Investment Roundup: Square, Starling, Deposit Solutions (Jan. 11, 2016)
After a hot 2015, fintech investment is off to a strong start in the New Year. U.K.-based digital financial services provider Starling Bank landed $70 million in financing from Harald McPike, founder of Bahamas-based investment manager QuantRes. Founded by former Allied Irish Bank Chief Operating Officer Anne Boden, Starling reportedly is preparing to apply for a banking license from U.K. regulators early this year. The company is one of a handful of Britain’s so-called “neo-banks,” which provide financial services like payments, money transfer and savings, without a brick-and-mortar presence. Two neo-banks—Atom Bank and Tandem Bank—already have secured licenses, while several others, including Starling and Mondo Bank, are seeking to enter the space. Along with the investment, Starling also named new members to its board of directors, including Victoria Raffe, a former director of authorizations at the Financial Conduct Authority, and Standard Chartered alum Oliver Stocken, who will serve as board chairman.
Meanwhile, Hamburg, Germany-based startup Deposit Solutions has closed a €6.5 million (US$7.1 million) funding round, with PayPal founder Peter Thiel among the participants. The company offers a platform enabling consumers throughout Europe to shop for retail banking services across multiple banks. Users don’t need to open a new account with each bank; instead, they can just use their master accounts with their local bank and build a “portfolio” of savings products. Since its founding in 2011, Deposit Solutions has mediated deposits totaling more than €1 billion (US$1.1 billion), according to the company.
Finally, asset management firm BlackRock has acquired at least a 5 percent stake in Square, according to an SEC filing. Given recent pricing levels for Square stock, BlackRock shelled out more than $30 million for the stake. M-POS pioneer Square has worked to diversify its services over the past two years, moving into verticals including P2P money transfer, business lending and payroll processing. BlackRock’s investment was seen by many observers as a positive sign for Square’s long-term growth potential.