Fintechs Start To Feel The Pain From Government Shutdown

With the federal government playing a bigger role in the overall financial technology industry, the lack of government workers is hurting everything …

Government shutdown weighs on fintechs.Getty

The partial government shutdown, which is now in its second month, is having an impact on the fintech industry whether it’s from a regulatory standpoint or customer perspective.

While the stock market has been holding up in the face of what is now the longest shutdown of the Federal government in modern history, fintech startups looking to go public via an initial public offering or those needing a sign-off from regulators are seeing efforts delayed. The irony isn’t lost on some of the fintech startups that decided to go the regulated route, eschewing the launch of services without the approval of the federal government. Those who play by the rules are now the ones hostage to a government that is not operating.

“It’s interesting to see the SEC (Securities and Exchange Commission) come to a screeching halt,” said Max Niederste-Ostholt, co-founder and Chief Financial Officer at Rally Rd, the New York alternative investment marketplace operator. “On a normal day, the SEC is churning out incredible work and keeping the financial system operating. When something like this happens literally some of the biggest companies in the country’s businesses are coming to a halt.”

Rally Rd, which enables anyone to invest in luxury cars via an IPO of the vehicles, relies on the Securities and Exchange Commission to sign off on its offerings. If the government shutdown continues much longer, the backlog the SEC already approved may start to run out. Rally Rd is also interested in expanding into other markets including memorabilia and wine and whiskey. Without the blessing of the SEC it can’t move forward.

“The government has made all these regulations easier for startups and almost in a flip of the switch the process has stopped,” said Niederste-Ostholt. “We were prudent. We got a lot of stuff in early. But if the shutdown continues for months this will certainly have an impact.”

Lawmakers are scheduled to vote on dueling proposals Thursday (January 24) but optimism is low that it will result in the reopening of the government. It could spark a fresh round of negotiations, something that hasn’t happened in the past few days as politicians on both sides continue to squabble.

IPOs, Online Lending to be Impacted by Shutdown

The alternative asset startup market isn’t the only area of fintech impacted by the shutdown. With the federal government playing a bigger role in the overall financial technology industry, the lack of government workers is hurting everything from how much a fintech can raise to when a business plan is approved. One of the most visible impacts of that is the pending IPOs of fintechs, software startups and consumer-focused companies. Take Lyft and Uber as one example. The two ride-hailing startups are expected to go public this year. Most IPOs tend to happen in the first half of the year before the summer slowdown and the holiday season sets in. But with the government closed the SEC can’t approve IPOs. That could result in a huge backlog when it does reopen. “Those companies that need public market liquidity to fund operating expenses will have a much harder time,” said Niederste-Ostholt, noting that if the SEC opened up tomorrow there would be a two to three-month delay in approving IPOs. “Anything that was supposed to get done in the first half of the year now will get done no earlier than the second half of the year.”

Outside of IPOs, online lenders are being hurt by the shutdown since the SEC has to sign off on their ability to sell loans to investors. Without that blessing, they may be forced to turn to other avenues to secure funding. These online lenders are also the source of funds for government workers who are about to miss two paychecks. If they can’t get access to capital they could turn to pawn shops and payday lenders. It’s the reason stocks of the two industries have been on an upswing since the shutdown began 33 days ago.

Government Shutdown Not All Bad for Fintechs.Shutdown Not All Bad for Fintechs

For some fintechs, the government shutdown isn’t all bad news. It gives the established players an edge over competitors awaiting regulatory approval. It also validates the business models and missions of others. Betterment, the New York online investment company, is an example of the latter. Adam Grealish, director of Investing at Betterment said there was a “notable uptick” in customers who are tapping their safety net accounts to cover bills as the government remains shuttered. Betterment, a big advocate of setting aside money for the unexpected, enables customers to place their savings in different digital buckets and input journal entries noting why they are taking an action. “On the one hand it’s heart wrenching the hardships government workers are encountering,” said Grealish. “On the other hand, it’s great to see these customers have taken steps ahead of time to plan for any unforeseen event.”

