Plaid, a fintech unicorn known for its APIs that connect consumer bank accounts to financial applications, announced today that it is buying Cognito. The price is around $250 million, paid in a blend of cash and stock TechCrunch understands, though we couldn’t suss out the exact mix of each.

The deal highlights where Plaid is heading in its post-Visa form. Recall that the company had previously intended to sell itself to the consumer credit giant before the deal ran into a regulatory wall; since then Plaid has raised capital and expanded its valuation by a factor of around four.

Cognito is an interesting buy for Plaid, offering verification services for the fintech world, which is distinct from what its acquirer is best known for. In practice, Cognito offers ID verification, along with help with thorny issues like know your customer (KYC) rules, and anti-money laundering requirements.

If you deal with money in motion, there’s work to do behind the scenes to ensure that your service is not facilitating nefarious activity, for example. (Unless, naturally, your company is named HSBC.) By buying Cognito — the acquiring entity is bringing aboard all of the smaller firm’s staff, including its three co-founders — Plaid is layering more services atop its core remit of consumer bank account connections via developer hooks.

Plaid’s API work puts it in between consumers, and a host of financial applications and services. That’s a lucrative, important, and I would add sticky place to be — all good things for a business. But why merely shuttle data back and forth, when it is possible to do more?

Recall that Plaid bought another startup called Flannel last year, in what Insider described as a push into the payments world; the company, flush with external cash and with equity worth north of $13 billion to use in deals, is adding to its roster of services that it can offer customers.

TechCrunch spoke with Plaid CEO Zach Perret and Cognito CEO Alain Meier (previously of Bloom) about the transaction. Meier said that the talks started off as a chat about a partnership that evolved into a sale; per Crunchbase data indicates that Cognito raised single-digit millions while independent, meaning that its exit price was likely attractive to its investors and staff.

For Plaid the deal makes sense from a number of angles. First, the issue of verifying users for fintech applications is, per Meier, an “extremely complex problem.” That means that Plaid can get past building all of what Cognito has thus far with its checkbook. And with Plaid customers asking for ways to more quickly onboard users per Perret, Plaid knew that it had customer demand for what the smaller company had built; buying Cognito means that Plaid can instantly layer on another service to its already growing customer base.

From that perspective, the deal is something akin to Microsoft acquiring an enterprise software company, knowing that it can sell its product via existing channels and customer relationships. By selling to Plaid, Cognito can likely scale its in-market footprint far more quickly than it could have by itself. Plaid, the company shared with TechCrunch via email, has around 5,500 customers today, a rich vein for Cognito to mine now under the larger company’s aegis.

TechCrunch asked Perret about where Plaid is heading from a product perspective. Our hunch, given the Cognito deal, was that it intends to build an ever-wider cadre of services that customers of its core product can add as they will to their existing contracts. As Cognito will be priced as an add-on, our thesis felt directionally correct.

The CEO noted that Plaid had launched a product called “Signal” recently, aimed at helping reduce fraud as an example of what the company has been working on in recent quarters. Plaid has also built a consumer portal where end-users can check their various connection points.

That’s illustrative. Plaid’s work to build more services atop its core product — which feels very similar to the product work that Stripe has done on top and adjacent to its payments nucleus — doesn’t appear to be merely a push to better support business customers. It has a consumer play in the mix as well. I would add at this juncture that the company remains, in our view, a firmly B2B company today.

Still, you can imagine what could be coming in the future. If consumers use Plaid as the de facto way to connect to the larger web of fintech and finservices products, and the company provides a central hub, or source of truth, it could build relationships with myriad individuals. That would give it sway on both ends of the fintech-user relationship, a powerful place to sit.

Here’s hoping that Plaid dreams big and uses its relationships on both sides of the app-user coin to do lots. Like, say, reinvent credit scoring. That would be a net-good for individuals everywhere.

Regardless, the Cognito deal is not the final acquisition that we anticipate from Plaid before its eventual public offering. More when we have it.

