Fintechs Are Disrupting the Business Travel Industry

Good morning Rain Makers!

What a timely occasion to write about Fintech and Business Travel (I will be heading out to North Carolina in the coming week to meet with a few investors). First U.S. trip of the year.

Anyway! Here’s what I have for you today 👇

• ✈️ Fintechs are revolutionizing the business travel industry, and Brex is moving fast with its newly launched travel booking and management features.

• 🐷 "Save Now, Buy Later": the emerging alternative to "Buy Now, Pay Later" (BNPL) models, which prioritizes saving over borrowing, is gaining traction in Africa and India.

• 👀 Find out which fintech startups are securing millions in funding despite rising interest rates and a tech downturn.

• 🍟 Extra Fries: fraud accusations against Block, Roofstock layoffs, and Sezzle's direct listing plans.

• 🖤 M&A: JPMorgan Chase acquires data analytics provider Aumni and Securian Financial's subsidiary Empyrean Benefit Solutions acquires Enspire to enhance its insurance and retirement offerings.

• 💸 +6 Funding Rounds

How Fintechs are Simplifying the Business Travel Industry

The business travel market is projected to reach $928.4bn by 2030, and Fintechs want to capitalize on this growth by offering simplified solutions to replace the expensive and time-consuming legacy systems in the industry.

Here’s how fintechs can help the travel sector:

• Simpler Workflows: Fintechs are well equipped to handle the complexities of payments, treasury management, and payouts. For travel companies, this means flexibility and customization of internal workflows.

• Data and Insights: Fintechs also offer the ability to address the big data requirements of travel businesses and provide solutions and recommendations for meeting regulatory changes (e.g. licensing rules and accounting principles).

• Scale: A single fintech provider that can operate in different territories allows travel companies to focus on other parts of their business instead of dealing with building financial partnerships, managing multi-currency operations, and complying with changing regulations.

This week, Brex announced its expansion into the travel industry by adding travel booking and management features to its existing Empower platform. 

• The new travel feature allows users to book travel directly through the Brex mobile app and manage the process, including budget and policies.

• The company aims to apply budgeting capabilities to travel expenses to allow finance teams to decide which trips should take priority.

• The new feature also provides receipts automatically and lets employees know if something is out of policy and needs extra approval.

• The Technology: Brex partnered with Spotnana, a "travel-as-a-service" software company, to provide back-end infrastructure that integrates with global airlines and hotels.

• Revenue Model: Brex charges a per-trip fee, which varies by company depending on travel volume.

• Competitors: Concur; Navan

Save Now Buy Later: Prioritizing Savings Over Borrowing

• 'Buy now, pay later' (BNPL) has become a popular model globally, but has been questioned for its sustainability. (Affirm’s stock is down ~95% from its peak)

• A new model called 'save now, buy later' (SNBL) is emerging as an alternative.

• Unlike BNPL, SNBL models require consumers to pay installments before receiving their items.

• SNBL models are gaining traction in Africa, where the culture often prioritizes saving over borrowing. Some players leading the charge include: FlexPay, Tunzaa, LayUp, and CDcare.

• For example, CDcare is a Nigerian platform that uses a hybrid SNBL model to sell items at or below market prices. The company has sold $6 million worth of goods over the last year with a default rate of just 0.4%.

• SNBL models are gaining traction in India as well with offerings from Tortoise, Hubble, and Multipl.

• Other players globally include: Accrue Savings, Monkee, and Cashmere.

Fintech Startups Rain, Beam, and Kredivo Secure Millions in Funding

Here are some of the most interesting funding rounds I came across this week. It's a healthy sign that, despite the venture industry facing rising interest rates, elevated inflation, and a tech downturn, some startups are still able to secure capital.

• Rain has raised $116 million in a funding round to further its earned-wage access service.

  • Problem: People with low savings are at risk of overdraft fees, low balance fees, and high interest rates if they choose to take out a payday loan or carry a balance on a credit card while waiting for their next paycheck.

  • Solution: This service enables hourly workers to access their wages soon after their shift ends by assigning their wages to Rain. The company automatically assigns wages and compensates itself through the employer's payroll system, charging employees a fee for each advance.

