Eye Of Sauron


Sep 19, 2020



Sep 19, 2020



Smoke from the West Coast traveled across the US this week and is now well on its way to Europe. From our HQ in NYC - the sky was hazy and the sun resembled the Eye of Sauron.

Climate change risk has plagued US insurers over the last several years and the severity is growing. A task force led by several US financial regulators issued a 200-page report warning that climate change poses “serious emerging risks to the U.S. financial system.” Many central banks in other countries are conducting climate “stress tests,” and, in Europe, many companies are now reporting their climate risks.

Such disclosures are not required in the U.S., but BlackRock, the world’s largest asset manager, says it sees climate change as a clear systemic financial risk. Banks like Morgan Stanley, Citi, and Bank of America have agreed to tally the greenhouse gas emissions financed by their lending portfolios.

This past week, we participated in the Copenhagen Fintech Week, where the focus of the discussion was the fintech community’s role in sustainability and climate change. While some think that "it'll start getting cooler" in California, the picture below would suggest otherwise. Perhaps Sauron has left Mordor to take advantage of some cut-price New York commercial real estate and taken up residence on the top floor of the Freedom Tower?

Portfolio News

Octane acquires the Motorcycle Group from Bonnier Corp. - Media Brands include Cycle World, Motorcyclist, Dirt Rider, Motorcycle Cruiser, UTV Driver, ATV Rider, and Cycle Volta. Combining these brands with Octane's frictionless financing experience will help more consumers discover and connect with the vehicles of their dreams. Read more

MoneyLion launches new thematic investing solutions - The new thematic portfolios are designed as packaged solutions to meet certain investment interests or preferences of MoneyLion investors, and are offered as part of MoneyLion's fully managed investing offering. Additionally, MoneyLion members will be able to include their new thematic portfolios within their existing investment accounts, making MoneyLion the first digital offering to allow users to combine multiple strategies in a single account. Read more

Survey says: fintech on the rise during COVID - Eighty percent of Americans now say they can manage their finances without a physical bank branch, according to a new survey commissioned by Plaid, which is well positioned to benefit from this behavior. Since COVID struck, Plaid has experienced a 44 percent increase in usage across its customer base March through May when compared to the same period last year. In self-directed brokerage, Plaid saw an even greater increase at 300 percent year over year. Read more

Why Mexico’s SMBs need a fintech operating system and not another bank - In an interview with Karen Webster, Vilash Poovala - founder and CEO of portfolio company Oyster - discusses how financial platforms, powered by open banking, can serve as alternatives for business banking in Mexico. Read more

Eye Of Sauron

Climate stress tests will eventually influence European bank capital - French and UK banking regulators are among the first to require stress tests for climate change, which will make banks more aware of how climate risk can increase other types of risk, including credit, market, business and reputational risk. Greater awareness should help to drive banks’ sustainability objectives, and while the French and UK stress tests will not formally test banks’ capital adequacy, Fitch expects that climate-change risks will eventually feed into prudential capital requirements across Europe. Read more

Federal report warns of financial havoc from climate change - The costs of wildfires, storms, droughts and floods impact everything from insurance and mortgage markets to pension funds and other financial institutions. Those observations are not entirely new, but they carry new weight coming with the imprimatur of the regulator of complex financial instruments like futures, swaps and other derivatives that help fix the price of commodities like corn, oil and wheat. It is the first wide-ranging federal government study focused on the specific impacts of climate change on Wall Street. Read more

Amazon exec discusses company Climate Pledge Fund - This episode of the Axios Re:Cap podcast digs into how Amazon hopes the fund will help achieve its goal of being carbon neutral by 2040, and whether the plan is more substance than spin. Read more

Industry News

Uniswap now valued at more than $5b - The decentralized protocol for automated liquidity provision on Ethereum launched their token this week. The supply of 1b tokens is owned by more than 50k addresses. Read more

Who wants to be a SPAC millionaire? - Chamath Palihapitiya, the former Facebook executive, had an extremely awkward exchange with Andrew Sorkin on CNBC this week, over how much he was making in fees through his SPAC / Opendoor deal (“$70m in fees”). Read more

German fintech startup backed by Peter Thiel taken down by coronavirus - Monedo, formerly known as Kreditech, once the largest German fintech startup backed by the likes of Peter Thiel, JC Flowers and media giant Naspers, has filed for bankruptcy after the impact of the pandemic took its toll on the company. Read more

