Introduction:
Welcome to the latest edition of TechCrunch Fintech! In this article, we will explore the performance of two fintech companies that aim to serve the underserved population. We will also delve into other significant stories in the fintech industry. So, let’s dive in!
Positive Unit Economics and Financial Inclusion: PayJoy’s Success Story
One company that stands out in the fintech space is PayJoy. Combining positive unit economics with a mission to assist the underserved, PayJoy has achieved remarkable milestones. Last year, the company recorded $300 million in annualized revenue while securing $150 million in Series C funding. PayJoy’s unique model revolves around providing pay-as-you-go financing for smartphones to help individuals build credit. Once customers pay off their phones, they can leverage their devices as collateral to apply for loans through PayJoy. This approach not only promotes financial inclusion but also ensures the company’s profitability and growth.
Helping the Underserved Build Credit Responsibly: Petal’s Acquisition by Empower Finance
Another fintech company dedicated to serving the underserved is Petal. With a focus on enabling people to “build credit, not debt,” Petal has garnered attention in the industry. Last May, the company raised $35 million and expressed plans to spin off its data unit. Recently, Empower Finance announced its intention to acquire Petal. Fortune reported that Petal began seeking buyers last year when it faced financial constraints. However, Petal’s spokesperson clarified that both Petal and Empower Finance adopt cash flow underwriting for their credit products. The acquisition will allow Empower Finance to expand its suite of credit cards. This development hints at potential mergers and acquisitions within the fintech sector in the coming years.
TransferGo’s Expansion in the Asia-Pacific Region
TransferGo, a prominent UK-based fintech focused on global remittances, has recently raised $10 million in growth funding. Taiwan-based investor Taiwania Capital has backed TransferGo, aiming to support the company’s expansion into the Asia-Pacific region. This latest investment follows TransferGo’s successful $50 million Series C funding round in 2021. The combination of continuous growth and fresh investment has led to a doubling of TransferGo’s valuation. This expansion showcases the company’s strong market presence and its commitment to providing efficient cross-border remittance services.
Latin America’s Fintech Sector and Y Combinator’s Recent Batch
Y Combinator, a renowned startup accelerator, recently confirmed that Brazilian startup Salvy was the only Latin American company in its latest batch. This represents a significant decrease compared to previous cohorts, especially those during the COVID-19 pandemic when the program was conducted remotely. In contrast, the Winter 2022 batch included 33 Latin American companies. The decline in Latin American representation may be attributed, in part, to the overall state of the fintech sector in the region. Historically, around one-third of all Latin American companies participating in Y Combinator focused on fintech. With fintech funding on the decline, this lack of interest from Y Combinator could be seen as a reflection of the challenges faced by the Latin American fintech ecosystem.
Other Noteworthy Headlines in Fintech
In addition to the aforementioned stories, there are several other noteworthy developments in the fintech industry. Investors are closely monitoring the fintech and e-commerce sectors, which are often labeled as “most hated” due to regulatory scrutiny and market volatility. Stride and Utah have set new precedents in providing benefits for independent workers, highlighting the growing importance of gig economy support. US startup Parafin secured a substantial $125 million warehouse facility from SVB and Trinity Capital, indicating investor confidence in the company’s potential. Tabs, an AI-driven accounts receivable platform, raised $7 million in seed funding to enhance its offerings. Meanwhile, Fortis, a fintech company based in the UAE, secured $20 million in a Series A round, underscoring the region’s growing fintech ecosystem.
Conclusion:
In this edition of TechCrunch Fintech, we explored the success of PayJoy and its positive unit economics, as well as Petal’s acquisition by Empower Finance. We also discussed TransferGo’s expansion plans and the decline in Latin American representation in Y Combinator’s recent batch. Additionally, we highlighted several other significant headlines from the fintech industry. The constantly evolving fintech landscape presents both challenges and opportunities, and it is crucial to stay informed about the latest developments in this dynamic sector.