Blueprint: Biz fintech Brex worth $12B; Visa and ConsenSys CBDCs; Alliance DAO raises $50MM for DeFi & Web3
Gm Fintech Futurists — our agenda for today is below.
NEOBANKS: Brex has confirmed that it has raised $300 million in a Series D-2 round that ups its valuation to $12.3 billion
CBDC: Visa Partners With ConsenSys to Help Bridge CBDCs With Traditional Finance
DAOs: DeFi Alliance Goes Full DAO After Raising $50 Million
LONG TAKE: 2022 Capital Markets Primer: Fintech Equities, SPACs, and Venture (part 1) (link here)
PODCAST: Solving climate change through financial services, with Aspiration CEO Andrei Cherny (link here)
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NEOBANK: Brex has confirmed that it has raised $300 million in a Series D-2 round that ups its valuation to $12.3 billion (link here)
Brex confirmed raising $300 million in a Series D-2 round at a $12.3 billion valuation, with the previous round valuing it at $7.4 billion. Greenoaks is leading the round alongside existing investors looking to increase their stake in the company, making up 95% of the capital. The business is doing well — Brex has seen its customer base grow by 80% in Q1 2021, and doubled revenues last year. The company has now raised a total of $1.2 billion since its inception in 2017.
The fintech offers a breadth of corporate spend services, such as credit cards and cash management accounts, with a primary focus on earlier-stage startups and other mid-market businesses. Competition in digital corporate spend is intense, with Ramp raising $300 million in Series C funding in August, and TripActions pivoting into the space during the pandemic (valued at $7.5 billion). The space is garnering attention for multiple reasons — increased remote spending for employees during the pandemic, more digitizal consumption of finance across the board, as well as the modernization of CFO-type activities as venture eats into SMEs.
Brex is doing all the things you would expect from an engineered attempt at building a software product that sells business financial services. It released Brex API free of charge allowing customers to draw financial information into a customisable interface. The company is also likely to establish a Brex Bank, though they have recently withdrawn their bank charter and federal deposit insurance applications in order to strengthen them for a re-application. Brex has also hired Karandeep Anand as Chief Product Officer out of Facebook/Meta, where he had led the business products group with a global footprint.
Progress like this signals to us that the wholesale / business banking arms of banks are going to eventually be challenged head-on by venture and hedge fund investors.
Visa and ConsenSys are teaming up to build software for and around the concept of central bank digital currencies (CBDCs). The main goal of the partnership is to develop an infrastructure that enables financial institutions to build services on top of CBDC networks. In turn, users could get expanded access to blockchain-based finance, while governments can experiment with onchain disbursements and other modern functionality. This also opens up the possibility of a CBDC-linked Visa card or digital wallet.
There is meaningful progress with China's digital yuan as well as a number of Carribbean countries, though much of the Western world is taking a more skeptical, step-wise approach. There is significant, and perhaps insurmountable, work to be done to bridge the gap between existing systems and blockchain-based financial architecture. The gap is as much philosophical as it is technical and financial. Thus it is encouraging to see the major payment networks participate in pushing the integrations forward.
Visa's CBDC Payment Module is built to onboard CBDCs into existing payment networks, allowing banks and processors to plug into the module to process CBDC-linked payment cards or wallet credentials for users. This sits on top of ConsenSys’ CBDC sandbox powered by Quorum (an enterprise version of Ethereum). We can see the shape of a future CBDC network, with the blockchain technology acting as the chassis for central bank data and fiat tokenization, and Visa bridging the economic path for both businesses and consumers.
Our hope is that such networks are interoperable with public EVM chains in the future, pulling in enormous money supply into Web3.
Web3 incubator, DeFi Alliance, announced its rebrand as Alliance DAO after raising $50 million from fintech industry leaders. The DAO provides mentorship, funding, and access to a community for emerging projects, with the goal of growing Web3 to 1 billion users by 2025.
Alliance DAO has onboarded key players like Coinbase, and helped develop well-known projects in the space, such as Sushi and OlympusDAO. Core Contributor Imran Khan highlights the main reasons for the move to a DAO being (1) faster feedback from the community, and (2) enabling a structure where the future is in the community’s hands. That implies financial returns from holding the DAO token, of course.
Token holders, which will initially be confined to vetted members, can vote on which projects join the community. The DAO treasury, which will be funded in part by protocol generated revenue, can be used to fund development and will be under the structure of a governance proposal. Yes, that does sounds like an investment syndicate to us too. Qiao Wang of Alliance DAO suggested micro-incentivisation for referring start-ups to the community, with the teams themselves receiving token rewards for their contributions. Tokenisation may also create symbiotic relationships between different projects within the community — teams may support one another to grow the overall revenue of the DAO, which will in turn increase the value of the tokens they are rewarded.
We’re big fans of Alliance DAO, their tokenomics, and their authentic position in the ecosystem. That said, when companies start putting “dot com” or “blockchain” or “DAO” in their name, like a lot, it is time to think critically about the market in which they trade.
Rest of the Best
Here are the rest of the updates hitting our radar. Note that DeFi and digital investing now have their own dedicated weekly emails, on Tuesday and Thursday respectively.
BANKING: Novo raises $90 million
2022 Capital Markets Primer: Fintech Equities, SPACs, and Venture (part 1) (link here)
We start a review of the capital markets to orient ourselves in 2022. First, we look at the pricing of public equities, and do a light factor analysis and Shiller ratio comparison. This turns on the warning lights. Next, we review the somewhat painful performance of fintech champion IPO and SPAC transactions, highlighting the disconnect between public and private markets. Finally, we re-affirm the $130B+ of capital recently invested in private fintechs, which creates a positive operating outlook for the next year.
Podcast: Solving climate change through financial services, with Aspiration CEO Andrei Cherny (link here)
In this conversation, we chat with Andrei Cherny, Co-Founder & CEO of
Aspiration, a budding financial services platform for people who want to save the planet by neutralizing their carbon footprint. Their mission is massive, with ~5 million members making a difference in the fight against climate change.
Andrei combines a background as an advisor to some of America’s top companies, the co-founder and president of a media start-up, a financial fraud prosecutor, a historian, a White House aide, a Navy reserve officer, and a nationally-recognized economic policy expert. Andrei has provided strategic counsel to companies such as Intel, Qualcomm, and Bank of America. He has worked with Elizabeth Warren to help start the successful fight for the new Consumer Financial Protection Bureau. A former Clinton White House aide, he was the youngest White House speechwriter in American history.
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