News

B2B Fintech Radar: July 5, 2022

On the radar this week:

Q&A with David Putts of Billon

Fung, a crypto payments infrastructure provider, raised a $2.7 million pre-seed.

System 9, a digital currency market-maker, raised a $5.7 million round.

Dynamic, an infrastructure builder for decentralized digital wallets, raised a $7.5 million round.

Flowdesk, a French digital asset manager, raised $30 million.

Kaiko, a digital currency data provider, raised a $53 million Series B.

Polysign, a builder of digital asset infrastructure for institutional investors, raised a $53 million Series C.

Singletrack, a capital markets client engagement tool, raised growth funding.

Claira, a document intelligence tool for financial contracts, raised strategic funding from Citi.

Abacus, an IT managed services provider for financial services, raised a private equity round.

CAIS, an alternative investing platform, raised private equity funding.

Edge Tradeworks, a platform for trading whole loans, raised funding from FTX Ventures.

MassMutual launched a $400 million venture fund to invest in fintech companies based in the US and Israel.

Wise co-founder Taavet Hinrikus launched a €250m fund to invest €1 to €10 million in early-stage founders.

Conversion Capital raised $122 million for its third fintech-focused fund.

Q&A with David Putts of Billon

1. Tell us a bit about yourself and your company.

I am the Chief Growth Officer of Billon – the fintech scaleup which created the Unified Enterprise DLT System.  What makes Billon special is that it saw weaknesses in the ability for blockchain protocols to handle the complexity of compliance.  For this reason, Billon creates a new, eco-friendly layer 1 protocol which unifies fiat digital cash, documents and non-cash tokens into a single, high-performance distributed ledger (DLT). The system, designed for maximum throughput and low cost of maintenance, meets regulatory requirements and solves challenges for the wide adoption of blockchain technologies. As a result of this innovation, we are now moving past the early commercialisation stage, and we have over 20 clients.

Before joining Billon I was a challenger bank leader.  I founded or ran two challenger banks, building them from scratch – Inteligo in Poland and Equa in Czechia – and I also became a payment expert with several years of experience in both Barclays and HSBC. The passion for challenging the status quo has always been in my blood, even during my early years as a consultant at McKinsey, so you could say that I have been fighting for change during my entire 30-year career.

http://www.fintechforum.de/qa-with-david-putts-chief-growth-officer-billon/

Crypto payments startup Fung raises $2.7m to help Europe’s SMEs accept digital assets

Amsterdam-based crypto payments infrastructure startup Fung has raised $2.7m in a pre-seed funding round co-led by by Global Founders Capital, Kingsway Capital, Kindred Capital and Karatage. 

What does Fung do? 

Fung is setting up the infrastructure to enable ecommerce merchants to accept crypto payments, handling the behind-the-scenes “payment rails” to convert digital assets into fiat money, as well as the compliance issues related to these transactions. To begin with, the company is targeting ecommerce SMEs. 

Fung says it’s “on a path” to becoming fully regulated by the Dutch Central Bank for both fiat and crypto — and seems pretty confident it will secure this status, as it’s already billing itself as “the first regulated payments platform unifying crypto and fiat payment rails”. 

Who’s investing in Fung? 

  • Global Founders Capital
  • Kingsway Capital
  • Kindred Capital 
  • Karatage 

What’s the crypto payments infrastructure market like? 

  • Fung’s main, larger rivals are the crypto payments startup MoonPay and, as of fairly recently, Stripe. In Europe, Warsaw’s Ramp also handles on and off-ramping for crypto payments and the compliance issues that go with that, and it’s raised $65m to date.
  • Fung is hoping that targeting a specific niche will give it an edge. The company says that SME ecommerce businesses that want to accept fiat and crypto payments have been left behind by the likes of MoonPay thus far.
  • European regulators are grappling with how to regulate the crypto market — including questions about reporting transactions over a certain value (something that doesn’t happen with fiat currencies) and banning “unhosted” wallets, which are held by an individual rather than an exchange or financial institution.
  • Places like Switzerland and Singapore have more rules specific to crypto in place, leading some crypto startups to base themselves out of these countries to avoid issues with regulation at a later stage of growth.
  • If Fung manages to get its activities regulated by the Dutch central bank from an early stage, this will put it in an advantageous position as it’s less likely to reach a regulatory standstill when it has more clients on board further down the line.
https://sifted.eu/articles/crypto-payments-startup-fung-regulation/?utm_source=substack&utm_medium=email

