Welcome to the February installment of Fin Capital's newsletter. It’s been a busy month for the team and our portfolio companies.

Charting the Course for the FinTech IPO Market: While several fintechs like Chime, Klarna and Circle have already spoken openly about their IPO plans, many other companies have recently hinted at public listings but have yet to file. With a clearer rate path (higher for longer) driven by stable or declining inflation, we expect the environment for new IPOs to be more supportive. To learn more about fintech IPO candidates, see here. 

Navigating Troubled Waters, The High-Risk Customer Dilemma: Debanking has become an increasingly popular talking point for both Democrats and Republicans in recent weeks. However, this is not a new issue, and one felt most acutely by a particular subset of bank customers. High risk customers (like those engaged in crypto transactions, cannabis growing or selling, ATM owners or other cash-intensive businesses) go through an annual compliance review known as ‘Enhanced Due Diligence’ or EDD in short. Almost every EDD process requires the customer to provide some fresh information, but contacting customers to complete the process is a nightmare. Big banks use dedicated call centers that report just 20% response rates. Vendors, such as Refine Intelligence, are increasingly automating the process by engaging digitally with those high-risk customers, collecting the relevant information using industry-specific templates, and providing the information back to the bank. Not only does this solve the regulatory risk but it helps customers update the bank with required information, automates about 70% of the work done by the front line or call center, and makes sure exits are limited to customers who actually engage in suspicious activity.    

Open Banking’s Sea of Change: We believe that the CFPB’s responsibilities will expeditiously be folded into other regulators, particularly the OCC, resulting in new regulations, including possible amendments to the Open Banking 1033 rule. Though we may see new legislation along with amendments to the Open Banking 1033 rule, we believe that Open Banking is here to stay with more robust infrastructure requirements. The demand is clear - customers expect transparency and access to their financial data. However, for banks to make this data available, they will need to ensure they have the proper standards, compliance, and risk management in place. Solutions that help establish the appropriate middleware and orchestration, sub- accounting/reconciliation, compliance reporting, and API layers, will be critical for banks to continue to digitize their own back/middle/front office and to serve as program sponsors. To learn more about how our portfolio company Synctera is addressing this problem, click here. Additionally, as banks and fintechs increasingly rely on 3^rd  party vendors, they will need to automate onboarding, monitoring, and risk management. To learn more about how our portfolio company Certa is addressing this problem, click here. To read more about what the future might hold for the CFPB, click here.

Our Q1 2025 Demo Day

In case you missed it, this past week we were joined by portfolio companies, Circle, Conduit, Talos, and AnChain.AI to discuss digital asset adoption in traditional finance! Please reach out to [email protected] if you’d like a link to the recording.

Upcoming Industry Events

• March 2-7: GFTN Forum Japan 

  • Logan Allin, Founder & Managing Partner will be taking the stage throughout the conference to discuss Bridging the Gap: Building a Corridor for Growth Between Japanese Capital Markets & Asian Startups! 

• March 3-4: Bank Automation Summit 

  • Stephanie Perez, Managing Director of Business Development & Partnerships will be in attendance, reach out to [email protected] to find some time to connect! 

• March 10-13: Fintech Meetup 

  • Fin Event: We will be hosting an invite-only event on March 10^th alongside TTV Capital. Please reach out to [email protected] if you would like to request a spot.

• March 17-19: ALTSLA 

  • Logan Allin, Founder & Managing Partner will be speaking on the panel Venture Capital - Unlocking Opportunities across the Innovation Economy

• March 17-19: SuperReturn North America 

  • Christian Ostberg, General Partner & Head of Venture will be participating in a live panel on Identifying Tomorrow’s High-Growth Sectors: Where to Invest in 2025. 

Upcoming Portfolio Events

• March 21: Exclusive Masterclass with Mechanical Orchard in NYC

  • Mechanical Orchard invites you to join an insightful in-person Masterclass where they will explore practical approaches to strategizing and implementing digital transformation within large organizations, cutting through hype to deliver immediately applicable value. This masterclass is tailored to emerging SVP and C-suite leaders: the people who need to operationalize strategy and achieve the vision within a cost envelope, at the same time as running the existing business and navigating complex regulatory and competitive landscapes. With only 25 seats available, this intimate setting ensures meaningful discussion and relevant takeaways for all participants. Please reach out [email protected] if are interested in joining.

Portfolio Spotlight

It’s been a busy month, sharing some of the latest moments from across portfolio…

• Congratulations to Chime, DailyPay, and Figure for making The Fintech 50 list. 

• Capstack registers 100^th banking client since launch on October 1 of last year. 

• Carefull announces partnership with Synovus and partnership with Merck Employees Federal Credit Union to combat rising elder fraud and scam threats. 

• Kard releases new growth hacks for marketers to help fuel customer acquisition, loyalty, and sustainable growth. 

• Koxa announces partnership with Regions Bank to launch Regions Bank Embedded ERP Finance, enabling a seamless connection of bank financial data to ERP systems. 

• OneVest and DriveWealth launch partnership to enable enterprises to access a fully configurable, out-of-the-box solution for modern wealth management needs. 

• OpenYield releases research on the Top Ten Fixed Income Fictions. 

• Pipe continues international expansion to Canada through partnership with Housecall Pro. They also recently invested in new developer features to simplify integration for embedded capital. 

• Salt (acquired by Chime) publishes a new study on employee reward models and how they impact employee turnover rates. 

• Thoropass will now directly integrate with HITRUST’s audit portal, MyCSF, and is now an authorized MyCSF reseller, enabling compliance management for the healthcare space. 

• Trovata is partnering with Mastercard as their cash flow management solution for their Mastercard Mid-Market Accelerator.    

What We’re Reading

INDUSTRY RESEARCH 

• Array recently commissioned Billions Lost: The Cost of Bankers’ Myths About Americans’ Finances, authored by Ron Shevlin, Chief Research Officer at Cornerstone Advisors 

• Financial Technology Partners: Unlocking Data in the Digital Asset Ecosystem (Read More)  

BLOGS, PODCASTS AND VIDEOS 

• Growth Unhinged: Customers Don’t Care About Your AI Feature (Read More) 

• Future of Prospecting: For Sales Teams – 20 Things That Your Competitor is Doing Better with AI (Read More) 

• Lina’s Newsletter: The Ultimate Collection of Profit & Loss Statement Templates (Read More) 

• Mostly Metrics: Your Complete Guide to Sales Territory Planning (Read More) 

• Untrapping Product Teams: What Makes or Breaks Product Strategy (Read More) 

• Data Driven VC: From Founder-Led to Professional Sales, When is the Right Time to Hire a Professional Rainmaker? (Read More) 

• Pierre Herubel: The #1 Problem in B2B Marketing (Read More) 

• Elena’s Growth Scoop: Your B2B Product Led Motino is More of a Data Problem Than a Product Problem (Read More) 

• A16z: How Much Should I Invest in RevOps? (Read More) 

Thanks for reading!

We are grateful for your partnership and support, and welcome any feedback you have. We’ll see you next month with more!

-The Fin Capital team

_Disclaimer

_{This material is provided for informational purposes, and it is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by Fin Venture Capital Management LLC (“Fin”) or its affiliates. Content obtained from third-party sources, although believed to be reliable, has not been independently verified as to its accuracy or completeness and cannot be guaranteed. Fin has no obligation to update, modify or amend the content of this post nor notify its readers in the event that any information, opinion, projection, forecast or estimate included, changes or subsequently becomes inaccurate.}