UBS chairman maps out Credit Suisse merger - UBS chairman Axel Weber has used external management consultants to examine the potential for a deal but no formal discussions have taken place. The planning comes at a time of upheaval for both banks, with each undergoing leadership change and coming under pressure to cut costs, as the coronavirus pandemic prompts renewed interest in bank consolidation across Europe. Read more

Even Fidelity’s $230b star manager has Robinhood anxiety - Will Danoff has been wondering why billions of dollars keep flowing out of the Contrafund, the giant mutual fund he manages at Fidelity Investments. Performance isn’t the problem. He’s up 21% this year, trouncing the S&P 500’s 6.2% return. His conclusion: Today’s kids want something sexier. Read more

SWIFT to create new cross-border real-time rails - SWIFT said its platform will improve interactions between financial institutions, optimize speed and provide transparency and predictability from one account to another anywhere. The move has the potential to provide instant transactions between 4b accounts serviced by financial institutions across SWIFT’s network. Read more

Kraken wins bank charter approval - Headquartered in Cheyenne, Wyoming, Kraken Financial is the first digital asset company in U.S. history to receive a bank charter recognized under federal and state law, and will be the first regulated, U.S. bank to provide comprehensive deposit-taking, custody and fiduciary services for digital assets. Read more

Square launches payroll feature that could boost its banking business through the Cash App - Square is letting some small business employees get a portion of their earned wages ahead of time. The payments company also announced an “instant payments” feature, which lets businesses fund payroll immediately using money in their Square balance. Both products push users towards direct deposit through the Cash App, which has taken off as customers use it more like a bank account this year amid the pandemic. Read more

Brazil’s Nubank buys Advent-backed broker Easynvest as part of plan to become full-service financial provider - The move illustrates growing competition among the country’s five biggest lenders - which account for more than 80% of Brazil’s deposits – with newer platforms such as those from XP Inc, BTG Pactual and Guide already luring billions of reais in savings. Read more

Goldman Sachs takes what it learned from a $100m acquisition to upgrade the Marcus app - The bank released the first version of a personal finance management tool that gives Marcus customers a top-down view of all their financial accounts, as well as insights into spending and a monthly snapshot of their budget. Read more

Some of the UK's biggest banks sign a government-backed pledge to improve collaboration with fintech companies - Barclays, HSBC, Lloyds, NatWest and Santander have already signed the pledge, the key principles of which require them to provide clear guidance to technology firms on the onboarding process. Read more

Revolut saga spotlights concerns over digital banks’ service standards - Being repaid the £150,000 in dollars and euros that he had lent to a relative 10 years ago should have been good news for Richard Walker. Instead, it was the beginning of an eight-week digital in-app chat nightmare this summer. Read more

Is an algorithm less racist than a loan officer? - Digital mortgage platforms have the potential to reduce discrimination. But automated systems provide rich opportunities to perpetuate bias, too. Read more

Law & border: the Brexit trade game - In this Bloomberg game you get to decide how to survive as a northern England manufacturer whose sales form part of the £300b of exports that go to the EU from Britain each year. Now the U.K. has left the bloc, will you still be able to deliver? Read more

Select Financings

Acko - India based digital insurer raised $60m in Series D funding led by Munich Re Ventures. Read more

Affirm - San Francisco based point-of-sale (POS), buy now, pay later (BNPL) lender raised $500m in Series G funding led by GIC and Durable Capital Partners. Read more

Alloy - New York based identity operating system for the financial services industry raised $40m in Series B funding led by Canapi Ventures. Read more

CashKaro - India based cashback and coupon site raised $10m in Series B funding led by Korea Investment Partners. Read more

Chime - San Francisco based challenger bank raised $485m in Series F funding at a $14.5b valuation. Read more

dLocal Group - Uruguay based provider of payment processing solutions in emerging markets raised $200m in new funding led by General Atlantic. Read more

Factris - Amsterdam based fintech company focused on unpaid invoices raised €5m in Series A funding led by AB Ventures. Read more

First AML - New Zealand based anti-money laundering startup raised $5.4 million in Series A funding led by Bedrock Capital. Read more

Finch - New York based fintech service for millenials to invest via a checking account raised $1.8m in Seed funding led by Mendoza Ventures. Read more

Klarna - Sweden based payments platform for e-commerce raised $650m in primary and secondary funding led by Silver Lake. Read more

Veem - San Francisco based business payments network raised $31m in strategic funding led by Truist Ventures. Read more


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