French startup Luko is acquiring German startup Coya in order to grow its European presence and get an insurance license from German regulator. While Luko isn’t disclosing terms of the deal, the company says it’s a 100% share deal, which means that Coya investors are now Luko investors. Those investors include Valar Ventures, Headline and Roland Berger’s family office.

Luko started as a home insurance company for both homeowners and renters. It’s a big market as you have to prove that your home is insured when you rent or buy a home in France. Since then, the company has expanded with new insurance products and services.

Compared to traditional insurance companies, Luko has chosen a direct-to-customer model. People sign up on Luko’s website or in the company’s app directly.

After that, Luko tries to be as efficient as possible. You can chat with the company in the app directly. When the insurance pays you back, it tries to send you the money as quickly as possible. For instance, you can receive money instantly on a Lydia account.

When it comes to transparency, Luko takes a 30% cut on monthly payments. Everything else is pooled together to pay compensation. If there’s money left at the end of the year, you can choose to donate your portion of what’s left of the 70% share.

And the startup has been quite successful. It has attracted 220,000 customers — in particular, the customer base has doubled between November 2020 and November 2021. Luko started accepted clients in Spain a few months ago as well.

Coya, on the other hand, offers various insurance products for the German market. Insurance products include home content, private liability, dog liability and bike insurance.

Following today’s acquisition, Coya is going to be called Luko Insurance AG. Coya’s 80,000 clients are joining Luko’s customer base, which means that Luko now has 300,000 clients in total.

More importantly, Coya has obtained an insurance license in Germany. Luko is going to leverage that license across all its markets thanks to European passporting rules. This way, Luko controls a bigger chunk of the insurance stack.

Up next, Luko has ambitious goals as it plans to build a European leader in the insurtech startup space. The company plans to hire 100 new employees this year alone. By 2023, the startup wants to reach one million customers.

A SaladStop worker uses StaffAny to clock in

StaffAny, a management platform for SMEs with shift workers, has raised a $3.4 million Series A led by GGV Capital. The round included participation from East Ventures, FreakOut Shinsei Fund, Far East Ventures, Farquhar Venture Capital and angel investors including Allen Shim, former CFO of Slack. The round will be used to expand into more markets and develop new features for StaffAny’s platform, which currently operates in seven countries, including Singapore, where it is based, Malaysia, and Indonesia. It brings the startup’s total raised to $4.2 million.

Co-founder Janson Seah told TechCrunch that StaffAny is used by businesses with more than 30 employees, and serves clients ranging from single outlets to chains with more than 1,000 employees. “Whilst we serve smaller businesses perfectly, there is much larger value for SMEs with aspirations to scale where labor processes need to be optimized with data and visibility,” he said.

Before onboarding to the platform, a lot of StaffAny’s clients, who are primarily in the F&B or retail sectors, were using spreadsheets, punch cards or apps that do not sync rosters, pay slips and leave management the way StaffAny does. The software also provides both management and workers with the ability to communicate in real-time.

Its features include an online rostering schedule that enables managers to view staff schedules across different outlets and forecast where workers might be needed and labor costs for the next week. Empty shifts are automatically scheduled and staffers are immediately notified about changes to their hours or additional shift requests. They can clock in and out through StaffAny using their smartphones, replacing punch-in cards or manual sign-ins, and adjustments to payroll are made automatically if their hours change. Both staff and management can see timesheets, so errors can be spotted. This means less disputes over pay slips.

StaffAny’s other features includes ones to handle leave requests and track employee work performance in case of auditing. To adapt to the pandemic, it also added features for contact tracing, testing reminders or vaccination status, depending on each country’s regulations.

In statement, GGV Capital global managing partner Jixun Foo said, “Despite F&B being the worst-hit industry by COVID-19, StaffAny saw strong growth and unprecedented adoption among the SMEs, a testament to its product and the resiliency of its leadership team. SMB tech is a sector GGV invests in globally. We are excited to work with StaffAny as they expand and scale.”

