#324
Going For Broke(r)!

Published:

Feb 22, 2020


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Published:

Feb 22, 2020


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Morgan Stanley employs more than 15,000 human advisors (!) and has built a reputation for providing financial advice to high net worth individuals. The bank is now staking its future on the average Jane / Joe by acquiring online broker firm E-Trade for $13b!

Last October, the formerly 3 big brokerages, Schwab, Ameritrade, and E-Trade cut equity trading commissions to ZERO. Ameritrade’s stock immediately dropped by 26% and shortly thereafter, Schwab acquired them (at a “steep” discount) for $26b!

Morgan Stanley is undeniably acquiring technology in this transaction but more importantly, they are also buying 5m retail customers and their $360b in assets (read: low-cost retail deposits) that will be funneled into highly lucrative loans.

As the largest acquisition by a bank since 2008, banks are officially back in the game!

This is the end of a story that started 7 years ago when Robinhood first opened its doors – and in this short time span brought an entire industry to its knees. Let's see how Goldman, aka the Sherriff of Nottingham, will react…

Portfolio News


It is already possible for Colombians to make money electronic transfers in real-time 24/7 - ACH Colombia has announced its real-time payment initiative powered by portfolio company, Minka - 38k RTP transfers have already been made through 10k active customers, with 5m transactions to be completed by 2020 year-end. Read more

Raise named to the a16z marketplace 100 – The list includes the largest and fastest-growing consumer-facing marketplaces, including portfolio company Raise, ranked 19th. Read more

Vestwell releases advisor portal updates - Portfolio company Vestwell released Phase I of their advisor plan management tools this week! This is the first step in a larger effort to provide advisors with more visibility into client data and better tools. Read more

Going For Broke(r)!


Spotlight turns to Goldman Sachs after Morgan Stanley's E-Trade deal - Instead of opening its own wallet to expand, Goldman is trying to grow a fledgling retail bank, create a treasury-services business, and expand in asset management, corporate lending and trading — largely all from the ground up. Read more

ETrade’s sale is the Death Knell for discount brokerages - Morgan Stanley swooped in, and for $13b in stock it now gets to clothe itself in ETrade’s digital street cred, attracting younger, tech-savvier clients to a bank whose reputation is staid even by Wall Street standards. Read more

Further consolidation in the online brokerage industry - The deal notably follows Charles Schwab's $26b acquisition of TD Ameritrade. The consolidation comes at a time of increasing margin pressure in the brokerage industry, as well as higher emphasis from the big banks on building out their wealth management businesses. Read more

Industry News


Irish drug dealer loses £46m bitcoin codes he hid in fishing rod case - In early 2017 Clifton Collins, an Irish drug dealer, former security guard and award-winning beekeeper had a dilemma: where to hide the codes of his illicit €55m (£46m) bitcoin fortune. Read more

Fintech takeover: LendingClub buys Radius Bank for $185m - LendingClub will acquire a banking license, $1.4b in assets that will provide a stable and cheaper source of funding, and improved margins, no longer needing bank approvals for each loan. Read more

HR Billboard Wars: Rippling starts battle with Gusto - Rippling, a new employee onboarding startup founded by the former Zenefits CEO, had a new billboard aimed at their rivals (and fellow YC alums): “Outgrowing Gusto? Presto change-o.” Read more

Ally Financial to acquire CardWorks for $2.65b - The acquisition will diversify revenues for Ally and add 2.8m credit card accounts, $3.4b in balances, with an avg. FICO score of 630. Read more

BitGo acquires Harbor in a surprise expansion beyond crypto custody - While probably not the outcome recent venture investors were shooting for when investing in Harbor, this marks the first time a single entity in the cryptocurrency space holds a broker-dealer, transfer agent, and a qualified custodian license. Read more

Big data opens up vast new possibilities for insurers - But as the FT points out, the Industry faces questions about how it will use these thousands of new information sources and how will regulators respond? Read more

Patreon enters the micro-lending game with Patreon Capital - The platform allows creators to earn monetary support from fans and is now supporting creators with non-equity cash advances. Read more

Sweden starts testing the world's first central bank digital currency - Sweden is the least cash-dependent country in the world, making it a litmus test for how central banks can react to people using less of the money they print. Read more

New UBS boss brings fintech skill and a whiff of Dutch scandal - Ralph Hamers has earned praise as a champion of AI and digital platforms. At home in Amsterdam, his former bank ING was linked to a money-laundering affair that led to a record $900m fine. Read more

Coinbase and Bitcoin debit cards - Coinbase is the first cryptocurrency company to gain principal membership with Visa, which cuts out expensive middlemen. Coinbase is reportedly looking for new growth areas are its earnings declined by 40% last year. Read more

Select Financings


Brace - Los Angeles based mortgage servicing startup has raised a $10m Series A led by Point72 Ventures. Read more

Concirrus - London based insurtech platform for auto and marine industries raised a $20m Series B round led by AlbionVC. Read more

Copper.co - London based crypto custodian raised $8m in Series A funding led by Target Global, LocalGlobe, and MMC Ventures. Read more

EasyEuro - France based neobank for SME traders between Europe and Asia raised $4m in venture funding led by Shanghai based Ally Capital. Read more

MotoRefi - Washington D.C. based auto refinancing platform raised a $8.6m Series A co-led by Accomplice and Link Ventures. Read more

n2uitive - Seattle based insurtech management platform raised a $1.3m Seed round led by Cascade Seed Fund. Read more

OneTrust - Atlanta based privacy, security, and third-party risk platform has raised a $210m Series B at a $2.7b valuation led by Coatue and Insight Partners. Read more

Ordway - Washington, DC. based post-sales management platform raised a $10m Series A led by CRV. Read more

Toast - Boston based restaurant management and payments platform raised $400m in a new round of funding at a $4.9b valuation, led by Bessemer Venture Partners, TPG, Greenoaks Capital, and Tiger Global Management. Read more


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