Spotted: Two new European unicorns

Tweet of the week 🦉🏆

This week Akash Bajwa (fintech investor at Augmentum) and I hosted a London Fintech Happy Hour which was a great success, if I do say so myself. Check out the rare, dry London summer day event here!

Although numbers were restricted due to government guidelines, we hope to host larger events in the near future.

In collaboration with This Week in Fintech writer Nik Milanovic, we have created a sign up form to keep updated on future events in London, so please click below to sign up!

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Funding 💸

There were 28 deals in the fintech space across the US and Europe with a total investment of $750m. Some highlights are below.

🇪🇺 Pleo raised a $150m Series C at a $1.7bn valuation led by Bain Capital and included Creandum, Seedcamp, Thrive Capital and others. Denmark’s first unicorn!

🇪🇺 CoinShares acquired the ETF business of Elwood Technologies.

🇪🇺 Younited raised $170m from Goldman Sachs and Bridgepoint.

🇪🇺 Bunq raised a €193m Series A at a €1.6bn valuation led by Pollen Street Capital. The largest ever Series A by some reports!

🇪🇺 Juni raised a $21.5m Series A from Cherry Ventures, DST Global and Felix Capital.

🇬🇧 Revolut is said to be raising $1bn from SoftBank with a $30bn-$40bn valuation. Their commitment to their mission was noted.

🇬🇧 Wise had its direct listing debut on Wednesday the first DL on the LSE. Trading started at £8 and at time of writing sits at £9.80, a valuation of ~£8.75bn (~$11bn).

🇬🇧 Moneyhub raised $18m led by Direct Line founder Peter Wood and included NBSVentures and Nationwide Ventures.

🇬🇧 Augmentum raised £55m in its latest funding round to invest in more fintechs.

🇺🇸 Unit21 raised a $34m Series B round led by Tiger Global.

🇺🇸 Zerion raised an $8.2m Series A led by Mosaic Ventures and included Digital Currency Group, Lightspeed Ventures, Blockchain Ventures and Wintermute.

🇺🇸 Circle, creator of USDC, is going public via a SPAC at a $4.5bn valuation.

🇺🇸 Willa raised an $18m Series A led by FinTech Collective and included EQT Ventures and Entree Capital.

Challenger Banking 🚀

🇬🇧 Crown Agents Bank launched a pension solution with biometric authentication.

Digital Assets ₿

🇪🇺 The BIS found that crypto investing does not require new regulation as investors are motivated by speculation, the same as other asset classes. The paper claims “"we disprove the hypothesis that cryptocurrency investors are motivated by distrust in fiat currencies or regulated finance.". Pretty surprising but maybe this means crypto investing has crossed the chasm from early adopters to early majority?

🇬🇧 The UK’s Advertising Standards Authority is cracking down on misleading cryptocurrency advertisements. Luno’s London Underground ads were its first target for underplaying the risks. As crypto firms try to gain mainstream adoption, situations like these are likely to become more common, with certain disclaimers likely to be required.

🇺🇸 BlockFi is finally rolling out its credit card to US customers on its waiting list, which topped 400,000 people. Visa announced it has 50 partnerships with crypto platforms and exchanges allowing digital currency to be spent at 70m merchants via crypto-linked cards. Spending on the cards topped $1bn in H1 2021.

🇺🇸 Square’s hardware lead Jesse Dorogusker confirmed they are building a hardware wallet after rumours surfaced last month.

🌍 August 4th is the proposed date for the Ethereum “London” upgrade which includes EIP-1559 (EIP = Ethereum Improvement Proposal, a proposal to introduce changes to fees to make it easier to estimate the right fee for a transaction, to specify the maximum fee a user is willing to pay and cause part of transaction fees to be burnt.

🌍 With news that Circle was going public via a SPAC, CoinDesk reported on some interesting insights from its SEC filing. Circle makes more money from “transaction and treasury business” than from USDC. It also lost $156m on its buyout and spinout of Poloniex.

Traditional Banking 🏦

🇬🇧 Barclays have suspended payments to Binance from debit and credit cards and is the first bank to do so. Santander later followed suit as the FCA exerts its muscles in the crypto space, despite lacking direct authority over Binance. Binance already stopped Sepa payments in Europe and recruited eToro’s Jonathan Farnell as director of compliance.

Fintech Infrastructure 🚧

🇪🇺 Nordigen released a free tool to connect your bank account to Google Sheets.

Payments 💰

🇪🇺 Klarna is facing a data privacy investigation by Sweden’s regulator as to whether it violated bank secrecy laws following its May data security breach where customers had access to other customers accounts.

🇪🇺 P27 Nordic Payments has received ECB permission for its pan-Nordic payments platform.

🇺🇸 Amex will give US card members digital receipts when they shop at Amazon, giving them more details such as SKUs through a partnership with Verifi.

Crypto 101 🏫

Stablecoins - crypto assets or tokens whose value is pegged to a different, more stable asset. They are collateralised (backed) by the more stable asset and are an attempt to solve one of the main issues with bitcoin and ethereum as stores of value, their price volatility. Bitcoin and ethereum have volatile prices and because consumers and businesses want stability and predictability, they have not taken off as payment mechanisms.

Stablecoins are also used within the decentralised finance (defi) space to trade between different tokens where they may not be liquidity across certain pairs or to quickly moving funds between exchanges.

There are two main types of stablecoins, fiat-collateralised and crypto-collateralised. The two dominant fiat-collateralised stablecoins are collateralised by the US dollar and are Tether (USDT) and USDC. They are largely backed 1-1 with $ so when one new stablecoin is minted, the organisation behind them collects $1 and effectively puts it in the bank.

The other type of stablecoin are crypto-collateralised stablecoins which are backed by other cryptocurrencies such as ether. The most popular of these types is dai, created by the MakerDAO protocol and its value is pegged to $ and backed by eth. Dai is completely decentralised and is run by smart contracts, unlike USDT and USDC which have centralised organisations behind them.

Stablecoins are only as stable as what they are pegged to. With fiat-backed stablecoins, there is a counterparty risk with the physical $ they collect to collateralise it and if the organisation behind the respective stablecoin actually has all of the collateral readily available. As with anything, you cannot remove risk but merely transform it.

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