The global startup fundraising boom has lifted nearly every sector you can name: Edtech took off during the pandemic, software in general got a lift, and even more risky and long-term wagers like space tech and biotech are seemingly doing well in today’s risk-on startup fundraising market.

But no single category or niche in startup land has done better than financial technology, or fintech.

Around the world, fintech startups have raised simply astounding amounts of capital, with geographies like Latin America, Africa, North America, and more seeing neobanks, payments companies, new consumer-facing lending services, cryptocurrency on-ramps from the traditional banking world, trading apps, and other sub-sectors raising tectonic rounds from investors hungry to get their own capital to work in the craze.

No surprises

Global venture funding reached a record $621 billion in 2021, according to the CB Insights 2021 State of Venture Report. That’s more than double 2020’s total of $294 billion.

In 2021, global fintech funding jumped to a new record of $131.5 billion across 4,969 deals. That compares to $49 billion across 3,491 deals in 2020. As you can see, the pace at which capital was invested into fintech startups in 2021 grew much more rapidly than total deal count, leading to larger rounds on average. The CB Insights data that we’re citing here also helps put the pace of fintech investing into context compared to its peer startup groups, with financial technology companies raising one in every five venture capital dollars last year, or some 21%.

The fevered pace at which fintech startups attracted external capital continued: In the fourth quarter of 2021, fintech funding reached $34.9 billion – second only to Q2 2021, which saw funding total $36.6 billion. Deal flow was similar – 1,256 in Q4 compared to 1,224 in Q2.

To make those numbers a bit more understandable to our monkey brains, in the fourth quarter inclusive of weekends, holidays, and other non-working periods, some 14 fintech deals were announced every day, worth $387,777,777 every 24 hours. That’s pretty fucking rapid.

The fintech venture market is so big, in fact, that its outlines mirror those of the venture capital market itself. The United States, for example, led in fintech funding in Q4, as it did in total venture capital dollars in the year. The U.S. was followed by Asia and Europe in fintech investment – with $18.2 billion invested in U.S. fintechs, compared to $8.2 billion and $5.6 billion in Asia and Europe, respectively.

While still lagging globally, Latin America came in at an impressive fourth place with $1.9 billion in funding in fintech startups. (Note: In Q3, LatAm fintechs reaped $4.2 billion in funding; smaller numbers tend to be more variable quarter-to-quarter.)

But those are just the top-line figures. What happened on an individual round basis? Let’s talk about it.

Average deal size

Average and median fintech deal sizes reached new records last year. The average fintech startup round in 2021 was $32 million, up sharply – nearly double! – from $18 million in 2020. Meanwhile, the median deal size was $5 million, compared to $4 million in 2020, a more modest increase of 20%.

A few years back there was debate in the tech market concerning the growth of low- and no-code apps and services. A global shortage in developer talent was part of the impetus behind building software that made creating software simpler, but there were some who viewed no- and low-code tools as merely very good ways to create more, newly exciting technical debt.

In the last year or so, I’ve noticed that such conversations have died down, while companies building products replete with lower-code capabilities that empower non-technical folks have been trucking right along.

Softr is a good example of the trend, with the startup raising $13.5 million in a Series A that it announced this week. TechCrunch covered the startup’s seed round in early 2021, when Softr put together $2.2 million in external funds.

The company’s Series A was led by FirstMarket Capital and participated in by a host of individuals from around the technology world. I caught wind of the deal a little while ago thanks to Ashley Mayer, who did stints at Box and Glossier. AtlanticLabs, which put capital into the company previously, also participated in the Softr Series A.

What does it do? The Berlin-based startup lets customers build apps atop Airtable databases. But it has pretty big aspirations beyond that current remit.

In an interview with Softr CEO Mariam Hakobyan, TechCrunch learned that the company intends to expand the sorts of databases that can be leveraged to create apps using its software. It also intends to create a marketplace for both components (to extend what Softr can do beyond official capabilities), and templates (whole-cloth apps out of the box, by our understanding).

