Weekly Briefing No. 141 | Start-ups in Search of Rock Star Status.


We’re back from our hiatus and ready to rock. Here’s what’s in store this week:

  • Financings: Yoco, Monese, Alaia & Wellth
  • Robinhood; Varo Money; Citi’s new credit fintech play
  • Crypto drama; The word “fintech”; Tick sizes
  • Funding Circle; Gilligan’s Island; Fintech baseball
  • Posts from Caribou Honig, Philip Kessler & Sam Biddle
  • Should bankers earn more than garbage men, teachers?


Start-ups on the run.

This week, Paul McCartney was everywhere promoting his randy new album, Egypt Station. The renewed attention on the world’s greatest rock star led us to learn about the recording of McCartney’s third post-Beatles album, Band on the Run, with Wings. In short, McCartney had to confront an extraordinary set of circumstances (See below) on the way to creating one of the top 500 albums of all time. What we love about the story is its universality. Indeed, at one time or another, most founding teams have had to confront their own set of extraordinary challenges in their bid to obtain rock star status. Some companies that have taken their own strides as of late include Yoco, a South African maker of wireless card readers, which took in a $16-million Series B, and Monese, a feisty UK-based challenger bank focused on migrants, which announced a $60-million raise. Also, Alaia Capital, a creator of funky structured products, announced a $5.5-million raise, and Wellth, a digital healthcare company that uses behavioral economics to incentivize patient behaviors, closed on a $5.1-million strategic round.


Crazy-amazing Robinhood reveals medium- to long-term IPO plans.

Co-CEO Baiju Bhatt used his time in the chair at last week’s TechCrunch Disrupt to reveal that his multicorn has IPO plans “on the horizon” and that his firm is doing security checks and audits to prepare for that future. Rather notably, Bhatt also revealed that Robinhood, which has raised about $540 million and was inspired by the Occupy Wall Street movement, is “actively looking” for a CFO. So to repeat: The company, which purportedly has twice as many customers as E*Trade and a valuation north of $5 billion, is now looking for a CFO.

Gadot finally arrives (i.e., Varo Money receives national bank charter).

The Beckettian wait is finally over. After years of discussion and back-and-forth between regulators, financial institutions of all stripes and start-ups, the OCC has finally granted approval (preliminarily) to Varo to create an all-mobile national bank.

Citi creates new group to invest in fixed income fintech.

Concurrent with a major revamping of its investment bank, Citi has just done a smart thing by establishing an investment initiative to focus exclusively on backing innovative companies disrupting the institutional debt markets. Start-ups dedicated to less flashy but important areas like trading infrastructure may not generate lots of buzz, but they represent important ways for financial institutions to improve their innovation ground game.

Crypto is getting interesting.

It was a “bad” week for crypto, in the sense that prices were hammered and non-custodial exchange ShapeShift announced a Sovietesque “rewards” program that will soon become mandatory. But the biggest story involved a report that Goldman Sachs is icing its plans to open a crypto trading desk because of regulatory uncertainties. The soap opera took a dramatic turn when Goldman’s CFO Marty Chavez called the report "fake news." Fake or not, the bottom line is this: If you believe in the future of decentralization (for money and/or other things), the recent turmoil in crypto may provide an opportunity to get greedy when others are fearful. For those leaning in that direction, we recommend that you watch a recent interview with Scott Stornetta for perspective. Because if Satoshi is the George Washington of blockchain, Stornetta is the John Adams.

The word “fintech” makes it into the dictionary.

Recently, the word fintech was one of about 840 new ones added to Merriam-Webster’s dictionary. Along with other newbies, which include instagramming and zoodle (a.k.a. zucchini noodles or courgetti), fintech will now assume greater legitimacy in crossword puzzles. However, in the years to come, MW should offer a more expansive definition of the word to emphasize that financial innovation also occurs beyond the greater financial sector. Indeed, some of the most exciting innovations are taking place within companies that usually don’t get invited to fintech conferences or have received funding from fintech VCs.

Tick size pilot takes another blow.

