Blueprint: KKR, Goldman, others invest $350MM in custodian Anchorage; Neobank SPACs MoneyLion and Aspiration; Unicorn growth capital for datatech Nansen and Dune Analytics
Gm Fintech Futurists —
Holiday are coming, and we are starting to wrap up our coverage for the year. Today is the last set of short takes and podcasts for 2021. We do still plan to share a retrospective and maybe a long take, and then see you on the other side!
Our agenda for today is below.
CRYPTO: KKR leads $350M raise for crypto custody bank Anchorage Digital
NEOBANK: MoneyLion to acquire Even Financial, and Leonardo DiCaprio-backed fintech Aspiration raises $315 mln ahead of closing SPAC deal
DATA: Nansen Raises $75M to Expand DeFi and NFT Investor Tools on Ethereum, Solana and More; and Dune Analytics is raising funds at a $1 billion valuation
LONG TAKE: The State of Decentralized network M&A in 2021, with Polygon's $650MM of acquisitions (link here)
PODCAST: Pioneering Crypto ETPs to $3B in assets in 3 years, with 21Shares CEO Hany Rashwan (link here)
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CRYPTO: KKR leads $350M raise for crypto custody bank Anchorage Digital (link here and here)
The crypto custodian wars are in full swing. Anchorage, the OCC bank-chartered crypto custodian, has raised $350 million in a Series D. Its last round was $80 million in February of this year, and clearly lots of things have changed and progressed since then. Direct competitors like Fireblocks have also raised mammoth rounds, and began to aggregate capital. Adjacent companies like Zero Hash (embedded brokerage networks) and MoonPay (payment onramps) became unicorns. And so on.
Alternative institutional investors, and even more orthodox asset managers are hungry for exposure to the DeFi asset class, just look at who is investing — Goldman Sachs, Alameda Research, Andreessen Horowitz, Apollo credit funds, funds and accounts managed by BlackRock, Blockchain Capital, Delta Blockchain Fund, Elad Gil, GIC, GoldenTree Asset Management, Innovius Capital, Kraken, Lux Capital, PayPal Ventures, Senator Investment Group, Standard Investments, Thoma Bravo and Wellington Management.
These companies are investing in companies like Anchorage … because they use them. So expect to see a lot more of this type of thing, rather than less. In particular, expect to see the assets that Anchorage supports flow up into the portfolio management offerings of traditional asset managers, and eventually the brokers and advisors that distribute products to the rest of the world.
NEOBANKS: MoneyLion to acquire Even Financial (link here), and Leonardo DiCaprio-backed fintech Aspiration raises $315 mln ahead of closing SPAC deal (link here)
The B2C fintech SPAC trend is still moving ahead, despite the structural challenges in the SPAC markets. MoneyLion, a neobank that largely monetizes through a “credit builder” product that has gone public via SPAC, is acquiring Even Financial, a financial marketplace that connects and embeds third party financial product providers like banks and insurance companies. We think of it as a lead gen broker.
The deal structure is notable in that the $440 million consideration for Even is in the shape of $346 million of preferred MoneyLion shares, priced at $10 — which is the SPAC offering price. But you know, MoneyLion doesn’t trade at $10, it trades at $3.80. We gave some warning in our initial discussion here.
Separately, the climate-change focused neobank Aspiration has raised $315 million prior to going public with the InterPrivate SPAC next year at a $2.3 billion valuation. This suggests $700 million of proceeds to the company from investors like Robert Downey Jr, Leonardo DiCaprio, Oaktree Capital Management, and former Microsoft chief executive Steve Ballmer (disclosure — we are invested in InterPrivate).
The company will need to demonstrate a number of things to the public market to outperform MoneyLion and look like SoFi, which has had a more successful run using this structure. That something is ARR in the range of 10-20x or enterprise value, and a business model that is less like lending (sorry Affirm) and account management fees, and more like positive-sum growth sectors where customers win with the business.
DATA: Nansen Raises $75M to Expand DeFi and NFT Investor Tools on Ethereum, Solana and More (link here); and Dune Analytics is raising funds at a $1 billion valuation (link here)
There are some intense funding rounds going on.
We highlight the raise from Nansen and Dune Analytics, two of the most loved onchain analytics platforms in the Web3 space. Nansen, founded in 2020, just earned itself a $750 million valuation for about 5,000 customers — suggesting $150,000 in enterprise value per customer. For context, its pricing model is somewhere between $1,400 and $30,000 per year. If every customer is paid, then our guess would be this deal is priced somewhere between 50-75x on revenue. Not sure all the customers are paid.
Dune Analytics, founded in 2018, is raising at a $1 billion valuation; given they have Union Square Ventures and Multicoin in the cap table, we expect this to close. Dune is the default analytics and tracking platform for DeFi protocol traction. The product is built for developers first, as you can see below from the SQL calls. Pricing is $400 per user per month, or about $4,000 per year. To get to a 10x revenue multiple, the company would need 25,000 paying customers.
All this adds to the crypto unicorn index (see the Block version below). We are pleased to see data and analytics companies making a dent in the industry, suggesting that operating models can decouple from financial services revenue. However, price level is definitely quite elevated — in large part because the demand from venture investors for high quality companies, like these, far outstrips supply.
Rest of the Best
Here are the rest of the updates hitting our radar:
CAPITAL MARKETS: JP Morgan Joins Trumid Credit Trading Platform - Markets Media
Analysis: The State of Decentralized network M&A in 2021, with Polygon's $650MM of acquisitions (link here)
We look at the state of M&A in decentralized protocols, and the particular challenges and opportunities they present. Our analysis starts with Polygon, which has just spent $400 million on Mir, after committing $250 million to Hermez Network, in order to build out privacy and scalability technology.
We then revisit several examples of acquisitions and mergers of various networks and business models, highlighting the strange problems that arise in combining corporations with tokens. We end with a few examples that seem more authentic, highlighting how they echo familiar legal rights, like tag alongs and drag alongs, from corporate law.
Podcast: Pioneering Crypto ETPs to $3B in assets in 3 years, with 21Shares CEO Hany Rashwan (link here)
In this conversation, we chat with Hany Rashwan – the founder of Amun and 21Shares. Hany built the company that put out the first physically backed crypto Exchange Traded Product (ETP). In simpler terms, he created a vehicle for people to buy crypto assets, such as Bitcoin or Ethereum, on the stock market. Alongside Cathie Wood of ARK, 21Shares recently submitted a Bitcoin ETF to the SEC. While he waits for the US to get on board, Hany's products are already offered all over Europe, with more than $3 billion under management.
More specifically, we touch on his early entrepreneurial mindset which lead him to building successful businesses, how currency devaluation in Egypt pushed him to create 21Shares, what an Exchange Traded Product (ETP) is and how it related to Exchange Traded Funds (ETFs), the regulatory landscape for crypto-backed ETPs, and so so much more!
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