Hakobyan said Softr intends to become an ecosystem in time. Adding support for Google Sheets and other data sources will help in that work.

The company thinks that it is swimming downstream, with no-code services “just taking over,” Hakobyan said.

She cited a few trends regarding why no-code services — and, I would add, lower-code services more generally — are performing so well in today’s software market. The first is that there are not enough developers in the market today to meet demand. That’s well-understood. Her other argument was generational in nature. Per Hakobyan, GenZ is more tech-savvy than prior generations, less interested in snagging a traditional day job, and looking for ways to build their own tools and the like.

GenZ as a no-code accelerant makes sense in my head, even if I can’t quite put my finger on why — something for us to keep an eye on in coming quarters.

How is Softr performing in-market? The company is very young in terms of time in market with its product, so we can’t really hammer it too hard on year-over-year growth metrics, but it did share some early data. The company has 30,000 registered users today and has more than 1,000 paying customers. Its main customers, it disclosed, are small and mid-sized businesses, which makes sense, as those are the firms perhaps most likely to be priced out of today’s competitive developer market.

We’ll be curious to see how quickly Softr can bring more data sources to its service, and how rapidly it can roll out its planned marketplace. From that point, the market will decide if Softr is destined to become an ecosystem or not.

I do not want this morning column to become Old Man Shouts at Stocks; that’s not its goal. To prevent that from happening, we’re flipping the script today.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

Instead of talking about what the public markets are doing and how their moves may impact startup valuations, we’re going to ask when VCs will hit the brakes.

When will the venture crew slow down?

It has long been the consensus view that cheap money thanks to low global interest rates helped pump more money than ever before into the startup market. This resulted in the assembly of larger, more rapid venture capital funds, and larger, more rapid startup funding events.

The result of both was that startups got expensive as hell to buy into during their growth curve.

Not everyone is thrilled. Venture capitalists are hardly celebrating paying 75x, 150x, or even greater multiples for shares in nascent startups. But the game was set by rules external to the players, meaning that the venture crew has merely responded to in-market incentives in recent years.

The question before us — and it’s perhaps the most important question in startup land for the next few years — is what happens next. The incentives that venture capitalists followed for the last decade or so are finally changing, with the price of money expected to rise sharply this year (due to tightening monetary policy generally). This has led to the anticipated result — falling valuations for riskier stocks like richly valued technology shares.

What this means in practice is that there is an inverse relationship between the price of money (where interest rates are set by key central banks, like the U.S. Federal Reserve) and the value of startup exit prices.

This is simple to understand: Startups are priced first on hope (seed-stage), then momentum (Series A through C), and later by exit comps (late-stage). The startup exits that truly matter to venture funds tend to be post-late-stage, so we care most about how upstart tech companies are valued by their public market analogs. This means that more expensive money makes bonds and other, comparatively safer investments more valuable as startups lose in-market pricing power. So, up goes the price of money, down goes the exit value of startups.

This should impact earlier-stage startup prices in time, but we’ve tread that ground before.

All that in hand, when will venture capitalists tap the brakes? From where I sit today, the answer is clearly not yet. This is for two reasons:

Buy now pay later (BNPL) startups are proliferating around the world and the Philippines is no exception. Today, one of the country’s biggest BNPL providers, BillEase, announced it has raised an $11 million Series B. The round was led by BurdaPrincipal Investments, growth capital arm of Hubert Burda Media. Other participants included Centauri, a joint investment vehicle between MDI Ventures and KB Investment, and Tamaz Georgadze, CEO and co-founder of Raisin DS.

Operated by fintech First Digital Finance Corporation BillEase launched in 2017, with shopping marketplace Lazada as its first merchant partner. It can now be used at more than 500 merchants, including consumer electronics seller Kimstore and Philippine Airlines. Its BNPL is also available through payment gateways Xendit, Paynamics, 2C2P, Dragonpay and BUX, and it offers an app with personal loans, top-ups for digital wallets like GCash, PayMaya, Coins.ph, GrabPay and Shopee Pay and mobile phone and gaming credits.

