Turning On The Faucet


May 02, 2020



May 02, 2020



WhatsApp has 2b customers around the world and 400m in India alone. Facebook acquired the messaging app for $22b in 2014 and has yet to turn the faucets on to monetize its prized asset.

The path to convert eyeballs into dollars for a consumer internet startup has historically been through ads. Due to privacy concerns, Whatsapp was forced to scrap that attempt and is joining the inevitable movement of offering financial services as a meaningful lever for revenue growth.

WhatsApp’s payments business in India will pilot with 10m users via UPI (United Payments Interface). UPI was launched as a real-time inter-bank payment system. Just three years after its inception, the value of transactions through UPI represents 19% of India’s GDP, having amassed over 100m users and processed 1.25b transactions in March alone. Its success has led the US Federal Reserve to propose a real-time gross settlement service.

With the payments revenues limited due to the cap on merchant fees by UPI, the path to unlocking value lies in integrating a full suite of financial services. Whatsapp declared its intent to the local regulator to provide credit or loans (the same week Amazon launched PayLater in the country), in addition to launching message-based e-commerce orders with Jio a week after investing ~$6b in the telecom giant.

Financial products may become a foundational part of every technology company and large consumer brand – and once the faucet is open, it is tough to turn it off...

Portfolio News

DeFi sees its first major token distribution with Universal Market Access listing - Exciting times ahead for DeFi (decentralized finance) with portfolio company UMA listing its decentralized governance token on the decentralized exchange Uniswap, the first-ever Initial Uniswap Offering (IUO). Read More

Ocrolus adds senior technical leadership - Portfolio company Ocrolus has built out it's tech ranks. Joining the team are CTO Pieter Nel, who helped develop the world's first mobile instant messenger; VP of Product Douglas Melchior, formerly of AppNexus and Goldman Sachs; and VP of Analytics David Snitkof, former co-founder of Orchard (acquired by Kabbage). Read more

Sigma Ratings extending help during pandemic via complimentary due diligence checks - Portfolio company Sigma Ratings is offering state governments, hospital groups or multilateral development organizations complimentary due diligence checks during COVID-19. Read more

Flutterwave launches SME e-commerce portal - Portfolio company Flutterwave accelerated the development of Flutterwave Store, a portal for African merchants to create a digital shop to sell online. With the acceleration of digital commerce, the product will allow SMEs to go digital. Read more

Turning On The Faucet

On Facebook earnings call, Mark Zuckerberg opens up about his deal with Mukesh Ambani’s Reliance Jio - Jio acquired a majority stake in Nowfloats, a platform for retailers to build omni-channel digital store fronts. The Facebook partnership will likely accelerate the road for Whatsapp to become a super-app in India. Read more

WhatsApp looking at lending in India via partnerships with local banks - the messaging app has made significant progress in advancing its relationship with local regulators. With approval looking likely for payments, lending stands as the next step. Read more

Facebook-Jio deal may create competition in India’s e-payments—just like RBI wanted - Some observers might see the Facebook-Reliance Jio move as threatening UPI and Indian public infrastructure, but in fact, this is exactly what is being encouraged by the government. Competitors including Google Tez, PhonePe, and PayTM are keeping tabs. Read more

Industry News

Virtual rate cut forces Nintendo gamers into riskier assets - The estimated 12m players of Nintendo’s cartoon fantasy Animal Crossing: New Horizons were informed last week about the move, in which the Bank of Nook slashed the monthly interest paid on savings from around 0.5% to just 0.05%. Read more

The pandemic is liberating firms to experiment with radical new ideas - The Economist explores the defining feature of the latest innovation revolution - breakneck speed! Companies are being forced to raise their corporate metabolism and overcome “analysis paralysis”, an affliction caused by top managers having pored over the same irrelevant case studies at business school. Read more

Goldman’s top tech banker: here come the debt deals - Airbnb recently tapped Goldman and Morgan Stanley, to help raise $2b of debt, at high rates. Private tech companies typically have a harder time borrowing money from traditional lenders than public firms do because they don’t have the cash flow to borrow against and they lack credit ratings. This often leaves convertible loans as the only option. Read more

Despite current environment, fintech startups continue to hire and raise funds - Data from HackerRank shows that interviews at financial services and fintech firms are up 39% since Jan. 1. The increase is mainly because companies are getting comfortable with remote hires, which increases the applicant pool by 10x. Read more

RBS abandons Monzo-challenger Bó - Royal Bank of Scotland has ended an attempt to compete with digital challenger banks like Monzo and Revolut, just 6 months after it was launched to the public. Bó will merge with Mettle, another RBS digital-only challenger brand for SMBs. Read more

Countries and companies tap fixed-income market with ‘social bonds’ for COVID relief - Countries and corporations are tapping a growing corner of the $100t global bond market with designated ‘social’ and ‘sustainability’ bonds. Read more

Cyberthreats add to LatAm bank challenges in pandemic - COVID-19 has added a challenge for digital banking, demanding more robust cybersecurity technologies and an urgent need to improve security in the digital culture, for employees and users. Read more

Argentina’s Central Bank trials blockchain for new interbank settlement layer - The Central Bank of Argentina (BCRA) is testing a new blockchain-powered clearing system that could be used by some of the country's largest financial institutions. Read more

Fintech startups sidelined in second round of SBA PPP funding - The new round of funding for the Paycheck Protection Program, which includes $60b for smaller businesses, excludes non-depository banks from acting as lenders. Read more

Andreessen Horowitz just closed its second crypto fund - Two years ago, a16z launched its first dedicated $300m crypto fund. It has raised a second $515m in the same vein. Read more

Growth in mobile wallets in LatAm: nearly 7m operating in Argentina already - Argentine Fintech Chamber reports that use rates for mobile wallets have increased 120-800%, mostly since the start of the COVID induced lockdown. Read more

Select Financings

Factorial - Barcelona based HR automation platform for SMBs raised €15m in a Series A round of funding led by CRV. Read more

Finom - Amsterdam based challenger bank for businesses raised a €6.5m Seed funding round led by Target Global. Read more

Flagstone - London based cash management platform raised $15m in funding led by OMERS Ventures. Read more

Okra – Nigeria based API for fintech apps raised $1m in pre-Seed financing led by TLcom Capital. Read more

Oriente - Hong Kong based infrastructure for digital financial services raised $50m in Series B funding led by Peter Lee. Read more

Qoala - Indonesia based insurtech platform raised $13.5m in Series A financing led by Centauri Fund. Read more

Stash New York based consumer finance and savings app raised $112m in a strategic round of funding from LendingTree. Read more

Wise - California based challenger bank for SMBs raised a $5.7m Seed round led by Base10 Partners. Read more


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