System 9 Closes $5.7M Series A Funding Round

System 9, a Los Angeles, CA-based digital asset market-making company focused on the alt-coin market, closed a $5.7m equity financing round. 

The round was led by Capital6 Eagle with participation from Kronos Asset Management, C2 Ventures, Gate Ventures, Ascendex Ventures, as well as several blockchain investors.

The company intends to use the funds to further scale the technology infrastructure & business operations supporting its proprietary market-making, and to expand its service offerings.

Led by Peter Sokolow, CEO, Marc Orenstein, CFO, and Joshua Baker, COO, System 9 is a digital asset market making firm providing software-based trading services to token issuers and digital asset exchanges to build liquidity, increase stability, and augment price discovery. With additional offices in London, and Singapore, System 9 has grown over the past two years and is now servicing more than 80 clients.

Digital Wallet Maker Dynamic Raises $7.5M from a16z

Developers are continuing to work on new infrastructure for the web3 ecosystem despite the bear market.

On June 28, Dynamic Labs, a team working to make digital asset wallets a single sign-on device (SSO) for use across the web, launched in closed beta.

The team also announced it had raised $7.5M in a closed round led by Andreessen Horowitz, the Silicon Valley venture capital firm. Leading  web3 VCs Circle Ventures, Solana Ventures, and Chapter One also participated in the round.

Single Click

Dynamic’s dashboard allows dApp devs to launch support for multiple wallets and chains with a single click instead of requiring them to create unique custom code for each chain and wallet. Its kits also allow developers to provide users with specific tokens access to exclusive features, and to block wallets flagged by blockchain intelligence firm, Chainalysis, or the U.S. Office of Foreign Assets Control.

The project also offers an account-management dashboard so developers can track connected wallets. Devs create processes for users to complete know-your-customer verification for compliance purposes. 

French digital asset tech firm Flowdesk raises $30 million

Active in the cryptocurrency sector for several years, the four co-founders of Flowdesk, Guilhem Chaumont, Paul Bugnot, François Cluzeau and Balthazar Giraux have been working in this sector since 2017 after careers in banking, algorithmic trading, engineering and entrepreneurship.

During their respective experiences, they were marked by the siloing and fracturing of marketplaces and the technological barrier to properly handle the liquidity of crypto-asset projects. In 2020 they chose to develop an infrastructure that would allow them to interconnect and trade on these exchanges, while guaranteeing the redundancy and scalability needed to support the growing number of crypto projects.

An innovative product: Market-Making-as-a-Service (MMaaS)

Flowdesk is thus the originator of a trading infrastructure that allows interconnection with more than 60 cryptocurrency exchange platforms. A technology that its teams use on behalf of Flowdesk as well as for their clients and which allows them to offer four types of services:

  • Asset management
  • Brokerage
  • Custody
  • Market-making

Market-making is Flowdesk’s flagship service and its most differentiating product. It addresses the needs of the majority of the 10,000 cryptocurrency issuers with significant liquidity issues. By making its technology and traders available to these players, Flowdesk allows them to manage their cryptocurrency token liquidity themselves with their own funds. The service is called Market-Making-as-a-Service in reference to digital models based on simply providing technology to customers who commit their own resources.

https://www.finextra.com/pressarticle/93209/french-digital-asset-tech-firm-flowdesk-raises-30-million?utm_source=substack&utm_medium=email

Blockchain Analytics Firm Kaiko Raises $53M Series B Led by Eight Roads Amid Bear Market

Kaiko, the Paris-based blockchain analytics company, raised $53 million in a Series B funding round, it said in a press release Tuesday.

