Hey all, happy Friday. Hope y’all had a wonderful week.
Kanye’s Jesus Is King came out today and...holy shit it’s good? I have very low expectations for him and I find it almost impossible to defend Kanye’s politics and beliefs but musically, seems like he’s still got it.
Here’s my favorite song from the album so far:
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This issue of Fintech Today is presented by Galileo Financial Technology.
Galileo had some big news recently: the firm announced a $77 million Series A, led by Accel. The stats are wild: $26 billion in annual payments processed—a 130% increase from the year before. Galileo powers Chime, Monzo US, Transferwise, and more. As a core banking product, Galileo allows their customers to develop high quality fintech products with some unique flexibility for their clients.
To learn more about Galileo, click here. If you’re interested in working with Galileo, email email@example.com (and mention Fintech Today!). We’ll be working together on a lot of cool stuff, so stay tuned 🙂🔥🙂
Breaking Down Cash App’s Investment Product
The rebundling of financial services is in full effect now. As a refresher, rebundling is what I call fintech apps adding another product that’s different than their core product offering. So, Robinhood adding cash management and a debit card, and Wealthfront & Betterment doing the same, Credit Karma offering a high yield savings account, etc...
Rebundling makes sense, strategically. Acquiring customers is getting more expensive, but, in theory, upselling customers you already have is cheaper and easier—they already know and trust your brand (you hope) and they’re already onboarded onto the product, so there’s less friction in getting things up and running.
But out of all the rebundlings out there right now, I’m most excited about Cash App adding fractional commission free trading (with Robinhood being a close second.) The main reason is the demo Cash App caters too—young, underbanked, millennials and Gen Z’ers (is that is? or is it Gen Z’s? Whatever.) While financial literacy for a product like this is super important (something I wrote about before), investing is such a smart way to ensure a) Cash App users don’t go to Robinhood and b) get users familiar with investing. Slowly, depending on the behavior, Cash App could expand into things like synthetic ETF’s and roboadvising tools to make investing simpler and more passive.
From a UI/UX perspective, the design is great and simple. I really like the messaging around investing in your “favorite” companies & stocks too—I think you should always invest in things you know and are passionate about when it comes to active investing, and encouraging that is a smart move.
I’m a nerd that’s fascinated with corporate structure, so I think it’s interesting that Square structured this as a subsidiary—Cash App Investing LLC. After chatting with some friends, the main reason behind this structure is to reduce the regulatory burden the SEC would have on Square as a whole, and limit it to the subsidiary company.
According to the docs, it seems like its made up of a bunch of small acquisitions and external partners:
- Benzinga reported that Square acquired Third Party Trade a few months ago, which focuses on API’s to enable trading features, and Trade Party’s CEO is listed on the documents.
- Also according to FINRA documents, Cash App is using Drive Wealthas a partner too (shoutout to Jason Wenk for digging this up on Twitter btw), most likely for the broker-dealer side of things. Drive Wealth also partners with Revolut and other fintech apps to power commission free trading in apps.
- There are also companies like Blue Tiger Wealth Management listed in the docs too.
It seems like Square’s been thinking about this for awhile—since 2015 according to the documents, which is in line with what I’ve heard through the grapevine. Makes sense—while its becoming easier to add different financial products, it still takes a lot of work and planning to do it right.
Fintech Reference of the Week
Kanye West did an interview with Apple Music’s/Beats Radio’s Zane Lowe, which is always really effing good. But he also shouted out Cash App Investing...talk about influencer marketing amirite.
Chart of the Week
Ark Invest is one of my favorite firms when it comes to fintech investing, and Max Friedrich is one of my favorite analysts. We’ve chatted quite a bit about Venmo & Cash App, so when is report on Venmo came out earlier this week, I wasn’t surprised at how brilliant it was.
Venmo has a little known API that you can tap into, and Ark Invest used this to estimate things like retention and growth rate. Absolutely ingenious. My favorite chart is below, but check out the whole article here.
Max and I will chat a bit more about Cash App & Venmo next week, so stay tuned.
Funding News of the Week
Lotta funding news this week: I wanna highlight two specifically (disclaimer: my friends work there too.)
Current raised a $20 million Series B from Wellington Management Company, Galaxy Digital EOS VC Fund and CMFG Ventures. Current is an interesting product—it started out as a teen focused checking app, controlled by parents, but launched a more widely accessible checking app in late Feb. The company has 500,000 users, and apparently around half of those users are on the checking account product. The NYC-based company has raised $45 million in total and hiring a bunch too.
Very Good Security raised a $35 million Series B, led by Goldman Sachs, and also included Andreessen Horowitz and Vertez Ventures. Simply put, VGS allows business and companies to store aliased versions of customer data, which means that if companies are hacked (and more and more of them are nowadays), customer data remains protected on VGS’s servers.
Job of the Week
Spotify is looking for a Payments Strategy Lead.