BlackFin Tech weekly — February 12th, 2024
Every Monday, we publish a short digest which sums up last week’s Fintech activity
Hello FinTech Readers,
Welcome to another installment of our weekly European fintech roundup. We trust you had a restful weekend. Without further ado, let's delve into the latest deals and developments that are shaping the fintech scene across Europe. Ready to stay informed? Let's dive in!
Last week we saw 7 official fintech deals in Europe for a total amount of 92.5m€ raised with three deals in the UK, one in France, one in Estonia, one in Denmark, and one in Lithuania.
Congratulations to Paris-based Pennylane, the augmented accounting solution, who has successfully raised €40m million in a Series C funding round with backers including Sequoia Capital and DST Global. Well done also to one of our portfolio companies Tuum, a core banking provider, for having secured €25m led by CommerzVentures, with funding also coming from SpeedInvest. Finally, we want to congratulate Navro, formerly known as Paytrix, for their $14m raise in their latest internal funding round, with existing investors including Bain Capital and Unusual Ventures, with participation from Motive Partners and prior investors Fin Capital. Well done to everyone!
Let’s dive in
Pennylane, a Paris, France-based fintech company, raised €40M in Series C funding. Backers included Sequoia Capital and DST Global. The company intends to use the funds to accelerate the development of its platform, invest in artificial intelligence for accountants, and expand to other markets in Continental Europe in 2024. Led by Arthur Waller, CEO and co-founder, Pennylane is building the financial OS (Operating System) for European SMEs. It acts as a single source of truth for financial and accounting data, used on one side by entrepreneurs to run their business (invoicing and getting paid, paying suppliers and expense management, piloting cash and profitability) and on the other side by their accountant for bookkeeping and tax filings. The company has multiplied by 40 the number of SMEs (now over 120.000) on its platform in 24 months thanks to the adoption of the tool by more than 2,000 accounting firms who have brought their clients on board. Pennylane stands out for its business model: the fintech charges accounting firms for its accounting production tool while generating additional revenue when firms equip their clients with the all-in-one management tool including an account.
Estonian core banking provider Tuum has raised €25 million, as it looks to target new territories in the DACH region, southern Europe, and the Middle East.
The Series B financing round was led by CommerzVentures, a fintech-focused VC fund, with support also coming from SpeedInvest, alongside existing investors. The funds will serve to push product and market development, with expansion planned across the DACH region, southern Europe, and the Middle East, where Tuum plans to open an office. It will also use the funds to boost its product offering, including providing a more tailored offering, which it says is an alternative to the “generic one size fits all or toolbox approaches of other cloud-native” providers. Tuum, which was previously called ModularBank but rebranded in 2021 to Tuum which means “core” in Estonian, says it now has customers in 10 countries, with a strong presence in the UK and the Nordics.
Navro, formerly known as Paytrix, has secured $14m in its latest internal funding round and has concurrently announced that the Central Bank of Ireland has authorized its EMI license. In addition to the Irish license, the London-based company recently secured an EMI license from the UK’s regulator, the FCA. Now, the fintech company’s global payment curation services are available to fast-growth businesses with international ambitions under the protection of EU regulations. The round was led by existing investors Bain Capital and Unusual Ventures, with participation from Motive Partners and prior investors Fin Capital. This investment bolsters Navro’s reserves, enabling it to meet the capital requirements of tier-one regulators, clients, and banks. The newly raised funds will support Navro’s expansion plans and enhance its capabilities to meet the evolving needs of its clients. With a focus on growth and innovation, Navro aims to further develop its global payments network and infrastructure to provide seamless and regulated payment solutions to international businesses. Securing an EMI license from both the Central Bank of Ireland and the UK’s Financial Conduct Authority (FCA) underscores its commitment to regulatory compliance and governance.
In addition to this week’s fundraising activity, here is the European M&A activity of the week:
Tembo has completed the acquisition of Nude Finance, to reinforce its offerings. Tembo is a London-based digital mortgage broker, founded in 2020 and has raised £7.5m. Through its technology, it provides first-time buyers with comparisons between providers and additional features such as family guarantors and shared ownership mortgage schemes. Nude Finance is a Lifetime ISA provider with an AI Copilot that advises clients on financial decisions and delivers insights. With the acquisition, Tembo seeks to expand its offering into savings products and make it easier for first-time buyers to get on the property ladder.
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Entrust announced that it plans to acquire Onfido to expand its product line. Entrust, a US-based privately held company that specializes in certification and verification services, employs 2,800 people across 150 countries. Its product line includes verification services for users and electronic signatures among others. Onfido is a global leader in identity verification through machine learning, computer vision, and other AI tools. Onfido boosts annual recurring revenues of over $130m and has more than 1,200 customers worldwide. The deal is subject to regulatory approval. If the deal gets approved, then Entrust plans to integrate Onfido’s solutions into its wider tech stack. According to Entrust, the company is looking to strengthen its identity security solution, especially in Europe’s high compliance environment.
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MSCI Inc. announced that it will acquire Foxberry. MSCI provides critical decision support tools and services to investment firms and professionals to enable them to build more effective portfolios. MSCI is based in the US and listed on the New York Stock Exchange. Foxberry is a London-based and powers a comprehensive index and analytics platform that is used by its customers for index and strategy creation. MSCI will integrate Foxberry to strengthen its existing suite of index customization solutions, which will lead to a higher degree of customization for its clients.
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And finally, here are the news that caught our eye last week:
The newly ratified EU regulations mandate instant payments from all payment service providers (PSPs) within the Eurozone, ensuring funds are accessible within 10 seconds at any time. These rules, aligning pricing parity with traditional credit transfers and bolstering security through name-checking features akin to the UK's Confirmation of Payee, also require daily verification of clients against EU sanctions lists to prevent illicit transactions. PSPs have a timeline to implement this technology, with a longer transition period for non-euro member states. Despite the positive reception, the EU acknowledges its lag behind global counterparts like India and Brazil, underscoring the growth potential in instant payments adoption.
The financial sector sees a continued wave of redundancies with major institutions implementing significant job cuts. French payments giant Worldline launched its Power24 plan, aiming to eliminate 1400 jobs, while Societe Generale plans to cut 900 positions at its Paris headquarters. UBS intends to cut 90 jobs in its Asia divisions, Deutsche Bank plans to slash up to 3,500 roles primarily in back office functions, and Citigroup aims to eliminate 20,000 positions over the next two years. These moves reflect ongoing efforts across the industry to streamline operations and cut costs amidst changing market conditions.
10x Banking, a UK-based core banking solution provider, has secured Old Mutual, one of Africa's major financial institutions, as its first client in the continent. This move marks a significant step for 10x Banking as it expands beyond its native UK market and extends its presence into Africa, following its earlier expansion into Australia and New Zealand. Old Mutual will leverage 10x Banking's SaaS core banking system to cater to underserved individuals in Africa, addressing their day-to-day money management needs.
Have a great week & see you soon!