Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you\u2019re reading this as a post on our site, sign up\u00a0<\/em>here<\/em>\u00a0so you can receive it directly in the future. Every week, I\u2019ll take a look at the hottest fintech news of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There\u2019s a lot of fintech news out there and it\u2019s my job to stay on top of it \u2014 and make sense of it \u2014 so you can stay in the know. \u2014\u00a0<\/em>Mary Ann<\/em><\/a><\/p>\n As we all know, the housing market goes through cycles. Low interest rates mean more purchases and refinances. Higher interest rates mean far fewer purchases and refinances \u2014 and lots of business for fintechs operating in the real estate industry.<\/p>\n In 2020, historically low interest rates led to a surge in both rates and purchases. Existing home buyers rushed to alter the terms of their loans and aspiring home buyers took advantage of those low rates to purchase homes. Factor in that more people were spending more time at home than ever due to COVID shelter-in-place orders, home<\/em> took on new meaning. Suddenly, many needed more space. Others took advantage of new remote work policies and being constrained by commutes to relocate to new homes.<\/p>\n This led to a boom in business for startups catering to home buyers. Companies (like digital mortgage lender Better.com) couldn\u2019t keep up and had to go on a hiring spree to meet all the consumer demand. Venture dollars flowed into proptech after proptech.<\/p>\n Then 2022 came.<\/p>\n Mortgage interest rates, which began their ascent in 2021, continued to climb\u2026significantly. Prospective home buyers, turned off by the rate surge as well as the competitive and overheated housing markets, began to reconsider their plans, as buying was suddenly far less appealing. At the same time, as the venture market slowed dramatically and suddenly, raising capital was much harder.<\/p>\n Layoffs in the sector began \u2014 and they took place in a range of real estate tech companies, big and small. Digital mortgage lender Better.com<\/strong> conducted its first of four layoffs in the past nine months on December 1, 2021. Its fourth layoff was scheduled to take place last week before news of it leaked to some employees, and the media. (You can read my story on that here).<\/p>\n And, real estate tech startup Reali<\/strong> announced last week that it had begun a shutdown and would be laying off most of its workforce on September 9.<\/p>\n In a press release, co-founder and chairman Amit Haller said \u201cthe challenging real estate and financial market conditions and unfavorable capital-raising environment\u201d led to the decision to wind down operations.<\/p>\n \u201cReali was one of the pioneering companies to offer the \u2018buy before you sell\u2019 and \u2018cash offer\u2019 programs to homeowners,\u201d he said in the release. \u201cWe believed deeply in benefiting the consumer foremost in every transaction.\u201d<\/p>\n Readers reacted with shock that a company could burn through so much cash, so fast.<\/p>\n Indeed, a little birdie told me that six-year-old Reali had been burning through cash and <\/em>is\u00a0in debt as it tries to sell off parts of its business. The company did not respond to my requests for comment.<\/p>\n Now, to be fair, Reali and Better.com aren\u2019t the only ones facing challenges in the real estate tech world. Earlier this month, another \u201cbuy before you sell\u201d startup Homeward laid off 20% of its staff. And Redfin and Compass let go of a combined 900+ people in mid-June. In February, online brokerage Homie laid off about one-third of its staff, or some 90 to 100 people.<\/p>\n While Better.com and Reali aren\u2019t in the same exact<\/em> space, they both cater(ed) to home buyers. And they both apparently burned a lot of cash in 2021. In case you missed it, Better.com CEO Vishal Garg was recorded \u2014 in a meeting held after the company\u2019s first round of layoffs last year \u2014 saying: \u201cToday we acknowledge that we over hired, and hired the wrong people. And in doing that we failed. I failed. I was not disciplined over the past 18 months. We made $250 million last year, and you know what, we probably pissed away $200 million.\u201d<\/p>\n Oof.<\/p>\n Frankly, it\u2019s both mind-blowing and offensive to hear of companies that can blow through enough cash to help millions of people in need like it\u2019s nothing.<\/p>\n Personally, I\u2019m all about the lean-and-mean mentality. Operate capital efficiently all the time, downturn or no downturn, and you won\u2019t be as panicked and sinking when the going gets tough. That means not hiring for the sake of hiring, thinking long-term and not spending like there\u2019s no tomorrow.<\/p>\n Last week, I came across, or was pitched, several tidbits of news that made me realize that an increasing number of fintech companies are launching products to help nonprofits and charities more efficiently move, raise and distribute more money.<\/p>\n First up, fintech startups Highnote <\/strong>and GiveCard<\/strong> said they are partnering to help nonprofits, shelters and governments issue prepaid debit cards to the \u201cfinancially vulnerable\u201d communities they serve. Via email, they told me: \u201cStudies show direct cash payments can put people on a path to permanent housing and end their reliance on predatory lenders. But buying a bunch of prepaid debit cards from the local corner store and then surveying the recipients every week to see if it\u2019s helping isn\u2019t a scalable solution, and the lack of data is a major reason why city governments are reluctant to fund it. The tech behind Highnote allows GiveCard to rapidly deploy cards to its network of nonprofits and collect enough top-level anonymized data to figure out whether the programs are working, and whether the amount or the frequency of the payments needs to be adjusted, opening the possibility for more city governments to start adopting these programs.