markets. Link here
FTX NEWS
FTX said it has located more than $5 billion in cash and other liquid assets and is hoping to sell hundreds of additional investment holdings with a book value of more than $4.6 billion. Link here
Just before crypto markets plunged last year, SBF’s hedge fund made a $1 billion bet on Genesis Digital Assets, a Cyprus-registered bitcoin miner rigged to consume a small city’s worth of electricity in Kazakhstan. Only around half of Alameda funds went to Genesis Digital operations, according to Cyprus corporate-registration documents and people familiar with Genesis Digital. More than $500 million bought existing shares from two Genesis Digital co-founders, a detail that hasn’t been previously reported. Link here
INSIGHTS
FinTech is still going down and valuations are still resetting, but some sectors are showing more resilience than others. For detailed information about FinTech in 2022, check out the full report by Dealroom and ABN AMRO Ventures. Learn more
Nigerian FinTech saw a disappointing Q4 with only 13 companies raising funding. This brought total deal activity for the year to 78 deals, an 8% decrease from 2021’s levels, according to FinTech Global. Link here
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FINTECH NEWS
Thai unicorn launches its TrueMoney E-Wallet in Malaysia’s crowded market. TrueMoney and Ascend Money announced their launch in Malaysia during a press event where they also announced that they are now the “official payment” provider for all of Lotus’s hypermarket locations across the country. Link here
DIGITAL BANKING NEWS
ClearScore introduces open banking-based service D•One; a new Open Banking and data insight unit, offering UK lenders Open Banking connectivity and transaction categorisation intelligence. Link here
PARTNERSHIPS
Stride Bank extends partnership with FinTech Chime. The partnership enables Chime to offer its members innovative, easy-to-use, and fully regulated products with the same important consumer protections that are in place for traditional bank customers. Link here
Credi2 and Visa, have entered a strategic cooperation as part of the Visa Fintech Partner Connect program. Together they are developing a product that can be used flexibly and that will in future facilitate BNPL payments with Visa credentials in the Central European markets. Link here
Wordline has announced a strategic partnership with Lidio Payment Services in Turkey. The joint e-commerce proposition enables Lidio Payments to offer customers a seamless solution and ensure maximum satisfaction. Link here
BFC Payments partners with M2P Fintech to launch an advanced card BFC PAY TRAVEL BUDDY that offers international travellers great convenience as it allows for fast top-ups, instant currency conversion, worldwide shopping, dining and lots more. Link here
M&As
Deel enters the equity management space with acquisition of Capbase. Through the acquisition of Capbase, Deel hopes to ease the process of setting up companies and growing them. Link here
PayPal co-founder Peter Thiel backs German B2B BNPL Mondu in $13M Series A extension. With the funds, the Berlin-based FinTech that provides loans to businesses rather than consumers plans to expand its market and introduce new products. Link here
Detected closes £2.5 million financing round. The new funding will enable Detected to capitalise on US growth and continue to drive product innovation which has underpinned the impressive success to date. Link here
Butter nabs Series A led by Norwest Venture Partners to aid its mission of fixing payment failures through the Recovery engine; which is powered by machine learning and automates decisions in real time. Link here
This ends Your Daily FinTech News. Let me know if there are any questions or comments. Until the next!
Regards,
Marcel van Oost
Co-Founder & Director - Over a decade spent building exceptional teams
1yGreat read as always Marcel van Oost
Global Sales Leader in Technology & Talent Solutions | Banking & Financial Services Expert | FinTech, RegTech & Payments Innovator | Regulatory Advocate | Renewable Energy 🍃☀️ | Proud Father
1yLots of great insights(as always Marcel van Oost ) , and not all doom and gloom. Highlight for me is the Fireblocks ABN AMRO Bank N.V. Bond deal. Do it right , first time. 🤝
Architektin / impact entrepreneur / Solarkraftwerke - B2B Vermittlung seit 2008 / Künstlerin / Vorbildunternehmerin der Initiative unseres Wirtschaftsminsteriums / Vordenkerin
1yIn an economy, where lying is accepted as a base and a normal attitude, the responsibility is to seen in the DD process - my opinion. But we could change the base.