Putting a Ferrari engine in a Fiat doesn’t make it a Ferrari – but it definitely does improve its performance, as the Fiat Dino once proved.
Publicly traded alternative lenders have been facing immense market pressure, with Lending Club, Ondeck, and Funding Circle all down ~90% since IPO. SoFi’s $1.2b acquisition of Galileo definitively adds horsepower and diversifies revenue ahead of their inevitable IPO. This acquisition is not dissimilar from Lending Club’s acquisition of Radius Bank earlier this year.
As with replacing an engine on a car, the acquisition may have lingering issues. Galileo powers a range of products including payment processing, account setup, direct deposit, early paycheck, and bill pay for a number of challenger banks all of whom are likely competitive with SoFi.
Galileo crossed $100m in ARR and $53b in annualized payments in March – but it remains to be seen whether their customers will consider alternative software providers. SoFi plans to operate Galileo as an arm’s length company akin to AWS, the cloud computing company operated by Amazon and used by many of its competitors.
While no financial details were disclosed, it is widely speculated the majority of the purchase price was in the form of SoFi shares. Shareholders of the combined entity are now betting on the success of integrating a 19-year old engine!
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Antler calling for startups tackling Covid-19: April 15th Deadline - Portfolio company Antler is looking to fund startups to across Mitigation (e.g. masks, contact tracing, surveillance, data infrastructure), Medical Equipment (e.g. test kits, protective devices, ventilators), Remote Health (e.g. telehealth, remote patient monitoring, symptom checkers) and Digital Tools (e.g. remote work, smart delivery, e-learning). Apply now!
Plaid gives lenders access to small business payroll data amidst SBA PPP time crunch - Plaid is building a product that speeds the payroll portion of emergency loan applications from days to a matter of minutes, relieving much of the manual work currently being done. Read more
SoFi’s Ferrari Engine
Consolidation continues in the fintech industry with SoFi purchasing Galileo. - The deal is comprised of $75m in cash, $250m in seller financing debt and $875m in company stock, according to people familiar with the negotiations who asked not to be named because details were not disclosed. Read more
This Fiat Dino is your cheap entry into Ferrari power - For $36k, you can own a Ferrari-powered classic. The Dino is the result of a particular problem Enzo Ferrari encountered in 1967, which had engine restrictions and hence had to sell 500 engines to Fiat. Read more
SoFi acquiring Galileo in $1.2b deal, resulting in a ‘4x’ return for investor Accel - Last October, Accel led a $77m Series A in Galileo. The startup was profitable and previously bootstrapped for 19 years. Sources familiar with the transaction say the transaction represents an impressive “4x” return for Accel. Read more
iCapital Network – New York based alternative investing platform raised $146m in venture funding at an $860m valuation led by Ping An. Read more
Neat - Hong Kong-based challenger bank for SMBs raised $11m in Series A funding led by Pacific Century Group. Read more
Paidy - Japanese consumer online payments startup raised a $48m Series C round extension led by ITOCHU. Read more
Perch - Boston based acquirer of Amazon FBA (fulfillment by Amazon) businesses raised $8m in funding led by Spark Capital. Read more
Phos - UK based software-only PoS for merchants raised €1.3m in Seed funding led by New Vision 3. Read more
Podium - Utah based messaging and payments SaaS startup raised $125m in Series C funding at a $1.5b valuation led by Y Combinator's Continuity Fund. Read more
Sila - Portland, Oregon based ACH Payments API raised $7.7m in Seed funding led by Madrona Venture Group and Oregon Venture Fund. Read more
SourceDay - Austin based supply chain management software startup raised $12.5m in Series B funding led by Baird Capital. Read more
Yapily - London based opening banking API has raised $13m in Series A funding led by Lakestar. Read more
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