PrizePool's Casino-Like Savings Accounts Fold
In this newsletter, we'll also cover Stori's expansion in Colombia, Klarna's profit surge, insurtech funding, and a fintech that want to help undocumented latinos open bank accounts.
United-States:
PrizePool's Casino-Like Savings Accounts Fold
US-based fintech startup PrizePool has notified its customers to transfer their funds to another institution, as it’s shutting down following an acquisition by an unnamed party. It seems unlikely that PrizePool, which raised $18.6 million USD since its inception in 2019, is a financial success. Regardless, the idea that US customers would respond well to this offering was compelling. The fintech’s savings accounts not only earned interest, but also made their holders eligible for weekly drawings where they could win up to a million dollars.
Given the popularity of premium bond accounts in the UK (bonds that don’t pay interest, but whose holders can win prize money), this hybrid approach could have been successful in the US. Savings accounts offered by PrizePool, on the other hand, were paying interest—a meager 0.30% on their free plan and 4.5% on their paid plan. The rise in interest rates, coupled with the fact that PrizePool is not a bank and therefore had to partner with FDIC member Evolve Bank & Trust to offer savings accounts, might have made their unit economics unfavourable.
Source: Fintech Futures
Mexico:
Stori Takes on Colombia’s Underbanked with $100M Bet
Mexican fintech Stori is set to invest 100 million USD over the next three years to expand into Colombia, targeting the underbanked population with payment cards and high-interest deposit accounts. Stori will offer credit lines starting at 200,000 pesos ($50) to Colombians, even those without a credit history. Stori has already added 3 million active users in Mexico, where it became the first credit card provider for 80% of its customers. Fresh off a $212 million funding round, which included Goldman Sachs, Stori reached unicorn status in 2022 with a valuation of $1.2 billion.
Source: BNN Bloomberg
Sweden:
Klarna's Revenue Jumps 27% as IPO Buzz Builds
Klarna Bank AB reported a 27% revenue increase in the first half of 2024, pushing its adjusted profit to 673 million kronor (66 million USD) compared to a 456 million kronor (44 million USD) loss a year earlier. The boost comes as Klarna trims operating expenses and leans heavily on AI, which now handles work equivalent to 700 employees, according to CEO Sebastian Siemiatkowski. With a potential US IPO on the horizon in 2025, Klarna is eyeing a $20 billion valuation—up from $6.7 billion in 2022, but still a far cry from its $45.6 billion peak in 2021.
Source: Bloomberg
United-States:
$21.5 Million in Funding for a Neobank Catering to Illegal Latinos
Comun, a fintech focused on Latino migrants, has raised 21.5 million USD in Series A funding led by Redpoint Ventures. Founded in 2021, Comun offers a Spanish-first platform that accepts over 100 Latin American IDs, allowing users to bypass traditional banks’ requirements like US Social Security numbers and proof of address. The app provides a checking account, a Visa debit card, and early paycheck access. With around 11 million undocumented migrants in the US facing financial service barriers, Comun is stepping in to fill the gap. As the US heads into a contentious election with immigration at the forefront and Trump promising mass deportations, Comun’s investors might be betting on a Democratic win next November.
Source: TechCrunch
Canada:
Fintech Superfund Hires a Head of AI
Montreal-based investment giant Sagard Holdings has appointed Parinaz Sobhani as its first Head of AI. With over 25 billion USD in assets under management and a portfolio that includes fintechs funds Portage and fintech incubator Diagram as well as many late stage fintechs such as financial planning software Conqest and neobank Koho, Sagard is no stranger to spotting fintech winners. One of its portfolio company, Wealthsimple, now manages $43.6 billion CAD in assets and has 2.5 million customers in Canada. By leveraging Sobhani’s expertise, Sagard might want to utilize AI to identify the next Wealthsimple.
Source: Globe & Mail
US & Asia:
InsurTech Funding Drops 67% in the US, But Rises 400% in Southeast Asia
Funding for InsurTech companies in the US has taken a significant hit, dropping 67% year-over-year in Q2 2024 to $237 million USD, down from $714 million in the same period last year, according to FinTech Global Research. Investor caution has led to fewer deals and smaller average deal sizes, reflecting a broader pullback as the sector navigates economic uncertainties. Meanwhile, Southeast Asia is seeing the opposite trend. A report by EY reveals that InsurTech funding in the region surged by 400% to $2.35 billion USD in 2023, driven by major deals like Sumitomo Life's $2 billion acquisition of Singlife and Bolttech's $246 million Series B round. It's important to note that this data is from 2023, so while the comparison highlights divergent trends, the exact figures for 2024 in Southeast Asia are not yet available.
Sources: Fintech Global & Tech in Asia
Have some fintech news you think I should include in the Global Fintech Insider newsletter or heard some rumours you’d like me to look into? Drop me an email at: jrbrault@protonmail.com