The stock of hot dog purveyor Nathan’s Famous was one of about 1,200 securities chosen for an SEC pilot to have its “tick sizes” changed from one to five cents. Supporters had hoped that with beefier spreads, liquidity providers and/or research houses would be incentivized to provide greater support to smaller stocks. In turn, this could have warmed the water for private firms to go public. But whether it’s because the pilot was badly designed or the medicine wasn’t kosher, it looks like the recently issued findings from Pragma Securities are a death knell. Pragma isn’t a neutral party, but the report is serious enough to show that you can’t just MacGyver a return to the era of tasty trading incentives.

Danish billionaire gets hygge with Funding Circle.

Quickly, who’s the richest person in Denmark? Answer: His name is Anders Holch Povlsen, and in addition to his vast retail holdings, he’s also the second-largest landowner in the UK. Those British holdings will soon expand, as it was recently disclosed that Povlsen would take a ten-percent stake in Funding Circle in conjunction with its recently announced IPO. Ever since we started following Funding Circle, we’ve been impressed by how it’s weathered challenges that have creamed other marketplace platforms. Povlsen’s endorsement is a strong vote of confidence in Funding Circle’s continued staying power.

Crowdfunding continues to be a powerful tool for all kinds of causes.

On Wednesday, a group of sheriffs visited the White House and announced a crowdfunding campaign to finance the construction of a wall along the southern border. Also this week, Dawn Wells, who played Mary Ann Summers on Gilligan’s Island and was the subject of perhaps 100 million teenage crushes between the 1970s and 90s, announced a GoFundMe campaign to help her cover unanticipated costs of a long hospital stay. Of course, we support the rights of both parties to use crowdfunding platforms. We also hope that Mary Ann’s campaign hits its target and that the sheriffs’ campaign is ultimately abandoned on a desert island.

You couldn’t Google your employees’ skills (until now).

Sponsored by Uiba

As organizations scale, lots of things improve for employees. Benefits can get more generous, and the cafeteria coffee may get fancier. But if you’re a manager trying to get a grip on your in-house talent, growing team sizes can pose a big challenge, especially if you’re in a knowledge-intensive industry. In fact, according to McKinsey & Co., the average knowledge worker spends about 20 percent of their time looking for internal information or tracking down colleagues who can help with specific tasks. That’s where Uiba comes in. With its new Internal Knowledge Engine, you can finally unearth all of the in-house knowledge residing in your company with the click of a button.

alt text


A fintech fastball for minor leaguers.

Somehow, we didn’t know about BLA (Big League Advance), a two-year-old company started by an ex-Phillies pitcher that uses its predictive technology to forecast the future earnings of baseball players. With the model in hand, BLA offers an upfront lump-sum payment in exchange for a share of the player’s future MLB salary. For minor leaguers long on potential but short on cash, BLA, which according to Sports Illustrated has raised a staggering $150 million, represents a compelling albeit controversial alternative.

The most important insurtech innovation in the world right now.

If you could only rally your insurance company around one technology, what should it be? That’s the question posed and answered by our hatted friend, Caribou Honig, in a recent piece published in In$urance CIO Outlook.

Investment management’s “galling reality.”

“Unnecessary complexity has been used to oversell, overcharge, and overcomplicate a viable path towards prosperity for the average client.” No, we didn’t pull that statement from a consumer advocate lamenting the demise of  the DOL fiduciary rule. It’s from SWS Partners’ Phillip Kessler in a new piece discussing the investment management industry.

When will Congress get serious about Big Tech in between hearings?

Either Facebook’s Sheryl Sandberg lied under oath, or Facebook has lousy values. That’s the opinion of writer Sam Biddle in The Intercept in response to Sandberg’s recent testimony on Capitol Hill (See below). But to Sandberg and Jack Dorsey’s credit, at least they showed up. How is it that Alphabet/Google, circa 2018, can essentially pull an Elijah before Congress without consequence? What can one of the few major politicians who understands tech do about it?

Garbage men should earn more than bankers.

We don’t fully agree with the title of this piece written by historian and writer Rutger Bregman, but we do think it raises an interesting question. Specifically, why does the free market pay the “agents of prosperity” (i.e., police officers, nurses, garbage collectors and educators) so poorly relative to those professions that essentially shift around money or documents? His question also brings new perspective to our understanding of Airbnb. According to a study Airbnb is promoting, nearly one in ten Airbnb hosts nationally are teachers, including at least 20% of all Airbnb hosts in Wisconsin, Utah and Ohio. Wow.


“The most common way people give up their power is by thinking they don't have any.”

~ Alice Walker