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Barclays Expands Rise New York and Launches Rise Growth Investment Funds

Rise is the FinTech ecosystem created by Barclays to enable financial technology start-ups to connect, create and scale, as well as offer its clients’ …

NEW YORK–(BUSINESS WIRE)–Jan 23, 2019–Barclays today announces a significant expansion of Rise New York, one of its global locations providing a co-working, mentoring and events space in its Rise FinTech ecosystem. Situated in the heart of Silicon Alley, Rise New York is currently home to more than 60 start-ups. Participating companies in the Barclays Accelerator, powered by Techstars program, will now also be eligible for Rise Growth Investments, new investment capital of £10m per program, one of the largest initiatives of its type in FinTech.

The Rise New York expansion will transform the location to the network’s largest site with five full floors spanning over 66,000 sq ft, capable of hosting up to over 200 businesses. It will also feature a state-of-the-art events space, an auditorium and a recording studio. Together with Barclays’ new Innovation Technology R&D center, it will be used to host numerous innovation events and learning sessions that will be open to the public.

Rise is the FinTech ecosystem created by Barclays to enable financial technology start-ups to connect, create and scale, as well as offer its clients’ unparalleled access to start-ups around the world. Rise has a global physical presence with approximately 200 companies in residence.

Interested FinTechs can learn more about Rise at www.thinkrise.com.

John Stecher, Chief Innovation Officer at Barclays said: “The FinTech community is growing faster than ever with a number of game-changing start-ups. With the expansion to create our largest-ever Rise site, not only can we give those in our Accelerator program the room to grow – we can also help to house more of the best and brightest innovators. We’re excited to further build relationships that foster growth for start-ups, and opportunities for Barclays to work directly with businesses transforming the financial services industry.”

Barclays also announces Rise Growth Investments, new investment capital that will solely be focused on the companies accepted into the Barclays Accelerator, powered by Techstars program. This capital will reinforce Barclays’ commitment to FinTech innovation as well as deepening the ecosystem of entrepreneurs, companies and innovation they have built. The fact the capital is dedicated solely to Accelerator companies is a marker for the further growth and value that Barclays sees in these early-stage companies. The funds will allow Barclays to invest up to £10m per Accelerator class. Start-ups in this year’s New York program, which recently held its Demo Day on December 5 at New World Stages in New York City, will be eligible for the funds. £10m will be available for each class going forward.

The funds will enable Barclays to invest in strategically-relevant companies participating in the program, bringing growth to both the start-ups and the bank. Barclays already has significant commercial agreements with several Accelerator alumni including Sigma Ratings, Crowdz and Simudyne, helping transform the way Barclays does business. The ability to lean in with additional equity investment further strengthens these types of partnerships.

The Accelerator program launched in 2014 and is currently active across New York, London and Tel Aviv with more than 140 companies in its portfolio.

Andy Challis, Managing Director, Principal Investments at Barclays, commented, “Rise Growth Investments will be a win-win for both Barclays and the Accelerator companies. We can support start-ups as they continue to develop their proposition and reduce the burden for access to funding, which can be very time-consuming for founders. At the same time, the funds allow Barclays to capitalize on early-stage opportunities ahead of potential strategic investment further down the line, ultimately positively impacting the bank.”

About Barclays

Barclays is a transatlantic consumer and wholesale bank offering products and services across personal, corporate and investment banking, credit cards and wealth management, with a strong presence in our two home markets of the UK and the US. With over 325 years of history and expertise in banking, Barclays operates in over 40 countries and employs 82,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.

For further information about Barclays, please visit our website www.barclays.com

About Rise, created by Barclays:

Rise, created by Barclays, is a global community of the world’s top innovators working together to create the future of financial services. With a diverse network of FinTech talent, a world-leading accelerator program and workspaces based in the main FinTech hubs of the world, Rise is an exclusive place for FinTech companies to connect, create and scale together with Barclays.

