Fintech Bench: What Happened?

TechCrunch Fintech: A Return and Recap

Greetings from TechCrunch Fintech! It is a pleasure to resume our coverage.

This week’s focus centers on the noteworthy closure and subsequent acquisition of Bench. We’ll also examine numerous fintech companies currently expanding their teams through active hiring.

Legal challenges facing PayPal, updates regarding initial public offerings (IPOs), and additional relevant news are also included in this report.

A Lengthier Edition

Due to a brief pause in publication over the past few weeks, this installment is more comprehensive than usual. We extend best wishes for a Happy New Year to all our readers!

May the coming year be filled with tranquility and happiness for everyone.

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A Surprising Turn of Events

The collapse of a company having secured over $110 million in venture capital is noteworthy in itself. However, the situation surrounding Bench became even more unusual when it was subsequently acquired just days after announcing its closure.

This rapid sequence of events has understandably left both customers and employees experiencing considerable disruption.

Unpacking Bench’s Closure and Acquisition

TechCrunch’s Charles Rollet has conducted an in-depth analysis to reveal the factors contributing to Bench’s shutdown and to identify the acquiring entity of this fintech firm, which had received backing from investors such as Shopify and Bain Capital Ventures.

The speed of the shutdown was remarkable; a customer who had stored years of data on Bench’s platform, and had even been highlighted on their website, only became aware of the company’s fate through contact from TechCrunch.

Key Details of the Situation

• Significant Funding: Bench had successfully raised more than $110 million in venture funding.
• Sudden Shutdown: The company’s closure was announced unexpectedly.
• Rapid Acquisition: An acquisition followed the shutdown within a matter of days.
• Investor Backing: Notable investors included Shopify and Bain Capital Ventures.
• Customer Impact: Customers were often unaware of the shutdown until contacted by media outlets.

The acquisition details and future plans for Bench’s technology remain under scrutiny, but the initial sequence of events presents a compelling case study in the volatile world of fintech.

Financial Updates and Developments

The year began with the announcement of Thomson Reuters’ acquisition of SafeSend, a company specializing in tax automation. This was an all-cash deal with a valuation of $600 million.

SafeSend, established in 2008 and headquartered in Ann Arbor, Michigan, provides a cloud-based platform. Its core function is to simplify the handling and distribution of confidential financial documentation.

An interview with Robinhood’s CEO and co-founder, Vlad Tenev, was conducted by Connie Loizos, Editor-in-Chief at TechCrunch. The discussion covered the company’s recognition as Yahoo Finance’s “comeback stock” and other pertinent topics. You can find the full interview details here.

Notable Fintech News

TBC Bank Uzbekistan, a mobile-first bank operating in Uzbekistan, successfully raised $37 million in a recent funding round. This capital injection is intended to strengthen its leading digital position within the Central Asian market.

The funding will be allocated towards the development of new artificial intelligence and technology solutions. Furthermore, it aims to attract a larger base of digitally proficient customers.

Tyme Group, a South African fintech company, has secured $250 million in a Series D funding round. This investment has elevated the company’s valuation to $1.5 billion.

A significant portion of this funding, $150 million, came from Nu Holdings, the parent company of Nubank, Latin America’s highest-valued fintech. Nu Holdings now holds a 10% stake in Tyme Group.

• This investment signifies strong confidence in Tyme Group’s growth potential.
• The partnership with Nu Holdings is expected to foster innovation and expansion.

Recent Developments in Fintech

The previous week presented challenges for PayPal. Initially, Dominic-Madori Davis reported on a lawsuit filed against the company by Nisha Desai, founder of Andav Capital.

The claim alleges exclusion from PayPal’s diversity and equity initiatives due to her Asian ethnicity.

Subsequently, a further legal action surfaced, asserting that Honey, a browser extension owned by PayPal, is improperly withholding earnings from content creators.

Data Exposure Concerns

In related news, Zack Whittaker detailed a security lapse at MyGiftCardSupply, a U.S.-based online gift card retailer.

An online storage server belonging to the company was discovered to be publicly accessible, exposing sensitive government-issued identification documents of hundreds of thousands of customers.

Growth in African Fintech

Africa’s technology sector has experienced increased recognition recently.

Tage Kene-Okafor highlighted the significant funding rounds secured by both South Africa’s TymeBank and Nigeria’s Moniepoint.

These companies have both achieved valuations exceeding $1 billion, thereby attaining “unicorn” status.

• TymeBank, based in South Africa, has seen substantial investment.
• Moniepoint, operating out of Nigeria, has also secured significant funding.

This influx of capital underscores the growing potential within the African fintech landscape.

Fintech IPO Developments

Speculation is growing regarding the potential for increased Initial Public Offerings (IPOs) within the fintech sector in 2025.

Recent IPO Activity

Prior to the end of 2024, Manish Singh detailed the significant performance of MobiKwik, a digital payments company.

The company’s shares experienced an 82% increase, closing at ₹507.5 ($6) on its debut trading day.

This $69 million IPO by the Indian fintech firm occurs within a highly competitive market, facing challenges from established industry leaders.

Further Indian Fintech IPO Plans

Aye Finance, a lending institution focused on small and medium-sized enterprises (SMEs) in India, is also preparing for a public offering.

The company intends to secure $171 million through its IPO.

Chime's IPO Preparations

In the United States, Julie Bort reported on Chime, a digital bank, submitting its confidential IPO filing to the Securities and Exchange Commission (SEC).

This action follows the engagement of Morgan Stanley as their banking partner last September, signaling a planned IPO launch in 2025.

Looking Ahead

These developments suggest a potentially active year for fintech IPOs, with both Indian and US-based companies positioning themselves for public market entry.

The success of these offerings will be closely watched as indicators of investor confidence in the fintech landscape.

Notable Developments in Fintech and Blockchain

Although recruitment within the fintech sector remains active, a noticeable reduction in available positions has occurred in recent months. Despite this shift, numerous opportunities persist, with select companies even expanding their hiring efforts compared to the previous year.

Legal Challenge to IRS Regulations

A coalition of three prominent cryptocurrency organizations – the DeFi Education Fund, the Blockchain Association, and the Texas Blockchain Council – has initiated legal proceedings against the Internal Revenue Service. The lawsuit aims to prevent the implementation of new rules mandating decentralized finance (DeFi) entities to disclose customer data.

Revenue-Based Financing in the MENA Region

Recent analysis by Mike Butcher highlights the continued success of revenue-based financing startups in the Middle East and North Africa (MENA). This financing model appears particularly effective within this geographic region.

We appreciate your time and attention. Further updates will be provided in the next weekly installment.