#358
Drop In The Bucket

Published:

Oct 17, 2020


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Published:

Oct 17, 2020


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So vast is the world of financial assets that if investors allocate just 200bps of the total $73t of professionally managed assets to “crypto majors”, the institutionally-held digital asset class will cross $1.5t!

While adoption rates will vary, multiple public and private corporates are making the leap of holding parts of their treasury reserves in digital assets. MicroStrategy (a $1.5b public business analytics company) has deployed over $400m in Bitcoin, and Square announced they bought ~$50m of Bitcoin (which represents about 1% of the company’s total assets) this past week.

Asset managers are also exploring Bitcoin as a hedge - Stone Ridge ($10b asset manager) has allocated over $100m, and VC Social Capital revealed it uses Bitcoin as a 1% portfolio hedge.

Fidelity Digital Assets released a report this week backing Bitcoin as an alternative investment, highlighting its ability to fulfill diversification and reduce risk. Coupled with the fact that crypto is less correlated to broader public markets, a buy and hold strategy seems increasingly appealing. In Fidelity’s own words, crypto’s current market capitalization is a “drop in the bucket” compared to its disruption potential.

Portfolio News


The future of institutional digital asset management has arrived: Why FinTech Collective led a $50m equity round into NYDIG - Over the next decade, institutions will not enter the digital asset market because of the store of value thesis alone, or on the assumption that the Bitcoin price will only go up over the coming decade. A nuanced, high-touch approach will be needed to properly service institutional clients and capitalize on this transformational opportunity. We believe NYDIG is best positioned to deliver upon this vision — hence, our decision to lead NYDIG’s oversubscribed $50m growth equity round. Read more

Global VC Antler invests in seven UK startups - Portfolio company Antler reported that 2,600 individuals from over 30 different nationalities applied for this London-based cohort, a 50% rise from the previous year. After conducting 440 face-to-face interviews, 71 founders were selected for the program, half of whom had previously launched a startup. Just over half of the companies that raised money (four out of seven) have at least one woman founder, which the VC points out is above the London average of 21%. Read more

How Ocrolus CEO Sam Bobley built his document analytics company into a $100m fintech firm - Ocrolus cofounder and CEO Sam Bobley shares in a recent interview how he built up Ocrolus from an idea in 2014 to a reality, and why the company plans to expand into banking and mortgage document reading. Read more

Drop In The Bucket


Stone Ridge reveals $115m Bitcoin investment as part of billion-dollar spinoff - Forbes feature article this week - out of stealth, NYDIG, a New York based digital asset manager announces a $50m equity round led by FinTech Collective, and reveals it is custodying $115m of Bitcoin on behalf of Stone Ridge for their corporate treasury. Read more

Crypto gets a second look from corporate investors seeking yield and hedge - The head of the country’s only licensed and publicly traded cryptocurrency broker says tighter regulation and exponentially higher yields are causing corporate treasury and cash management accounts to seriously consider this alternative asset class. This in the wake of the OCC’s Sept. 21 landmark announcement that allowed national banks and federal savings associations to hold certain crypto assets for the first time. Read more

MicroStrategy CEO on Square’s ‘extraordinary’ bitcoin investment - Between August 11 and September 14, Microstrategy invested $425m into Bitcoin. Then, approximately three weeks later, Square followed suit with a smaller $50m investment. Square didn’t make this investment for financial reasons, according to Saylor. Instead, their investment is somewhat of a political or ethical statement. Read more

Fidelity report says Bitcoin’s market cap is ‘drop in the bucket’ of potential - Fidelity Digital Assets said bitcoin’s market cap has plenty of room to grow in a Tuesday report on the benchmark cryptocurrency’s uncorrelated nature. Fidelity argued that while institutional inflows may damp bitcoin’s uncorrelated performance, the crypto is “fundamentally less exposed” to the “economic headwinds” that other assets will likely face. Read more

Industry News


China’s Shenzhen giving away millions in sovereign digital yuan to test technology and boost consumption - The digital yuan, known officially as the Digital Currency Electronic Payment (DCEP), is part of China’s plan to move towards a cashless society. Unlike bitcoin and other cryptocurrencies, the DCEP is issued and backed by the country’s central bank, the People’s Bank of China (PBOC), and is designed as a digital version of the nation’s currency. Read more

European fintech giant Revolut is close to applying for a bank charter in California, sources say - Even though Revolut’s bank charter will be with California, it will allow the lender to operate widely throughout the U.S. via interstate agreements. Read more

PayPal takes aim at Klarna with ‘Pay in 3’ service for UK shoppers - PayPal is launching a “buy now, pay later” service in the U.K. that lets shoppers finance their purchases over three interest-free monthly installments. The company has grown customer accounts by 300% year-on-year in the second quarter and now has more than 24m active users in the U.K., dwarfing Klarna’s almost 10m customers in the country. Read more

