Fintech Highlights - 5/30/2023

FTX is suing former shareholders in Embed. Robinhood launches 24-Hour weekday stock trading. Episode Six raises a round. Here's what we're watching this week 👇

Pinned to the Top

FTX is suing former shareholders in Embed, a stock clearing startup that FTX acquired last September for $248 million, seeking to claw back proceeds from that deal.

This may be just the tip of a litigation iceberg related to acquisitions and investments made by former FTX CEO Sam Bankman-Fried, who's also being sued by FTX in a related complaint.

Defendants include Rocket Internet, Global Founders Capital, 9Yards Capital and Plaid co-founder William Hockey. None are accused of wrongdoing.

It's worth noting that few of these firms were identified by Embed when it announced either its Series A round ($20 million equity, $40 million debt). Also, some investors Embed did identify aren't included in the lawsuit.
The bottom line: FTX's own investors got wiped out, but plenty of other folks got rich off the crypto company's house of cards. The question now is where those windfalls will ultimately reside.

The BFD

Retail investment platform Robinhood is allowing users to engage in 24-hour trading of selected exchange-traded funds and popular stocks such as Apple and Tesla.

Why this is the BFD: This makes it the first U.S. brokerage to offer 24-hour-five-days-per-week trading in individual stocks.

According to Robinhood, as well as allowing users to invest outside regular market hours, the new system will also benefit advanced traders by allowing them to act in real-time to manage their portfolios and adapt to new information as it unfolds.

The big picture: The ‘What Next?’ is the big thing here.

If Bloomberg’s report is to be believed, retail investors are headed ‘for their own stock-market-induced insomnia’ – akin to Wall Street’s Gordon Gekko.

There are fears that turning retail investment into a 24-hour experience is a dangerous expansion of Robinhood’s gamified UX – and could lead to some bad financial decisions in the wee small hours.

There’s also the fear of whether this could revive the ‘meme-stock’ frenzy of 2021 - where investors from Reddit’s /wallstreetbets were sending the market wild with coordinated investments in stocks such as consumer electronics store Gamestop.

But, there is a whiff of snobbery here. ‘After-hours trading’ is already part of the culture of Wall Street - and this could be said to be further democratising that process away from brokers.

Also, in our globalised world - why shouldn’t retail investors keep their money safe as incidents happen outside of trading hours?

M&A

Setpoint, an Austin-based real estate funding platform backed by over $50m from firms like a16z, bought Resolute Diligence Solutions, a Park City, Utah-based provider of asset-level due diligence. More here ->

Fifth Third Bancorp (Nasdaq: FITB) acquired Rize, an Arlington, Va.-based payments infrastructure startup that had raised around $19m from firms like Alpha Edison, Raptor Group, Revolution Rise of the Rest, Morpheus Ventures and Red & Blue Ventures.  More here ->

Wells Fargo-backed mortgage fintech Maxwell has struck a deal to acquire mortgage solutions provider LenderSelect Mortgage Group from Blue Ridge Bank. More here ->

Potentia Capital walked away from its efforts to acquire Australia's Tyro Payments (ASX: TYR) after its sweetened A$875m offer was rejected.  More here ->

Fintechs

Episode Six, an Austin, Texas-based provider of payment processing and digital ledger infrastructure, raised $48m in Series C funding. Episode Six is a global provider of bank-grade payment technology and ledger management infrastructure in the cloud, as well as a highly configurable ledger and payments system.It is the world's first and only globally distributed processor available via API.  More here ->

Onyx Private, a Miami-based digital bank focused on affluent young professionals, raised $4.1m.  Onyx Private is a modern banking and investments app that offers users a user-friendly interface, high yield cash management, personalized investments, 24/7 lifestyle concierge, premium customer service, cashback, and more. More here ->

Tyme, a South African digital bank majority owned by African Rainbow Capital, raised $77.8m. It has grown rapidly since launching in February 2019, with about 2.8 million customers onboarded via physical kiosks, usually in Pick n Pay and Boxer stores around the country. More here ->

PhonePe, an Indian payments and financial services firm, raised another $100m from existing backer General Atlantic, just four months after a similar investment.  More here ->

Kiwi, a Puerto Rico-based consumer credit history and financial literacy startup, raised $4.5m in seed funding from Advent-Morro Equity Partners, Altio Capital and Independent Capital. It also secured a $75m credit facility from i80 Group.  More here ->

Investtechs

Unlimited, a New York-based alternative investing platform, raised $8m in Series A funding co-led by FirstMark and Citi Ventures.  More here ->

Crypto

Kigo, a St. Paul, Minn.-based crypto loyalty and NFT discovery platform, raised $6.5m led by Valor Siren Ventures.  More here ->

Proptech

Orbital Witness, a British property due diligence tech startup, raised £7.5m in Series A funding.  Orbital Witness is a LegalTech-meets-PropTech startup that offers automated solutions for property due diligence, replacing legacy legal due diligence in property transactions with a legal risk rating.  More here ->

Property technology company Avenue One has reportedly achieved unicorn status after raising $100 million.The company, founded in 2020, helps single-family landlords purchase and sell rental properties. Avenue One doesn’t acquire properties on its own, which helped protect the company when rising interest rates led to a slowdown in the purchases of rental homes. More here ->

From the Stash

USAA is in the top 10 of the Axios Harris Poll of the Top 100 reputable brands in the country  -  FTX and Tesla, once seen as shining examples of innovation and opportunity, took two of the biggest reputational hits in this year's Axios Harris Poll 100 brand reputation survey. USAA moved up 8 places and lands in 8th. More here ->

TD Bank invests in credit card solutions, digital experiences - TD Bank is investing in its digital experience as the bank upped tech spend in the first quarter and launched two new credit cards in May. The Cherry Hill, N.J.-based bank introduced monthly subscription-based, no interest credit card TD Clear and flexible payment credit card TD FlexPay, according to a release from TD Bank. More here ->

Will the Ripple deal create waves in stagnant Web3 M&A? - Even with crypto prices slowly creeping up, any kind of dealmaking involving blockchain and crypto startups has been slow. Funding is way down and recent M&A deals lack punch, per Crunchbase data. But hey, here’s Ripple‘s $250 million acquisition of Metaco, the only Web3 deal to break $100 million this year. More here ->

Webinars / Reports

Recent Forrester research reveals how modernizing insurance infrastructure with cloud-based solutions can help deliver key business outcomes.

Hear from insurance experts on the business impact resulting from technology decisions.

Get registered here ->

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