Fintech 🤝 crypto #4

Fintech funding is booming, why tokens are everything and say hello to the era of in-car payments

Nov 16, 2021

Hi friends 👋

This week is full of interesting news and great reads! Since I don’t want to make this newsletter super long, I decided to omit the “weekly theme” part this week. No worries, it will be back.

Welcome to “Fintech 🤝 crypto” - episode #4.

If you want to get new episodes directly into your mailbox, hit the button below:

Let’s go! 🚀

Happened last week 👀

1) Fintech investments have hit $91.5 billion in 2021 - nearly doubled last year’s total🚀

In short:
- The fintech sector is booming, with a record $91.5 billion in global funding so far this year.
- In the last quarter 42 fintech unicorns (startups valued at over $1 billion) were born, bringing the year’s total to 200 (sic!).
My comment:
Source: CB Insights’ State of Venture Q3’21 Report
- Let’s start with the chart above - the numbers here are on 🔥 2021 already almost doubled the last-year result and, don’t forget, 2022 is still two months away. High chance that we will cross the level of $100B by the end of the year.
- It is yet another confirmation that 2021 is a stunning year for fintech companies - both smaller and bigger ones. A lot of funding & acquisitions happened and I would expect this trend will continue next year. Embedded finances are having their momentum and there is still a lot of cool stuff to build in this space. These numbers confirm that.
- And one more chart from the CBInsights report that puts things into perspective. Look at the dramatic change between 2021 and years 2017-2020:

quarterly fintech $100M+ mega-rounds reach 94 deals in Q3'21 — Source: CB Insights’ State of Venture Q3’21 Report

2) N26 is now worth more than Commerzbank - Germany’s second-largest bank 🇩🇪

In short:
- German challenger bank N26 has raised $900 million in a new funding round that values the company at $9 billion. N26 direct competitors are Revolut (valued at $33 billion) and Monzo ( $3 billion).
- Commerzbank - the second biggest bank in Germany - has a market cap of 7.6 billion euros ($8.8 billion).
My comment:
- Another great example of “fintech is eating the world” narrative. N26 was created in Munich in 2013 - less than 10 years ago. Commerzbank - in 1870. Somehow investors are putting a lot of faith in fintech super apps, neo banks, challenger banks, and other fintechs that are building foundations of a better financial ecosystem.
- The incumbents and their legacy, outdated systems have always been way too slow. They will never catch up. Their only strategy to survive is through acquisition. The problem is: fintechs every year are becoming bigger & bigger. They are generating more revenues, expanding their portfolios, getting more customers, and they just don’t want to be acquired. It’s not their strategy. Their strategy is to build amazing stuff in B2B or B2C model and offer better ways of doing finance. And this vision will win in the long term.

3) Mercedes will let drivers authenticate in-car payments their fingerprint 🚘

In short:
- Mercedes drivers in the UK and Germany will soon be able to authorize in-car payments for goods and services using a fingerprint sensor in their vehicle’s dashboard.
- They will roll out “Mercedes Pay” in spring 2022.
- The solution is built with close cooperation with VISA.
My comment:
- Cars and vehicles are next in line if we are talking about embedded finance and disrupting the standard ways of doing payments. The car industry is special - they are always lagging behind with regard to software innovations. And payments.
- This news complements the one from March 2021 that Mercedes rolls out contactless in-vehicle fuel payments in Germany.
- For curious ones: here is a short video that shows how the system works.
- Easy, quick, and smooth in-car payments are the future. After premium brands, like Mercedes, others will offer them to the customers. I bet they are already talking with suppliers about expanding their software with the possibility of adding a tokenized card.
- The technology is here. MDES for Mastercard, VTS for Visa and AETS for American Express. It’s working for mobile phones, wearables, and even for smart fridges. The cars are next. Huge market & huge possibilities.

4) 16% of Americans have used crypto 🇺🇸

In short:
- The vast majority of U.S. adults have heard at least a little about cryptocurrencies like Bitcoin or Ether, and 16% say they personally have invested in, traded, or otherwise used one, according to a new Pew Research Center survey.

A bar chart showing that nearly nine-in-ten Americans say they have heard at least a little about cryptocurrency, and 16% say they have ever invested in, traded or used one themselves — Source: Pew Research Center

My comment:
- 16% of Americans - it’s almost 52 million people. To put it into perspective - it’s the California & NYC states’ population combined. Not bad, huh?
- This year is extremely good for crypto, DeFi & web3. The market is bullish, the prices are soaring, and inflation is going up as well. Then add NFT boom to that and you will get the result mentioned above. It’s not surprising at all. I would expect the trend will continue in the upcoming years. We are still very early.

5) Miami will start giving some residents free bitcoin 💸

In short:
- Miami Mayor - Francis Suarez - announced that the city would be staking (i.e. locking up cryptocurrencies to earn yield) a large portion of its native cryptocurrency, MiamiCoin, to earn yield in bitcoin.
- The earned bitcoins will be distributed to the residents as a dividend.
My comment:
- Last week I shared with you the news about the future mayor of NYC - Eric Adams - taking his first 3 paychecks in bitcoin. This week Miami Mayor - Francis Suarez - strikes back in the battle which city in the U.S. will become the country’s crypto hub.
- Could it be that web2 companies mostly operate from SF and the home for the web3 industry will be somewhere else? NYC? Miami?

Great reads worth your time 📚

1. Designing Internet-Native Economies: A Guide To Crypto Tokens (by Patrick Rivera)

If you want to understand crypto-economics, first you need to get the concept of the token. The fundamental unit of value in crypto.
This amazing deep dive by Patrick Rivera explains the concept of a token, types (fungible & non-fungible), and their use-cases. Plus gives a bunch of arguments about how & why traditional economies are limited. Very well written.

2. Rock, Paper, Scissors Says Go! (by Arthur Hayes)

Another one about tokens but this time - nonfungible ones (NFTs).
NFTs can be very difficult to talk about. Most people just don’t get them. They see NFTs as “worthless JPGes”. If you want to see the bigger picture, go and read this piece by Arthur Hayes.