\u201d<\/p>\n Los Angeles\u2013based B Generous<\/strong>, a self-described \u201cfintech for good\u201d platform, has launched Donate Now, Pay Later (DNPL), a new tool it says allows donors \u201cto make contributions to their favorite nonprofits through a proprietary philanthropic credit product called a Point of Donation Loan\u2122 (PoDL). Using Donate Now, Pay Later\u2122, B Generous says the nonprofit receives the donation immediately, and the donor gets the tax receipt right away, but the donor pays nothing out of pocket at the point of donation and instead pays over time, with no interest, costs or fees.\u201d The goal, it says, is to increase average donation values for nonprofits.<\/p>\n It\u2019s not only startups getting in the nonprofit space. TC\u2019s Sarah Perez<\/a> reports that \u201cPayPal<\/strong> is expanding further into the charitable donations business with its August 25 launch of support for Grant Payments. The new product has been created in partnership with National Philanthropic Trust (NPT) and Vanguard Charitable and allows Donor-Advised Fund (DAF) sponsors, community foundations and other grantmakers to move their donations electronically through PayPal\u2019s platform.\u201d Notably, Sarah adds that PayPal cited \u201ca sizable market in charitable giving as a reason for entering this space with a new product.\u201d<\/p>\n Fintech for good? Love it.<\/p>\n Image Credits:<\/strong> kieferpix \/ Getty Images<\/p>\n<\/div>\n Within half a year of going to market with its bill pay feature, Ramp<\/strong> went from launch to more than $1 billion in annualized bill pay volume, according to co-founder and CEO Eric Glyman. Last week, he told me that Ramp has now added financing and overlay to its bill pay product with a new offering called Flex. With the new Flex feature, customers will have the option \u201cin one click\u201d to add financing to pay the money back up to 30, 60 or 90 days later for a fee while the vendor \u201cgets paid right away.\u201d Besides the extra time, bill pay gives the business the flexibility to pay any way they wish or the vendor requires, including via ACH, check or card. Read more, by me, here.<\/p>\n Natasha Mascarenhas<\/a> broke the news that Argyle<\/strong>, which at one point aimed to be the \u201cPlaid for employment records,\u201d has laid off 6.5% of its staff \u2014 five months after raising a $55 million Series B. The company blamed the decision on a move upstream to serve more enterprise customers rather than SMBs (sound familiar? Ahem, Brex). Yet, it\u2019s still hiring. Confused? So were we. But we can only infer that it needs to hire more people with enterprise experience and let go of those with smaller company\u2013focused skill sets.<\/p>\n News that T. Rowe Price<\/strong> cut the value of its stake in fintech giant Stripe<\/strong> made headlines last week, the new data point coming in the wake of similar cuts by other investment houses regarding their ownership in late-stage startups. However, while it is true that T. Rowe Price reduced the value of its stake in Stripe, part of its Global Technology Fund, the latest reduction in its worth is not unique. Not only has Fidelity disclosed that it now values its Stripe shares at a discount to prior marks, but the latest T. Rowe Price news also comes after a similar cut in March. But the company is not the only fintech under pressure, Alex Wilhelm<\/a> and I write in this piece. Meanwhile, at least one VC wants to cash in on Stripe\u2019s lowered valuation. Homebrew\u2019s Hunter Walk tweeted<\/a>: \u201cpls let me know if you find anyone selling preferred shares at this latest valuation because I\u2019d like to purchase.\u201d<\/p>\n \u201cGoogle Wallet<\/strong> is now available in South Africa, the first market for this product in Africa, to make it easy for users to save and easily and securely access their payment cards, loyalty cards and boarding passes,\u201d reported Annie Njanja<\/a>.<\/p>\n MANTL<\/strong>, a provider of account origination solutions, has partnered with Alliant Credit Union \u2014 a $17 billion digital financial institution \u2014 to expand into the credit union market with MANTL for Credit Unions. Via email, the company said the software was designed to improve application conversion rates and reduce the time to open new or additional accounts.<\/p>\n Personal finance company MX <\/strong>announced that Wes Hummel \u2014 who previously served as PayPal\u2019s vice president of site reliability and cloud engineering \u2014 has been named chief technology officer (CTO) of MX. The company told Hummel joins MX just weeks after Jim Magats, also formerly of PayPal, was named CEO of the company.<\/p>\n Image Credits:<\/strong> Twitter<\/p>\n<\/div>\n Seen on <\/em><\/p>\n And elsewhere<\/em><\/p>\n Now for an important PSA<\/em><\/strong>: Disrup<\/strong>t finally returns \u2014 live and in person \u2014 to San Francisco on October 18\u201320. We\u2019re excited to share the complete agenda, where you\u2019ll hear from game-changing leaders like Serena Williams (Serena Ventures), Marc Lore (Wonder Group), Ami Gan (OnlyFans), Johanna Faries (Call of Duty), Chris Dixon (a16z), and many more!<\/p>\n In addition to hearing from these leaders, you can get your how-to on over at the + stage, check out roundtable discussions and breakout sessions. Whatever you do, start planning your schedule now so you don\u2019t miss a lick of all this startup goodness.\u00a0 Register before September 16 and save $1,100. This will be my first Disrupt and I am beyond excited!<\/em><\/p>\n That\u2019s it for this week. Thanks for joining me on this wild fintech ride. See you next week! xoxo, Mary Ann<\/p>\n<\/div>\nMore fintechs are focusing on nonprofits<\/h2>\n
Weekly News<\/h2>\n
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<\/p>\nFundings and M&A<\/h2>\n
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