  • The funding comes in a bear market that has seen bitcoin lose over half its value this year. The round tripled the firms’ valuation, according to Bloomberg. A Kaiko representative confirmed the Bloomberg report to CoinDesk via email.
  • The round was led by early Alibaba (BABA) backer Eight Roads. growth equity investment fund Revaia, French venture capital (VC) firm Alven, Berlin-based VC Point9, fintech investment firm Anthemis and VC Underscore.
  • The Paris-based firm offers institutions such as Deutsche Borse data from over 100 centralized and decentralized exchanges, including historic information dating back over 10 years.
https://www.coindesk.com/business/2022/06/28/blockchain-analytics-firm-kaiko-raises-53m-series-b-led-by-eight-roads-amid-bear-market/?utm_source=substack&utm_medium=email

Fintech Firm PolySign Raises $53M to Expand Staff

Blockchain fintech firm PolySign has raised $53 million in a Series C funding round with participation from Cowen Digital, Brevan Howard, GSR and others, the company said Tuesday in a press release. Valuation for the company following the latest funding round was not disclosed.

In addition to the funding round, PolySign has also secured a $25 million credit facility from private equity firm Boathouse Capital.

PolySign provides institutional grade infrastructure for investors through its subsidiary Standard Custody & Trust Company, as well as fund administration via MG Stover, a firm that PolySign recently acquired.

According to PolySign CEO Jack McDonald, the company plans to use the funding to fuel its “net hiring mode” by increasing its headcount from the current 165 full-time employees by 20% to 30%, and recruiting talent from the world of traditional finance.

“We’re looking for people ideally that have experience in crypto or digital assets. We’re also looking for people who understand and have serviced institutional clientele,” McDonald told CoinDesk. “It’s either finding people that have an expressed interest in the space or experience, or at least are curious and want to come on board.”

PolySign has been actively growing its custody and funding administration products over the past year. In May 2021, Cowen agreed to provide its crypto custody services to the firm as part of PolySign’s $53 million Series B funding round led by Cowen. And in April of this year, PolySign acquired MG Stover.

According to McDonald, PolySign currently works with over 200 clients representing over 400 different funds and products, and manages about $35 billion in assets.

https://www.coindesk.com/business/2022/06/28/fintech-firm-polysign-raises-53m-to-expand-staff/?utm_source=substack&utm_medium=email

CAIS Receives Strategic Investment from Hamilton Lane

NEW YORK–(BUSINESS WIRE)–CAIS, the leading alternative investment platform, today announced a strategic investment from Hamilton Lane (NASDAQ: HLNE), a leading private markets investment management firm with more than $901 billion in assets under management and supervision. Hamilton Lane is the latest in a series of CAIS investors that have participated in the most recent financing, including Apollo, Motive Partners, Franklin Templeton, Reverence Capital Partners and Stone Point Ventures, which has resulted in the Company’s enterprise valuation exceeding $1.1 billion. Terms of the investment were not disclosed.

“We are thrilled to welcome another strong partner that shares our mission to level the playing field for RIAs, independent broker dealers, aggregators, and custodians looking to allocate to alternative investments,” said Matt Brown, Founder and CEO of CAIS. “Hamilton Lane brings tremendous value to CAIS as a strategic partner that is well-versed across private markets investing and data-driven innovation.”

The new capital will further CAIS’s mission to modernize how the independent advisor community can access and learn about alternative investments, while also connecting asset managers with the multi-trillion-dollar private wealth channel. Specifically, CAIS will continue to develop technology, expand its global team, enhance the advisor experience through personalized learning, and automate back-end processes for financial advisors and fund managers alike. It is Hamilton Lane’s intention to onboard some of its evergreen and closed-end products to the CAIS platform over time.

https://www.hamiltonlane.com/en-US/News/dc4a0d99-80ba-4de6-a018-708bf4ac1a6e/CAIS-Receives-Strategic-Investment-from-Hamilton-L?utm_source=substack&utm_medium=email

FFL invests in Abacus Group

FFL Partners (“FFL”), a private equity firm focused on growth investments in tech-enabled business services and healthcare companies, today announced that it has completed a strategic growth investment in Abacus Group (“Abacus,” or “the Company”), a leading financial services-focused IT Managed Services Provider (“MSP”) specializing in hedge fund, private equity, venture capital and family office clients.