Since the Philippines’ payment sector is fragmented, customers can pay back their BNPL loans through a variety of ways, including digital wallets, bank transfers, direct debit, linking their bank account or over-the-counter payments in physical stores like 7-11.

The new funding brings BillEase’s total raised to about $15 million in equity, and will be used for customer acquisition, developing new products and hiring.

One of the main ways BillEase differentiates from other BNPL services in the Philippines is that it allows customers to build formal credit records.

Georg Stegier, First Digital Financial Corporation’s co-founder and CEO, told TechCrunch in an email that BillEase’s target segment is the Philippines’ emerging middle class, specifically Gen Z and millennials who are early in their careers. “About 80% of our customers are new to the formal credit system and do not have a credit record.

For those customers, BillEase also serves as an on-ramp to the financial system—we are the only credit app in the Philippines that is a member of TransUnion.” It is also part of the state-owned Credit Information Corporation.

Another differentiator is that BillPay built and owns its credit, fraud and payment software stack, and can approve more than 90% of BNPL loans instantly with it model. This means shorter checkout times and also enables BillEase to offer lower interest rates, at about 3.49% compared to 7% to 12% for other BNPL loans, Stegier said. It gives merchants customizable installment plans. For example, they can offer BNPL repayment terms of 10 to 30 days for smaller purchases, payment in four installments or monthly payments for larger purchases, and decide if those loans will be interest-free or not.

Since most of BillEase’s customers don’t have a credit record, it uses “a wide variety of alternative data sources to triangulate and get a good picture of our customers,” including telecom usage, phone metadata, network data and behavioral data points,” Stegier said.

“Credit scoring is also something we constantly tinker with,” he added. “As new data comes in or new variables become available, we upgrade our models. At any given time we usually run a few A/B tests to test new models or process improvements.”

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This is our Monday Tuesday show, our short ramp into the week where we talk about the larger picture to get our feet wet. We’re a day late due to an American holiday, and I can say later in the day with this thanks to my schedule. But, better late than never, here’s what we got into:

• Yet another bad day for assets: Stocks around the world were broadly lower, with software shares taking yet another hit in the key US market.
• Microsoft wants to buy Activision Blizzard for nearly $69 billion dollars. It’s a lot of money for a gaming studio that was so recently covered in, well, scandal? And really, does Microsoft need to get any bigger? Come on. It has already consumed several gaming companies, and is worth north of $2 trillion. At what point will regulators, you know, regulate?
• Clockwise raises $45 million! This is a very neat round from a very cool company, which Aisha Malik covered for TechCrunch earlier today. Her post is here if you need more.

We’re back to our normal schedule starting tomorrow, now that the new year and holidays are behind us. To work!

Fintech startup Spendesk is announcing that it has raised an extension to its Series C round. Tiger Global is investing $114 million (€100 million) in the startup. Following today’s funding round, the company says that is has reached a valuation of more than $1.14 billion (more than €1 billion).

In other words, Spendesk is a new unicorn in the French tech ecosystem. Funding news has been accelerating over the last few months in France. In January alone, five startups announced that they have crossed the threshold to reach unicorn status — PayFit, Ankorstore, Qonto, Exotec and Spendesk.

Back Market, an e-commerce marketplace focused on refurbished smartphones and electronics devices, has also raised a mega round and reached a $5.7 billion valuation.

Let’s go back to Spendesk. The startup offers an all-in-one corporate spend management platform for medium companies in Europe. Originally focused on virtual cards for online payments, the company has expanded its product offering to tackle everything related to corporate spending.

Spendesk customers can order physical cards for employees, team members can use the platform to pay outstanding invoices, file expense reports, manage budgets and generate spending reports. By offering everything in a single service, Spendesk wants to simplify accounting and approvals in general so that money moves more freely.

