European venture capital giant Lakestar, an early supporter of fintech unicorn Revolut, has emerged as a prominent backer of French fintech startup Swan.
Swan raised the funds in a series B investment led by European venture capital giant Lakestar. The latest fundraise takes Swan’s total money raised to 58 million euros. Accel, another venture capital firm, previously led Swan’s series A round in 2021.
Swan CEO and co-founder Nicolas Benady said that, when he started out, it was “incredibly complex” to integrate banking and other financial services into existing platforms that didn’t have any financial components.
“What we had in mind with our co-founders was that it shouldn’t be that complex,” he told CNBC. “If it’s easy to accept payments — like the Stripes the Adyens, the Mollies of this world enable — it should be as easy to set up banking.”
“If you develop a big idea … at 2 a.m., it should be possible to come onto our website and have something up and running in the morning,” Benady added.
Swan will initially use the money to expand its operations in the Netherlands in the coming months, before later expanding its operations in the Italian market in 2024.
Benady said the Dutch market has unique features that set it apart from other European countries, making it more complex as a country to launch digital banking and payment capabilities in for its customers.
For example, the Netherlands has its own payments system, called iDEAL, which lets consumers pay online through their own bank and is supported by all the country’s major lenders including ABN Amro and ING Group.
Georgia Watson, a principal at Lakestar based in the firm’s London office, said the firm had been tracking Swan “for about a year.”
“We really like that they’re giving their clients the ability to create new product lines, new revenue lines, with attention for their end users,” she told CNBC.
She added that Swan’s clients “don’t have to think about the regulatory aspects when they want to add on new products, which can be very time consuming and create additional risk for the company.”
Swan is able to set up embedded financial solutions with businesses in as little as two weeks compared to many months for other competitors, according to Watson, who was previously with Goldman Sachs as a vice president managing the investment bank’s growth and venture deals.
Plans to forge partnerships
Luca Bocchio, partner at Accel, said Swan had proven its model was more scalable than competitors in the embedded finance world, such as Railsr and Solarisbank, which have faced struggles in their mission to plug payments and other financial products directly into companies’ platforms. Railsr earlier this year entered bankruptcy protection via a sale to a consortium of investors led by D Squared Capital.
Swan is able to handle large volumes of payments and run know-your-customer (KYC) checks with “very few people,” Bocchio told CNBC.
“Banking-as-a-service providers usually need to take care of many of their customers, who piggyback on their licenses. They need to take care of anti-money laundering, KYC and compliance costs for their customers.”
“Depending on what they’re serving, it means a high volume of requests if you’ve not created a fully automated platform,” Bocchio said. “It requires you to have lots of manual processes.”
Bocchio said that, where Swan differed to competitors was with its ability to process lots of tractions with more automated compliance processes. Railsr, he said, struggled to allocate the right number of people to figure out the challenge of developing an embedded finance experience while also considering how to scale it with compliance in mind.
Railsr, at the time of its restructuring announcement, said that it had “best-in-class technology” and would “get back to basics and manage the business methodically and constructively.”
Swan will also look to forge partnerships with more large, multinational corporates with an aggressive sales strategy following the fundraise. The company already works with the French retail chain Carrefour, which used its technology to develop a cashback project.
Swan plans to broaden its product offering out to include more payment collection methods such as direct debit and card payments, as well as new lending capabilities. As it rolls out these new products, Swan anticipates it’ll begin to serve new industries like travel, insurance and business-to-business marketplaces.
The proportion of payments that are embedded in platforms is expected to grow to 40% in the next few years, according to a note from Bain Capital Ventures. Embedded finance is expected to become a $384.8 billion market by 2029, according to data from Reportlinker.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