Terms of the private transaction were not disclosed.

Founded in 2008, Abacus manages clients’ entire IT stack via a tech-enabled streamlined offering specifically designed for the unique needs of the financial services industry. The innovative and award-winning Abacus Cloud platform allows investment managers to source all technology as-a-service, offering the capacity to scale on-demand to meet current and future IT, cybersecurity, and compliance requirements. Founded in San Francisco and headquartered in New York City, Abacus has over 250 employees and serves more than 650 clients with on-site support teams in every major financial city across the U.S. and the U.K.

“We have evaluated over 25 MSPs in the last three years and Abacus is the clear leader in the industry due to the strength of its management team, leading cloud platform, and service approach purpose-built for financial services companies that cannot afford to compromise on compliance and cybersecurity,” said Jonathon Bunt, Director at FFL. “We look forward to partnering with Abacus Founder and CEO Chris Grandi and his management team as they invest further in supporting their existing clients and expand to new clients both organically and through strategic acquisitions.”

“FFL has a deep understanding of our business and our target markets and has a great reputation for partnering with founder-led businesses like Abacus to help them scale,” said Grandi. “I am confident that the resources, business acumen and energy the FFL team brings makes them the ideal partner for Abacus as we enter our next chapter of growth.”

https://www.finextra.com/pressarticle/93205/ffl-invests-in-abacus-group?utm_source=substack&utm_medium=email

Claira Receives Strategic Investment Led by Citi SPRINT to Accelerate Digital Transformation with Next-Gen Document Intelligence Technology

NEW YORK & LONDON–(BUSINESS WIRE)–Claira LLC (www.claira.io), the document intelligence fintech, today announced the company has received strategic investment from Citi Spread Products Investment Technologies (SPRINT), the strategic investing arm of the bank’s Global Spread Products division.

The new capital will support Claira’s product development and go-to-market strategy to accelerate digital transformation through the adoption of the company’s AI-powered technology to transform the document analysis process for finance and trading professionals.

“We’re excited about Claira and the new document intelligence solutions the team is bringing to the market. CLO professionals can spend more than 20 minutes analyzing a single structured credit document. Through Claira’s technology, the document analysis process is vastly reduced, cutting to mere minutes the time it takes to extract relevant sections, perform initial analysis, and interpret results to deliver actionable insights on pricing,” said Vitaliy Kozak, Global Co-Head of Secondary CLO, ABS and CDO Trading at Citi.

Citi will collaborate with Claira to reinvent document intelligence and develop next-generation data analysis solutions to support its business, starting with municipal prospectuses and collateralized loan obligations (CLO).

“Claira’s AI-enabled credit document analysis is well-suited for the $4 trillion municipal bond market comprising over 50,000 issuers and more than one million unique securities. Their use of specialized AI and pre-trained models greatly surpasses legacy Natural Language Processing solutions, making Claira a game changer that’s poised to transform our market,” said Patrick Brett, Managing Director, Head of Municipal Debt Capital Markets & Capital Solutions at Citi.

https://www.businesswire.com/news/home/20220629005288/en/Claira-Receives-Strategic-Investment-Led-by-Citi-SPRINT-to-Accelerate-Digital-Transformation-with-Next-Gen-Document-Intelligence-Technology?utm_source=substack&utm_medium=email

Singletrack secures private equity investment

Singletrack, the capital markets client engagement and analytics expert, today announced a significant capital growth investment from Accel-KKR, a leading technology-focused private equity firm.

The investment will enable Singletrack to accelerate expansion plans into global markets and execute on strategic M&A. Founded in 2009, Singletrack is an engagement, research management and analytics platform purpose-built by industry professionals for capital markets, helping clients on both the sell and buy sides maximise revenue, efficiency and profitability.

