Fintech Investment Dollars Keep Coming, but Challenges to Growth Remain (Nov. 19, 2015)
Funding continues to roll in for fintech startups, with a pair of firms landing investments totaling more than $21 million this week. Align Commerce—one of a growing number of fintech providers looking to bring blockchain technology to real-world payments—closed a $12.5 million financing round, led by Kleiner Perkins Caufield & Byers. The funding will help Align build out its electronic payments platform, which combines blockchain—the technology underlying virtual currencies like bitcoin—with traditional payment rails to help small and midsize enterprises (SMEs) make cross-border payments more efficiently and at a lower cost. Align’s platform converts funds to bitcoin and pays recipients in their home currency—a strategy the company hopes will displace the $50 billion in wire and foreign exchange fees SMEs pay to banks every year, according to Align.
Meanwhile, banking services provider CARD.com landed $9 million in growth capital from Columbia Pacific Advisors and Fenway Summer Ventures. Headquartered in Santa Monica, Calif., CARD.com offers an alternative banking platform based on a mobile app and prepaid card. The company reports it has racked up more than $450 million in deposits since its creation in 2012, and has opened more than 50,000 new accounts in October 2015 alone.
But while investment activity continues apace, fintech providers are facing some challenges to growth—No. 1 regulation, a new study suggests. In a Silicon Valley Bank survey conducted at the bank’s Fintech Mashup in New York City earlier this month, 43 of the 101 fintech founders and investors polled tabbed regulatory issues as the biggest hurdle to growth. Reluctance on the part of corporations to adopt new technology was cited as the main impediment by 24 respondents, while 18 said changing consumer behavior was the biggest issue.