The startup defines its platform as a “7-in-1 spend management solution”, meaning that Spendesk is no longer just a product that lets you order debit cards for your employees.

“We have had this goal since the beginning — we really want to become this platform, this operational system to manage your spending,” co-founder and CEO Rodolphe Ardant told me. “When we started working on the product, we looked at each use case and designed the right workflow for that.”

In particular, Spendesk helps you formalize your internal processes. You can define team budgets, set up complicated approval workflows for expensive payments, automate some pesky tasks, such as VAT extraction.

“We target mid-market clients. Those are customers with 50 to 1,000 employees. We have a few clients that are bigger than that and a few clients that are smaller than that,” Ardant said.

And the company currently has 3,500 clients — around half of them are based in France while other clients are mostly based in Germany and the U.K. Clients have spent €3 billion through Spendesk in 2021 alone.

With its central positioning in the financial stack, Spendesk needs to interface perfectly with other financial tools — banks on one side and ERP products on the other side.

The startup currently supports many of the popular accounting tools used by European companies, such as Xero and Datev. Spendesk customers can also export transaction batches and import them into Sage, Cegid and other accounting software solutions.

Spendesk is also working on automating the integrations with your bank accounts, which could be particularly useful for companies with multiple bank accounts. For instance, you could imagine setting up a rule that automatically triggers a transfer between your German bank account and your Spendesk account when you want to pay a German supplier.

Image Credits: Spendesk

Spend management in Europe

Spendesk isn’t the only spend management solution in Europe. There are some competitors, such as Pleo, which recently reached a $4.7 billion valuation, and Soldo — another well-funded competitor as it has raised $180 million last year.

In the U.S. as well, companies like Brex and Ramp have reached sky-high valuations. And yet, Spendesk doesn’t think it has the same positioning as American startups.

“On the American market, it shouldn’t be called the spend management industry — it’s the corporate card industry. Players like Brex and Ramp position themselves as a payment method,” Spendesk co-founder and CEO Rodolphe Ardant told me. “Europe’s corporate culture is a culture of debit — not credit. We don’t provide payment methods, we provide a process.”

It’s a slight difference in product positioning, so it’s going to be interesting to see if a European spend management startup can successfully enter the U.S. and vice versa.

When it comes to business model as well, Spendesk considers itself as a software-as-a-service company with recurring subscriptions. The startup didn’t want to share any hard numbers for its revenue. Its CEO just said that Spendesk’s revenue “more than doubles every year.”

With today’s funding round, Spendesk plans to triple the size of its team over the next two years. The company plans to have 1,000 employees by the end of 2023.

Mio, the Vietnamese social commerce platform, has raised an $8 million Series A, less than a year after announcing its seed round. The funding was led by Jungle Ventures, Patamar Capital and Oliver Jung, with participation from returning investors GGV, Venturra, Hustle Fund, iSEED SEA and Gokul Rajaram.

TechCrunch first covered Mio at the time of its $1 million seed funding in May 2021. Founded in 2020, Mio is a group buying platform that focuses on selling fresh produce and groceries in Tier 2 and 3 cities in Vietnam. The company is able to offer next day delivery because it built a logistics infrastructure that enables it to send produce directly from farms to customers.

The Series A brings Mio’s total raised to $9.1 million, and will be used to expand its logistics and fulfillment system, enter new areas in Vietnam and add new product categories like fast-moving consumer goods (FMCG) and household appliances.

Mio co-founder and chief executive officer Trung Huynh said that since TechCrunch first covered Mio seven months ago, it has achieved 10x gross merchandise value growth, a 10x increase in agents, or resellers, and grew its team from 60 people to 240. It now fulfills more than 10,000 pieces of fresh produce per day, operating in Ho Chi Minh, Thu Duc, Binh Duong, Dong Nai and Long An, with plans to expand into northern Vietnam.