Accel-KKR logo

“Our success within the space can be measured in several ways: from our client base, which includes top performing independent investment banks, to our 29-country global footprint and our expanded product offerings which serve both buy and sell sides,” says Stuart Berwick, co-founder and CEO of Singletrack. “As the capital markets grow in opportunity and complexity, we are poised for aggressive market expansion. This investment from Accel-KKR is a great catalyst for Singletrack and our mission.”

Singletrack’s heritage is rooted in capital markets. Founders Stuart Berwick and Paul Dyson have decades of experience driving innovation at global investment banks. They developed Singletrack in 2009 as a radical new approach to capital markets CRM. Singletrack’s sell side platform leverages assets and information for sales and trading, research, events and corporate finance, using an array of advanced tools including AI and machine learning to surface deep client behaviour insights and inform client strategy. On the buy side, the company offers a vendor relationship platform that seamlessly captures interactions of all types with brokers and other research providers, handles voting, manages contracts and more. The resultant data informs research acquisition strategies, vendor management, and allocation of research finance.

https://www.finextra.com/pressarticle/93147/singletrack-secures-private-equity-investment?utm_source=substack&utm_medium=email

FTX Ventures Invests in Edge Tradeworks

Edge Tradeworks, a Charlotte, NC-based platform designed to address the demand for an efficient, transparent and profitable way to trade whole loans, today received an investment from FTX Ventures.

The amount of the deal was not disclosed.

Edge Tradeworks is finalizing a Series A round that will accelerate market expansion and will drive growth in both the loan trading and analytics subscription components of its platform. In addition, FTX Venture’s investment fortifies the company’s plans to integrate blockchain technology into their product offerings.

Led by John Roberts, Co-Founder & CEO, Edge Tradeworks was founded in 2016 to address the demand for a more efficient, transparent and profitable way to trade whole loans. Edge’s technology offers deep analytics and data that empower bankers and analysts to make more informed decisions about their business, their market, their peers and the loans they trade.

MassMutual Ventures Announces New Fund Focused on North America and Israel

BOSTON–(BUSINESS WIRE)–MassMutual Ventures (MMV) announced today that its U.S.- based team has launched a new fund to continue investing in early and growth-stage companies in the financial technology, cybersecurity, enterprise SaaS, and digital health sectors. With this latest fund, the Boston-based team will manage a total of $400 million targeting companies in North America and Israel.

MMV Managing Directors Eric Emmons and Mark Goodman have led the Boston-based team’s investment efforts since MMV’s inception in 2014, and Principal Charles Svirk joined the team shortly thereafter.

“Over the past eight years, we’ve steadily expanded MassMutual Ventures’ team and reach while executing against our proven investment strategy,” noted Emmons. “MMV’s established sourcing and partnership platform provides us with a scalable way to back an increasing number of exceptional companies during this current economic climate.”

“MMV plays an active role in our portfolio companies’ ongoing development through board governance, strategic advice, recruiting, and customer introductions,” noted Goodman. “The new fund will be supported by the invaluable access to a leading financial services company with a deep expertise and network in fintech, cybersecurity, data science, and technology infrastructure.”

To date, MMV’s Boston-based team has backed more than 40 companies, with successful exits including Recorded Future, which was acquired by Insight Partners, and RiskIQ, which was acquired by Microsoft. The current portfolio includes category-defining companies, such as LinkSquares, Insurify, Affinity, Ledger Investing, and Prove Identity. “MMV is an active, hands-on partner,” said Svirk. “Once we are on the cap table, the entire MMV team is working for our portfolio company.”

“MMV’s overall investment capital has more than doubled in size in just two years between our U.S. team and team that invests across the Asia-Pacific region and Europe, underscoring our commitment to build a truly global platform,” said Doug Russell, Managing Director and Head of MassMutual Ventures. “This latest fund allows our U.S. team to build on the success and momentum the MMV fund family has realized in backing founders and companies that are fundamentally transforming the industries within our investment focus.”

https://www.businesswire.com/news/home/20220629005362/en/MassMutual-Ventures-Announces-New-Fund-Focused-on-North-America-and-Israel?utm_source=substack&utm_medium=email

Wise’s Taavet Hinrikus launches €250m fund for tech founders

Taavet Hinrikus, Ian Hogarth, Khaled Helioui and Sten Tamkivi have unveiled Plural, an investment platform for the next generation of tech founders with global potential.