Killer Mike's new Black-owned bank opens its doors - Greenwood was created by Bounce TV founder Ryan Glover and his close friend, rapper-activist Michael "Killer Mike" Render. The leadership team at Greenwood, which includes former Atlanta Mayor Andrew Young, unveiled their new platform this week after raising $3m in seed funding in June. Read more

Wall Street set for first $100b trading year in a decade - Sell-side traders rode a wave of activity as markets plunged at the start of pandemic-spurred lockdowns before embarking on dramatic rebounds. Trading gains since the start of the pandemic have helped offset weakness in consumer businesses at the nation’s biggest banks, where loan-loss provisions piled up in the first half of the year. Read more

Robinhood internal probe finds hackers hit almost 2,000 accounts - This week, Robinhood sent push notifications to users suggesting they enable two-factor authentication on their accounts. It also plans to send customers more advice on security and it will work quickly with customers to secure their holdings. Read more

Stripe acquires Nigeria’s Paystack for $200m+ to expand into the African continent - The deal underscores two interesting points about Stripe, now valued at $36b and regularly tipped as an IPO candidate. First is how it is doubling down on geographic expansion and second is how Stripe is putting a bet on the emerging markets of Africa specifically in the future of its own growth. Read more

N26 mulls new funding round at $3.5b valuation - N26’s native Germany is among countries whose citizens were considered especially wedded to cash prior to the pandemic. N26 is among the financial institutions that have benefited from flexibility in meeting customer expectations that is only possible because they are what the industry refers to as “digitally mature” institutions. Read more

Bitcoin OGs reveal their original Bitcoin mining rigs - It's been over 11 years since Bitcoin's genesis block was mined by Satoshi Nakamoto. In this article Charlie Shrem, Charlie Lee and other pioneers of the Bitcoin industry dig up old photographs of their original mining rigs—including the second ever ASIC miner. Read more

IMF, World Bank, G20 countries to create central Bank digital currency rules - According to the report, by the end of 2022 the G20 members, the IMF, the World Bank and the BIS will have completed regulatory stablecoin frameworks and research and selection of CBDC designs, technologies and experiments. Additionally, the IMF and the World Bank will have the technical capabilities to facilitate CBDC transactions involving the countries by the end of 2025. Read more

FSB publishes roadmap for improving cross-border payments - The Financial Stability Board (FSB) has published its roadmap for boosting cross-border payments, which have traditionally been slow, expensive and unreliable. Read more

A quarter century of hype - 25 years of the Gartner hype cycle - A chap called Mark used his COVID lockdown time to create a video representation of data scraped from 25 years of technology assessments from the Gartner hype cycle. Great to see how technology matures, and just how long something can be stuck in the 'about to happen' stage. Read more

Fintechs drive financial inclusion in LatAm during the pandemic - Faced with the need to maintain the flow of payments and transactions amid social distancing, millions of Latin Americans joined the financial system for the first time in 2020, and many did so through fintech solutions. Read more

Cryptocurrency ETFs under active consideration, says SEC chair - Tokenization allows a designated cryptocurrency asset — similar to bitcoin — to represent a single security, such as a stock, or a basket of securities, like a fund or an ETF. A handful of firms have begun exploring the idea. Read more

Select Financings


Aave - London based decentralized lending and borrowing protocol raised $25m in new funding led by Blockchain Capital, Standard Crypto, and Blockchain.com. Read more

Alpaca - San Mateo based API-powered commission-free equities trading service raised $10m in Series A funding led by Portag3. Read more

Aumni - Salt Lake City based investment analytics company for the private capital markets raised $3m in additional Series A funding from Donnelley Financial Solutions, DLA Piper and Orrick. Read more

Casai - Mexico City based "smart apartment" startup raised $23m in Series A funding led by a16z. Read more

Clair - New York based startup focused on rapid pay for hourly and gig economy workers raised $4.5m in Seed funding led by Upfront Ventures. Read more

Finexio - Orlando based AP payments as-a-service platform raised $23m in new funding led by Medalist Partners. Read more

Fivestars - San Francisco based small business payments and marketing startup raises $52.5m in Series D funding led by Salt Partners. Read more

Kasa Living - San Francisco based flexible accommodations startup raised $30m in Series B funding led by Ribbit Capital. Read more

M1 Finance - Chicago based automated money management platform raised $45m in Series C funding led by Left Lane Capital. Read more

Marco Financial - Miami based tech-enabled financing platform built for small and medium-sized Latin American exporters raised $26m in Seed funding and credit from Antler, Struck Capital and Arcadia Funds. Read more

Nuvemshop - Latin America based commerce platform raised $30m in Series C funding round led by Qualcomm Ventures and Kaszek Ventures. Read more

Razorpay - India based payment processing startup raised $100m in Series D funding co-led by GIC and Sequoia India. Read more

Snapdocs - San Francisco based platform to simplify mortgage loan closings raised $60m in Series C funding led by YC Continuity. Read more

Spendesk - Paris based spend management platform for SMBs raised $18m in Series B funding led by Eight Roads Ventures. Read more

Wealthsimple - Canada based robo-advisor raised $87m in new funding led by TCV. Read more


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