For more information on Rise, visit thinkrise.com.

About the Barclays Accelerator, powered by Techstars:

The Barclays Accelerator, powered by Techstars, is a 13-week intensive start-up program designed to shape and scale the next generation of FinTech businesses. Since 2014, it’s connected start-ups to mentors from across Techstars’ and Barclays’ global network of clients, partners and experts, with a focus on creating breakthrough solutions to solve some of our industry’s biggest challenges.

For more information on the Barclays Accelerator, visit barclaysaccelerator.com.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190123005509/en/

CONTACT: Danielle Popper

+1 212 526 5963

danielle.popper@barclays.com

KEYWORD: UNITED STATES NORTH AMERICA NEW YORK

INDUSTRY KEYWORD: TECHNOLOGY OTHER TECHNOLOGY PROFESSIONAL SERVICES BANKING FINANCE

SOURCE: Barclays

Copyright Business Wire 2019.

PUB: 01/23/2019 09:58 AM/DISC: 01/23/2019 09:58 AM

http://www.businesswire.com/news/home/20190123005509/en

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Electric raises $25 million to automate IT tasks

GGV Capital led Electric’s $25 million series B, with participation from existing investor Bessemer Venture Partners. It comes almost a year after …

Nothing annoys an IT team more than answering the same doggone questions about Wi-Fi passwords over and over again. And the truth is that, excepting hardware installations and particularly tricky software configurations, many (if not most) small and mid-sized business’ day-to-day IT tasks now can be automated or handled offsite.

That’s music to the ears of companies that have historically paid a premium to keep IT technicians on premises, and at least a few of these businesses have recruited Electric to help them make the transition. The New York startup, which emerged from stealth in December 2016, offers a chatbot-forward interface that integrates with Slack — a simple, no-frills solution that’s helped it attract 301 customers with more than 10,000 employees (up from 90 customers in 2017). Now, as Electric gears up for its next stage of growth, it’s announcing a new funding round that brings its total capital raised to $38 million.

GGV Capital led Electric’s $25 million series B, with participation from existing investor Bessemer Venture Partners. It comes almost a year after Electric’s $9.3 million series A last March and will be used to “further invest” in the platform’s features and its client, sales and marketing, and executive teams. The goal this year is to triple the number of customers, users, and sales to increase revenue 3 to 4 times from 2018 and to expand to 25 U.S. markets. (Electric currently services New York, San Francisco, Boston, Philadelphia, Chicago, Austin, Washington D.C., and others.)

Electric also revealed that Jeff Richards, managing partner at GGV Capital, will join Electric’s board of directors and that former Blue Apron executive Rani Yadav and Compass head David Weiner have been hired on as chief operating officer and vice president of sales, respectively.

Electric AI

Above: A screenshot of Electric’s web backend, which managers can use to set up integrations with third-party services.

Image Credit: Electric

“This past year has brought exponential growth for Electric, and I’m proud to call us the fastest-growing company in our competitive set,” said Electric founder and CEO Ryan Denehy. “Our sales, product and engineering, and account management teams have scaled up to support a wide range of customers, and most importantly, make those customers happy. With the new funding, we’re excited to continue on this rapid growth trajectory and become the de facto IT solution for small and mid-size offices all over the country.”

Denehy — whose previous startup, Swarm, was acquired by Groupon in 2014 — describes Electric’s core service as “AI-driven,” with a heavy reliance on automation. Tasks like setting up an email address, connecting to an enterprise platform, and turning on a firewall are handled largely without human intervention; Electric claims it can resolve 99 percent of IT issues within an hour. In place of support tickets, users ping the Electric bot with “@Electric” on any Slack channel, which identifies the client and software being used, delivers a troubleshooting guide or suggested fix, and registers follow-up requests in a web dashboard.

