Hi y’all, Cokie here.
Clay Wilkes, CEO of Galileo, wrote an article I cannot recommend enough: “To boost Black communities, support Black-owned banks.” I’m not going to recap here because you’re doing yourself a disservice if you don’t read it in its entirety.
It’s ladies night here at Fintech Today! Realized this edition was super female-focused, so I’m going to shut up and let you read. Sometimes the best thing we can do with our respective pulpits is step away -- to better amplify the accomplishments of others.
This week’s playlist is dedicated to Senator Kamala Harris. It is my honor and privilege to bring you funtech friday: at last - bangers by Black, female artists through the ages.
The News: by Cokie Hasiotis and Lodovico de Boni
American Express is in advanced talks to buy Kabbage, a small business lender. This doesn’t come as a huge surprise, AmEx has long been aiming for the small business market, and this opportunity would make them a massive lender to mom & pop shops. The deal is rumored to be all-cash at $850M. Kabbage is backed by SoftBank, Vision Fund, and Reverence Capital Partners and was last valued at over $1B in 2017, after SoftBank invested $250M. Given all the economic uncertain around small businesses, the SMB lending space has taken a massive hit recently—OnDeck Capital was acquired in a $90 million cash and stock deal after going public at a $1.3 billion valuation.
Square’s Cash App was recently reported to have generated $875 million in bitcoin revenue resulting in $17 million of bitcoin gross profit in their Q2 filings for 2020. Square’s success seems to be creating a domino effect in the space with some other big name players such as PayPal and SoFi entering into talks with crypto firms in an effort to follow suit. While Square continues to demonstrate the mainstream potential crypto has, it’s also clear that they have yet to factor in the social cost of families, once again, having to explain what Bitcoin is to that one distant aunt who appears to be incapable of properly pronouncing Chipotle.
This issue is brought to you by Kunai, a fintech focused development agency. The Kunai blog posted a really compelling piece on the gamification of fintech. Everyone’s talking about how people are treating the stock market like sports betting, and the essay argues that similar transformations are going to happen in other areas of fintech as well, like passive investing.
The question going forward will be whether or not crypto firm’s intend to take a play out of these fintechs’ playbooks and start dipping their feet into other segments of financial services. Recent announcements such as Coinbase’s revelation of its 35 million users dwarfing the 13 million registered accounts at Robinhood and eToro’s ongoing FINRA talks to start stock offerings in the U.S make the case that this question might actually be less about the ‘if’ and more about the ‘when.’ However, I talked to Frank Chapparo about this yesterday following his article speculating on whether cryptos will move into traditional financial services. He asked me what I thought about crypto in fintech offerings. As of right now, crypto trading and investing is a more complete fintech offering is a feature, not a product. We haven’t seen the long term value of crypto in fintech applications yet. Remember all those cards that came out a few years ago that issued cards linked to users’ crypto holding? What the hell am I gonna do, buy Juul pods with Bitcoin? Honey, no.
In Latin America, women are stepping up as fintech leaders, with five times as many female-founded fintechs as the global average. Financial services is so male dominated that less than 10% of senior positions are held by women. In 2019, fintech received 31 percent of the region’s venture capital, and more than 35 percent of Latin American fintech startups have female founders. 70% of people in Latin America don’t have a bank account, but 80% have a smartphone. Those are prime conditions for enabling fintech entrepreneurs to develop applications that actually help to solve many of the gaps in payments and infrastructure, as well as giving more people non-predatory access to financial services.
Fundraising news
Sequoia Capital named its first US female partner, Polyvore’s CEO Jess Lee. This move comes after the backlash following Chairman Michael Moritz said that the firm was unwilling to lower its standards to meet quotas. Well, nobody could accuse Sequoia of lowering its standards with this announcement. Polyvore was purchased by Yahoo for $200M in 2015 and Lee created a team culture so valuable that Yahoo spent an additional $40M in employee retention costs.
VC culture has overwhelmingly relied on “bros funding bros.” Imagine a world where that isn’t true. Where LGBTQ+, BIPOC, and female founders supported each other. Imagine a world where every company you want to work for isn’t a white guy named “Tom” telling you about his *vision* for “a *superapp* for wealthy millennials.” Just imagine.
Congratulations to Jess Lee, we can’t wait to see what you do.
Q&A with Ramona Ortega, Founder & CEO of My Money, My Future
Cokie: Tell us a little about yourself.
Growing up we didn’t have much money so it was always a stressful topic. Both my parents were farmworkers growing up so the impact of intergenerational poverty was felt by my immediate family and community.
Cokie: How did you come up with the idea for My Money, My Future?
So financial insecurity and the racial wealth gap hits close to home, which is why I have dedicated my career to solving this problem across different industries and it is also why I believe fintech companies like My Money Money My Future are key to solving one of American’s most pressing problems.
The Problem:
Black and Latinx families hold 1 cent of wealth to every dollar a White family holds and it is this racial wealth gap that is a contributing factor to the disproportionate impact of COVID and the social unrest.
For most Americans, personal finance is confusing and overwhelming but for communities of color that have been overlooked and underserved, they often don’t know where to start, they don’t understand financial products and they don’t feel like they have a trusted partner.
As a result, billions of dollars are left on the table by financial institutions who are unable to reach these customers
Solution:
I created My Money My Future as a mission driven financial services company to empower a new generation to manage their money with confidence and build wealth.
Specifically, our first product, Money Made Simple, is a platform that uses data and culturally specific content to help users make informed financial decisions, choose the right products and makes it simple to save, invest and build wealth. We also have in developed a bespoke insurance product for the gig economy.
Cokie: Have you experienced any barriers to valuable resources, mentorship, or funding?
As a Latinx woman working in law and finance I knew the challenges I was going to face but nothing could have prepared me for the amount of entrenched bias and discriminationn under the guise of pattern matching or closed networks in VC. Black and Latinx founders are essentially being redlined from the innovation economy and from the wealth that is being created in tech companies. Hundreds of billions of dollars have been deployed into fintech just this year yet so few of those dollars are going to diverse founders. If we are not at the table as. Funwe are not going to be represented in VC or in creating products that serve 40% of the population.
Cokie: What's your next big hurdle to overcome?
Our next big hurdle is raising an institutional seed round to scale our product. There is a lot of opportunity in the market right now given the social unrest and the economic impact of covid but we need capital to support our team and further develop our product.
Cokie: What has been your most valuable resource as a founder?
My most valuable resources as a founder has been other founders. This is a long journey and there are very few people who can relate so my founders circle has been my rock.
Tweets of the week
A flurry of tweets this week from VCs about what they look for before they invest left founders… hopelessly confused.
Literally me.
As the government flippantly continues fruitless conversations regarding extended pandemic assistance programs, many are wondering:
One company has offered a nice perk, allowing employees to offload low-value things. Or just things they didn’t quite feel like dealing with that day. This is a strategy I can happily get behind.
It’s been a couple weeks since Twitter has had a debate on how much a founder should work, here’s a great take:
Julie reminds us of darker times, respond and tell her what the future of payments holds for all of us.
