B2B fintech’s billion-dollar week

Overheard

• "When we enter a period of higher growth, our CapEx needs to be spent ahead of the revenue growth that will follow, so our capital intensity will be higher." —TSMC CFO Wendell Huang explained why the company will spend over $25 billion on CapEx this year, in an effort to take market share from rivals.
• "There are lots of technical difficulties and uncertainties with CDR issuance." —China Renaissance's Bruce Pang explained why tech companies have been reluctant to use Chinese depository receipts, though Lenovo and Megvii are about to change that.
• "There are some agreements of what happens when things go badly. But back-up options are never that good. For international investors the way the deal was structured was a real leap of faith." —An anonymous lawyer said institutions that invested in Ant ahead of its pulled IPO are "screwed," with some considering litigation.

The Big Story

B2B fintech's billion-dollar week

As the year gets underway, it looks like fintech — and in particular, the B2B side — might once again be among the hottest tech sectors of the year.

• This week alone saw a huge amount of activity in consumer fintech: Affirm went public, Walmart announced a startup with Ribbit Capital, Sea reportedly bought an Indonesian bank and Grab raised $300 million for its financial services spinout.
• But the B2B side has been even busier: Checkout.com, Enfusion, Rapyd, Blend and MX collectively announced $1.2 billion in funding this week, with a combined valuation of around $24 billion.
• And still on B2B there was, of course, Plaid: After Visa gave up on the $5 billion acquisition due to DOJ pressure, investors were champing at the bit to find out just how much it might be worth today.

Driving all that B2B-side activity is an upheaval in financial services, massively accelerated by the pandemic.

• As retailers move online, payments companies like Checkout.com, Rapyd and Stripe are raking in more and more business.
• And as consumers eschew long bank branch lines for the comfort of apps, neobanks are springing up using technology like Plaid's — while traditional banks need tools like Blend, Mambu and MX to better adapt.

Last year, investors took note: According to PitchBook data released this week, fintech companies raised a record high of $20.5 billion in 2020, with an average pre-money valuation of $460.7 million — more than double 2019's average of $212.7 million.

And 2021 could be even better. Today, JPMorgan Chase, Citi and Wells Fargo all announced earnings that beat expectations (although Wells missed on revenue).

• Already, the KBW Bank Index is up almost 14% this year, with the hopes of fiscal stimulus, infrastructure spending and interest rate hikes helping to drive a shift into the sector.
• If traditional banks are doing well, fintechs — especially those catering to said banks — could ride on their coattails. See also: Goldman Sachs eyeing digital banking acquisitions to bolster its Marcus personal banking unit while the going is good.

There's one big looming concern, though: regulation. In effectively blocking Visa's Plaid acquisition over antitrust concerns, the DOJ may have taken Goldman's plan — and the exit route of many fintechs — off the table.

• So far, investors don't seem to be too bothered by that, with a broad sentiment that Plaid in particular can become a huge company by itself. But if the DOJ's move becomes part of a bigger pattern and deals continue to be blocked, some of the shine might be taken off what otherwise looks set to be a blockbuster year.

A MESSAGE FROM MICRON

For Raj Hazra, who is senior vice president of corporate strategy and communications at Micron, there has never been a more thrilling time than this golden age of data. In this interview, Hazra describes how "we are now at the doorstep of taking things that we thought were science fiction and making them real, and it's only going to be exponentially faster going forward". Read more from Micron's Raj Hazra.

Up to Speed

• Monday: Intercontinental Exchange said it would take Bakkt, its crypto exchange, public via a SPAC. The deal values the NYSE-owner's venture at $2.1 billion. Also Monday: Keep raised $360 million at a reported $2 billion valuation, led by SoftBank.
• Tuesday:Bilibili reportedly filed for a secondary listing in Hong Kong, while Tencent Music, Joyy and Vipshop were all reported to be considering the same. That's in part to hedge against the risk of U.S. delistings. Also Tuesday: Zoom announced a $1.75 billion stock offering; Xpeng got a $2 billion credit line; Cockroach Labs raised $160 million at a $2 billion valuation; Workato raised $110 million at a $1.7 billion valuation; and SoftBank sold $2 billion of Uber stock.
• Wednesday:Affirm shares soared upon listing. It closed at almost double its IPO price, which was already raised from its initial range. Also Wednesday: American Tower bought Telefonica's cell towers for $9.4 billion; Qualcomm bought Nuvia for $1.4 billion; Talkspace said it would go public via a SPAC at a $1.4 billion valuation; Webflow raised $140 million at a $2.1 billion valuation; and Yuntongxun was reported to be considering a $500 million IPO.
• Thursday:Cisco raised its purchase price for Acacia by 64%. Acacia had previously tried to get out of the deal, first agreed to in July 2019. Also Thursday: Poshmark shares closed up 140% on their debut; Playtika raised $1.88 billion in its IPO; IBM bought Taos Mountain; LiveVox said it would go public via a SPAC at a $840 million valuation; Sennder raised $160 million at an over $1 billion valuation; Harness raised $85 million at a $1.7 billion valuation.
• Today:Yidu Tech shares closed up 148% on their debut. The Tencent-backed health tech company raised around $530 million in its IPO.

Coming Up

• The biggest story of the week will probably be Intel's earnings call on Thursday, when it's expected to announce a decision to outsource some CPU manufacturing to TSMC.
• Other earnings to watch are Netflix (Tuesday), ASML (Wednesday) and IBM (Thursday).
• Kuaishou could kick off its IPO plans, having reportedly received approval from the Hong Kong stock exchange to raise around $5 billion.

A MESSAGE FROM MICRON

For Raj Hazra, who is senior vice president of corporate strategy and communications at Micron, there has never been a more thrilling time than this golden age of data. In this interview, Hazra describes how "we are now at the doorstep of taking things that we thought were science fiction and making them real, and it's only going to be exponentially faster going forward". Read more from Micron's Raj Hazra.