    • Lead Investors: QED investors; Invus Opportunities 

• Beam, a startup founded by former Stripe engineer Adam Eagle, raised $4 million in seed funding led by Accel to streamline payments and invoices for subcontractors and general residential contractors.

  • Problem: In construction, contractors often complete projects before getting paid, having to cover the costs themselves. For smaller operations, this can be stressful. Keeping track of debts using spreadsheets and paper checks is time-consuming and tedious.

  • Solution: Beam makes it easy for contractors to send invoices and pay bills online with speed and accuracy—without the paperwork, spreadsheets, and hours of manual data entry.

  • The company aims to help smaller construction businesses that lack the resources to hire a bookkeeper or office manager.

  • Beam claims to charge lower fees for transacting compared to PayPal or Zelle, and its app facilitates ACH payments directly.

  • Investors: Accel, Susa Ventures, Wischoff Ventures 

• Kredivo Holdings, a fintech based in Southeast Asia, has raised $270 million in a Series D funding round led by Mizuho Bank.

  • The company nearly went public last year in a $2.5 billion SPAC deal but nixed it, citing adverse market conditions.

  • Kredivo targets underbanked consumers who have access to bank accounts but little credit access because of poor credit bureau infrastructure and the reluctance of traditional banks to offer unsecured credit.

  • Kredivo's products include online and offline buy now, pay later, personal loans, credit cards, and banking services through its new neobank Krom Bank Indonesia.

  • Kredivo uses data sources such as telcos, e-commerce accounts, and bank accounts to gauge the creditworthiness of potential consumers.

  • Competition: Akulaku, Bank Neo Commerce, Atome Financial, Kredit Pintar, and Sea Money. 

• Leave Dorsey Alone 😂. Block is facing accusations of fraud and enabling criminal activity, according to a report from short-seller Hindenburg Research. Hindenburg claims that Block misleads investors by overestimating user numbers and facilitates fraud against consumers and the government. (Read More)

• More Layoffs 😔. Roofstock has laid off an additional 27% of its workforce. The firm's CEO said the company did not anticipate having to lay off more employees so soon, but needed to "right size" in order to reduce cash burn rate and ensure adequate capital runway until the market turns. Roofstock allows users to buy and sell rental homes in dozens of markets across the US, with the premise that both institutional and retail investors can buy and sell homes without forcing renters to leave. (Read More)

• Time to cash out 🤑. Sezzle has filed with the SEC to register shares in preparation for a direct listing on Nasdaq. Selling shareholders would be offering up to 117M of its shares. Sezzle's payment platform allows online shoppers to "buy now, pay later" for items, which generally entails four interest-free payments made over six weeks. (Read More)

• JPMorgan Chase has purchased data analytics provider Aumni to strengthen ties with venture capital investors and their portfolio companies.

  • Aumni is a data platform that helps users analyse and understand their holdings via a simple dashboard.

  • The service will be integrated with JPMorgan’s private markets platform, Capital Connect.

  • JPMorgan is paying approximately the same amount as Aumni's last funding round in 2021, which valued the startup at $232 million, according to a source. 

• Securian Financial’s subsidiary Empyrean Benefit Solutions has acquired Enspire, an employee communication and engagement platform to enhance its insurance and retirement offerings.

  • The acquisition is expected to bolster Securian's insurance and retirement solutions, adding an expanded people-centric dimension to its innovative benefits administration technology and compassionate support services.

  • Securian Financial is the third-largest direct writer of group life insurance in the US. They also provide group AD&D and supplemental health insurance products to employers across the country.

  • Enspire empowers employees with an app that integrates everything they need into a digital hub customized to the client's brand. 

• Kredivo | $270m Series D: credit services for underbanked consumers in Indonesia and Vietman (link)

• Rain | $116m: early wage access and financial wellness benefit for mid-market to enterprise employers (link)

• ID Finance | $32m: online consumer lending and credit scoring services in emerging and growing markets (link)

• Toku | $7m: payments for subscription companies in Latin America (link)

• Infinant | $5m: technology chassis and power tools for banks to embed fintech in their applications and embed banking in partner applications with confidence and ease (link)

• Beam | $4m Seed: helping smaller and mid-sized general residential contractors manage payments, invoices and receipts in one place (link)