The numbers “strengthened our conviction in this model and its potential,” he said. “We need fresh capital to accelerate hiring, product development and supply chain to keep up with the pace of growth as we deepen our presence in existing geographies and expand to new provinces.”

Mio is able to offer next day deliveries because its vertically integrated mayor layers of the value chain, including procurement, warehousing, order sorting and bulk delivery. The startup owns the majority of its logistics infrastructure and uses its own fleet of couriers. Its ability to delivery fresh produce directly from farms to customers in less than 16 hours contributed to higher customer retention and growth, Huynh said, and it will continue to shorten delivery times. .

Mio resellers are called Mio Partners. Huynh said one of the driving factors behind Mio is targeting the right people for the program, or “housewives and stay-home-moms in lower income regions who love sharing value-for-money products to their social circle of friends.”

They aggregate orders, usually from friends and family, and orders are delivered to them in batches for distribution. The startup claims Mio Partners can make up to $400 a month, including a 10% commission on each order and additional commissions based on the monthly performance of other resellers they referred to the program.

“There is a strong possibility” that Mio will expand beyond Vietnam, Huynh said, “but will only be considered at a more appropriate time after we successfully built our playbook for Vietnam.”

This morning Rebundle, a hair-focused startup based in St. Louis, announced that it has raised $1.4 million in a pre-seed round. M25, a venture firm with a geographic focus on the Midwest, led the funding event. Prior to its pre-seed round, Rebundle had raised what CEO and co-founder Ciara Imani May described as six-figures worth of grant, and other non-dilutive capital in an interview with TechCrunch.

Rebundle creates and sells hair extensions made from plant-based materials. My knowledge of hair extensions is modest, but May walked me through a few key points. First, the market is both large, and varied, with myriad price points from low-cost (plastic-based products), to expensive (human hair). And second, plastic extensions can irritate one’s scalp.

May had a focus on living more sustainably before founding Rebundle, she said, and was aware of the irritation that plastic extensions can cause. What her startup created has the potential to both remove plastics from the product, helping customers’ heads feel better, and limit waste, helping the environment.

To create its product, Rebundle uses banana fiber as the core material in extensions that it sells in a variety of colors. Notably the company is building out new production facilities in the United States instead of offshore.

Manufacturing brings us back to the funding round, which the CEO said will be used to invest both in her team, and her supply chain. Rebundle was selling out of stock in an hour or less before raising more capital, which meant that prior funding sources were too small for it to properly scale. Enter venture capital.

Rebundle is a DTC company, selling its products through its website. I asked May how many times per year someone employing hair extensions might change them out for a new set. She said up to five times per year. This means that Rebundle is selling what appears to be a recurring-purchase physical good through its own channels. The gross margin profile of the extensions market isn’t clear to us at this juncture, but the potential regularity of extensions sales makes Rebundle an interesting business case.

Recall that mountains of venture capital has been invested in the DTC model for products that lacked a recurring hook, an experiment that had mixed results.

On the obvious question of subscriptions to its products, the co-founder demurred to share specifics, allowing only that there is “room to play” with the idea. Extensions customers today, she explained, do not typically buy subscriptions to the product. If Rebundle can scale its onshore manufacturing and introduce a recurring service to its product mix, I wouldn’t be shocked to see the company raise again this year.

It likely won’t need to. The company’s CEO told TechCrunch that her latest round was compiled with a rolling close, but that the capital will provide at least 18 months of runway, and perhaps a little more. So there’s not likely a near-term need for more funds at Rebundle, though not needing money has certainly not slowed many startups from taking on more capital when offered.

Barcelona-based Payflow, a YC-backed salary-advance fintech with ambitions to evolve into a neobank, has banked a $9.1 million Series A funding round — bringing its total raised since January 2020, when the business was founded, to $13.6M.

Investors in the round include a mix of national and international funds, including Spain’s Seaya Ventures, a new backer of Payflow and Cathay Innovation via its C. Entrepreneurs Fund, which are co-leading the round; with participation from Force Over Mass Capital, Y Combinator and Rebel Fund.