Plural will lead early-stage rounds between €1 and €10 million, focused on acting as a more workable investor for new startups.

Plural is targeted for “unemployables” as Hogarth calls them – experienced founders who have built a project from the ground up and worked for themselves and find it challenging to work under anyone else. Plural is a platform for these ‘unemployables’ to channel their entrepreneurial spirit.

“Founding a company is a craft and the best way to learn that craft is to work alongside those who have done it before,” expresses co-founder of Wise, Hinrikus. He believes that Plural will be “the investors we would have liked to have when we were building our own companies.”

Through Plural, Hogarth, Helioui, Tamkivi, and Hinrikus have already invested in 14 tech companies, including metaverse firm Ready Player Me, NFT infrastructure platform NFTport, and student banking app MOS.

Hogarth, Helioui, Tamkivi, and Hinrikus are founders of multiple successful startups – including Wise, Songkick, Teleport, and Certific. They also contributed to building Skype, Bigpoint, and Topia. All four angel investors have sponsored numerous well-known companies such as Deliveroo, Uber, Bolt, Chorus, and Pipedrive.

Helioui notes: “So much opportunity is left untapped today as exceptional founders often fail to meet standard investors’ pattern recognition criteria. Sadly, investors lack the risk appetite needed to fulfil founders’ ambitions and consequently, the full impact founders seek cannot be realised. By changing the funding mechanisms that act as conservative gatekeepers today we can unlock so much potential.”

https://www.finextra.com/newsarticle/40532/wises-taavet-hinrikus-launches-250m-fund-for-tech-founders?utm_source=substack&utm_medium=email

A look into how Conversion Capital plans to back fintech and infrastructure startups out of its new, 6x larger fund

When Christian Lawless founded Conversion Capital in 2015, fintech was only starting to take off.

But Lawless, who started the venture firm after serving in leadership positions in capital markets at Lehman Brothers and Barclays, had a vision that financial services infrastructure would be unbundled as companies moved critical operating infrastructure to the cloud. Lawless raised $10 million and $20 million for Conversion Capital’s first and second funds, respectively.

Since Conversion Capital’s formation, the firm has backed more than 60 startups, and counts among its portfolio the likes of corporate spend giant Ramp, Vesta, Figure, Braid, Blend, Wisetack and Booster Fuels, among others. It has seen 17 exits, mostly through M&A and one IPO (Blend).

In the years since Conversion was founded, fintech has essentially exploded — driven by a pandemic-induced, accelerated digital transformation on the part of financial services companies all over the world. Lawless’ belief that infrastructure is the key to unlocking innovation in the space has been validated as infrastructure companies continue to be among the largest recipients of venture funding in the space, even in a downturn.

Today, Conversion Capital is announcing that it has raised $122 million for its third fund — more than six times the size of its previous fund — to back early-stage fintech and infrastructure startups. Lawless said he and his partners, Blend co-founders Eugene Marinelli and Erin Collard, set out to raise $100 million and hit that target by the fourth quarter of last year. The firm then raised another $22 million in the first quarter of 2022. It currently has $254 million in assets under management.

Conversion plans to back 25 to 30 fintech companies out of its latest fund, reserving at least 30% for follow-on investments. It will focus on startups that are building software, cloud infrastructure and data technologies. So far, the firm has begun deploying capital from the new fund across the fintech landscape and into adjacent industries it believes are “undergoing structural transformation.”

Conversion will deploy initial checks ranging from $500,000 to $5 million into pre-seed through Series A companies, with “founder-led engineering teams.” In fact, Lawless said Conversion is betting on a trend he suspects will take off — engineers from companies that have gone public leaving to start their own companies.