In the latest edition of The Interchange, several significant developments in the fintech industry are highlighted. One major story covers the unfortunate layoffs at rent-to-own startup Divvy Homes, which experienced financial difficulties due to rising interest rates and a slowdown in the housing market. The company had initially received significant funding and achieved a valuation of over $2 billion. However, the adverse market conditions forced Divvy Homes to charge higher rents and ultimately lay off a large number of employees. This case exemplifies the cyclical nature of the real estate market and the challenges faced by startups in the sector.
Another notable article discusses a new option for small businesses looking to transition to new ownership. Common Trust, a startup that recently secured $2.6 million in seed funding, offers an employee ownership buyout option. The company aims to preserve generational businesses and quality jobs by allowing small businesses to exit while remaining independent. Common Trust utilizes a unique legal structure called a perpetual purpose trust to achieve this. The approach of employee ownership is presented as a scalable and cost-effective alternative to traditional brokerage services.
The newsletter also features news such as Square’s recent outage, which was attributed to a DNS issue rather than a cyberattack. The growing challenges faced by fintech companies in a changing interest rate environment are explored in an opinion piece. Additionally, Citizens Bank’s launch of a startup-focused private bank is highlighted, along with an interview with Sam Heshmati, the head of emerging VC and innovation banking at the institution.
Other stories covered include fundraising and M&A activities in the fintech sector, such as Perfios raising $229 million for its credit underwriting solutions and Swan securing $40 million to bring embedded banking to Europe. Finally, the newsletter includes a list of upcoming events and conferences in the fintech industry, providing opportunities for industry professionals to connect and learn.
Overall, The Interchange provides a comprehensive overview of the latest news and trends in the fintech industry, highlighting significant developments and offering analysis and insights.