“In short, we built a data warehouse fed by a human support desk,” Denehy explained via email, “and over the last two years used the data to inform our decisions about what to automate, when to automate it, and to create self-learning systems that rapidly increase the intelligence of our task automations over time.”

In the event a more complicated problem arises, Electric connects users with a technician who can undertake systems administration, security and network management, and troubleshooting remotely, or with a local vendor who can perform on-site assistance. Additionally, it affords them and administrators the ability to quickly perform tasks like creating users, updating permissions, deleting files, resetting passwords for apps, adding members to groups, and updating company-issued devices with security and vulnerability patches.

Companies pay a flat rate of $60 per month per employee for Electric — a fraction of the cost of employing an IT staff, Richards said.

“Small and mid-sized businesses will spend over $600 billion on technology in 2019 — more than $180 billion in the U.S. alone,” he said. “Now more than ever, those companies are struggling to deploy and manage their IT infrastructure. Ryan and the Electric team have built an incredible platform that leverages modern cloud technologies like AI and chat to support customers in a scalable way we haven’t seen before.”

Electric employs a team of around 100, and is headquartered in New York.

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Electric Raises $25M Series B to Automate IT Support

Jeff Richards, Managing Partner at GGV Capital, has joined Electric’s board of directors in addition to existing board members Bob Goodman, Partner …

NEW YORK, Jan. 23, 2019 /PRNewswire/ — Electric, the world’s first chat-based, real-time IT support solution for small and mid-size companies, has successfully raised $25M as part of a Series B financing round led by GGV Capital with participation from existing investor Bessemer Venture Partners. To date, Electric has raised $38M.

In addition, the company announced the expansion of its leadership team with the appointment of Rani Yadav as Chief Operating Officer and David Weiner as Vice President of Sales. Rani joins Electric from Blue Apron where, as Vice President of Marketing, she led all brand and customer acquisition functions, and helped scale the company from 8 to over 600 employees. In addition, Rani brings extensive general management, business development, and strategy and operations experience from her previous roles with Bain & Company, Unilever and Warner Music Group. David joins Electric from real-estate technology startup Compass, where he scaled the inside sales team from 6 to 85+ across 18 markets, and delivered triple-digit, top-line revenue growth for three years as VP of Sales and Head of Strategic Growth.

With this additional funding, the New York-based startup will further invest in the platform’s core features including automated IT troubleshooting, systems administration and data-driven recommendations for some of the most widely-used office technologies and SaaS applications in the world. In addition, Electric will be investing heavily across Client Success, Sales and Marketing, Operations and Executive teams.

“This past year has brought exponential growth for Electric and I’m proud to call us the fastest-growing company in our competitive set,” said Ryan Denehy, founder and CEO of Electric. “Our sales, product and engineering and account management teams have scaled up to support a wide range of customers and, most importantly, make those customers happy. With the new funding, we’re excited to continue on this rapid growth trajectory and become the de-facto IT solution for small and midsize offices all over the country.”

Jeff Richards, Managing Partner at GGV Capital, has joined Electric’s board of directors in addition to existing board members Bob Goodman, Partner at Bessemer Venture Partners; Brad Svrluga, General Partner at Primary Venture Partners; and Rudd Davis, Founder and CEO of Blackbird.

“Small and mid-sized businesses will spend over $600 billion on technology in 2019—more than $180 billion in the US alone,” said Jeff Richards. “Now more than ever, those companies are struggling to deploy and manage their IT infrastructure. Ryan and the Electric team have built an incredible platform that leverages modern cloud technologies like AI and chat to support customers in a scalable way we haven’t seen before.”

Today, Electric boasts over 300 customers with more than 10,000 employee end users through its innovative network-to-device level IT support platform, which includes day-to-day troubleshooting, systems administration, employee onboarding and offboarding and onsite emergency assistance. Electric integrates with over 50 of the most widely-used SaaS applications on the market.