The startup sells a salary-advance service to employers to offer their staff — charging companies a commission for the tech rather than levying a fee on users to withdraw a portion of their salary early (as some other salary startups do).

Payflow says the model has won it friends in works councils and labor unions.

It also touts it as a differentiating feature vs other salary advance startups.

“We differentiate from other pay-on-demand companies because we have never charged an employee for using the service (we are the first true employee benefit, fully paid by the company),” says co-founder Avinash Sukhwani.

“[Payflow] is free for users and it will always be the case,” adds co-founder Benoît Menardo. “Our vision is to provide the first true employee benefit for blue collar workers and we believe that if the employee has to pay for it, it’s not a real perk.”

Among users it notes a high uptake — with a 40% download rate on average, and rates as high as 90% for some of its clients — which it claims is 5-10x higher than other on-demand salary platforms and other social benefits.

Its approach also appears to be checking the right boxes for employers, too — with 175+ clients signed up already (covering 100,000 users).

It operates a SaaS business model, charging employers a tiered fee depending on the number of employees using the product.

Payflow is targeting the product at large corporate clients. it says customers span all industries but — as you might expect — it says take-up it’s highest among blue collar workers.

“We cater to all industries, from restaurants to startups to hospitals, but uptake is best amongst blue collar workers,” says Sukhwani.

A salary advance may help lower income workers avoid getting into debt if they are able to access wages more often than once per month, such as to pay an unexpected bill. At the same time, there may be some risks related to instant access to wages which could encourage a negative financial spiral — say if the employee spends their wages immediately they’re earned and arrives at the end of the month with no money.

Asked about this, Payflow says it makes a “safety limit” available in its employer dashboard “in case they want to restrict usage”.

“Most companies set this limit to around 50%, so that employees always receive at least the remaining 50% of their salary in the monthly paycheck,” says Menardo, adding: “That allows them to ensure there is enough leftover for rent and other essential monthly expenses.”

The startup’s Series A funding is earmarked for expanding Payflow’s international footprint.

It is also planning to spend on product dev to fuel its goal of evolving into a neobank.

Some neobanks are going the other way of course — and bolting on salary advance as an additional feature to their offerings (see, for example, Revolut).

In fintech the startup game can boil down to different strategies and approaches to maximize customer onboarding — after which, and with strong enough traction, there’s the chance to upsell users of a popular feature on more fully fledged banking services, funded by earlier feature success.

The upshot is fintech competition may be very dynamic.

Although a particular cohort of users may be more loyal and less likely to switch than others — and if such a demographic can be upsold on banking services via a sticky enough feature which gets them to know a startup service and inculcates loyalty that might make for a low churn banking customer base for cross-selling a full suite of services for years to come. Or, well, that’s the fintech dream.

On the product dev side Payflow is developing a “super app” to start to expand its feature set.

“In 2022, two features [will be added] that strengthen the b2b value proposition through bringing financial wellness to blue collar employees,” says Menardo. “Later on, by developing many b2c features [the plan for the app is] essentially turning into a neobank.”

Payflow isn’t disclosing a timeline for evolving its salary advance SaaS business into a direct-to-consumer neobank but Menardo implies it wants to grow its customer base by more than 10x, noting: “This concept is especially powerful once we have millions of users.”

“We plan to launch our first d2c feature before the end of this year,” he adds.

It’s also hoping to get a good chunk of growth out of its home market where it plans to double down and spend $3M of the fresh funding to consolidate the market — with a goal of growing its customer base 5x in Spain.

On the market expansion front Payflow is planning to launch into two more markets outside Spain, in addition to Chile and Columbia where it is already offering a service.

Its expansion will be focused on Europe and LatAm.

Currently, it has pilots running in Italy and Portugal. It also says it’s planning to open one more market in LatAm this year — so it looks like it will grow from three markets (currently) to five in total during 2022.