For more information, visit www.electric.ai and schedule a demo to see how Electric can make an impact on your business.

ABOUT: Founded in New York City in 2016 by Ryan Denehy, Electric is the world’s first all-in-one IT support solution for small and midsize offices delivered in real-time. Through a chat and web interface, personalized service and flat-rate pricing, Electric enables companies to assess, deploy and manage their technology at a fraction of the cost and headaches normally experienced with traditional IT managed service providers. Electric’s core package includes troubleshooting, systems administration, security and network management and on-site assistance.

Contact: Hally Darnell

hally.darnell@electric.ai

SOURCE Electric

Related Links

https://www.electric.ai

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Term Sheet — Wednesday, January 23

Generation Investment Management led the round, and was joined by investors including the Chan Zuckerberg Initiative, GV, Spark Capital, and CRE …

Desktop Metal, a maker of 3D metal printing systems for commercial and industrial use, raised $160 million in funding at a valuation of around $1.5 billion, according to Axios. A subsidiary of Koch Industries led the round. Read more.

Andela, a New York-based company building distributed engineering teams with Africa’s top software developers, raised $100 million in Series D funding. Generation Investment Management led the round, and was joined by investors including the Chan Zuckerberg Initiative, GV, Spark Capital, and CRE Venture Capital.

Globality, a Menlo Park, Calif.-based a platform that uses artificial intelligence to help companies find services, raised $100 million from the SoftBank Vision Fund. Read more.

NEXT, a Lynwood, Calif.-based technology company that connects shippers and carriers for the shipment of freight and cargo, raised $97 million in Series C funding. Brookfield Ventures led the round, and was joined by investors including Sequoia Capital and GLP.

Keyfactor, an Independence, Ohio-based provider of secure digital identity management solutions, raised $77 million in funding, from Insight Venture Partners.

Dosh, an Austin, Texas-based developer of a cash back app, raised $40 million in Series B funding. Goodwater Capital and Western Technology Investment co-led the round.

Hailo, an Israel-based startup developing a chip for deep learning, has expanded its Series A funding round to $21 million. Glory Ventures led the round.

Pro.com, a Seattle-based provider of full-service general contractor services, raised $33 million in Series B funding. Investors include WestRiver Group, Goldman Sachs, Redfin, DFJ, Madrona Venture Group, Maveron and Two Sigma Ventures.

CrediFi, a New York-based source for data and analytics for commercial real estate finance, raised $6 million in funding. Liberty Technology Venture Capital II led the round, and was joined by investors including Mitsui Fudosan, Maverick Ventures Israel, Battery Ventures, Viola Ventures and OurCrowd.

Sherpa, a Spanish language digital voice assistant, raised $8.5 million in Series A funding. Mundi Ventures led the round.

Liquid Instruments, a developer of software-configurable hardware platform for precision test and measurement and advanced digital signal processing, raised $8.16 million in Series A funding. Anzu Partners led the round, and was joined by investors including ANU Connect Ventures.

Your Super, a line of natural, organic, plant-based superfood mixes raised $5 million in Series A funding. PowerPlant Ventures led the round, and was joined by investors including Doehler Ventures.

The OneHealth Company, a diagnostics company that creates a tailored treatment for dogs with cancer, raised $5 million in seed funding. Andreessen Horowitz led the round, and was joined by investors including Lerer Hippeau and Y Combinator.

Chowbus, a Chicago-based developer of an online Asian cuisine ordering app, raised $4 million in funding. Greycroft Partners and FJ Labs co-led the round, and was joined by investors including Hyde Park Angels and Fika Ventures.

Hone, a San Francisco and New York City-based reimagined workplace training platform for modern and distributed teams, raised $3.6 million in seed funding. Cowboy Ventures and Harrison Metal led the round.

Growth Intelligence, a London-based technology company, raised £1.7 million ($2.2 million) in funding. 24Haymarket led the round, and was joined by investors including MMC Ventures.

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