Better.com employees leave in ‘mass’ following return of CEO Vishal Garg – TechCrunch
Welcome to my new weekly fintech-focused column. It’s an amazing time to be a fintech journalist. In addition to the fact that more than 20% of all venture capital dollars last year were invested in fintech startups, I’m especially excited about the many ways this technology is helping to drive inclusion around the world. As this pandemic has been sucked in on 100 different levels, one good thing that has come out of it is that consumers and businesses have forced more fintech into existence, and that’s a good thing.
There has been a lot of drama at online mortgage lender Better.com over the past two months and it seems that just because its infamous CEO Vishal Garg is back at the helm, the controversies around the company are still not lacking. Earlier this week, Axios’ Dan Primack revealed that the investor SoftBank, “in its apparent zeal to support the company”, promised to give Garg the 1.9% voting rights attached to his initial investment, “subject to the final settlement of certain legal proceedings (which have not not yet taken place). For those who haven’t followed this saga, Garg has received a ton of negative press for his callous way of fire 900 people on Zoomchastising its own investors via email and accusing employees of being “lazy” and “dumb dolphins”.
We all wondered how can this man still run the show and maybe SoftBank’s terms help explain it. Meanwhile, a former staffer tells me that Better employees are so upset that Garg is back, they’re leaving the company in droves. Apparently, employees at all levels – from loan officers to senior executives (some of whom are said to potentially leave millions of dollars in equity on the table). As the employee told me, “It’s an amazing disgrace. It wouldn’t be an exaggeration to say that top talent and hundreds from all departments fled as a result of Zoomgate.
But that’s not all. Now that Garg is back, he’s apparently paranoid about leaks to the media and according to an employee, he and the rest of the executives still there “have locked everything away.”
For example, engineering officials would have had an AMA (Ask Me Anything) with Garg and only in-person workers were allowed to attend. These employees had to sign NDAs and place phones in paper bags, and there were even metal detectors to make sure no one had recording devices. Also, the company reportedly disabled Google doc sharing internally and blocked access to all company dashboards, likely because the company has probably suffered a lot. As the employee said, “There’s no transparency about anything. Vishal doesn’t trust anyone.
Now let’s talk about payments
Small businesses may soon be able to accept payments using their iPhones without the need for additional hardware, according to this piece, which quotes Bloomberg. This is interesting because if true, Apple could be seen as taking Square into the contactless payments space. I found all of this particularly intriguing because in October I wrote about a startup named magic cube – which is backed by Visa – which is developing technology that will impact Android users.
This company’s software technology offers merchants a way to accept card payments on any consumer device with no reader or additional hardware required. CEO and co-founder Sam Shawki told me in October that he thinks his startup “will be the dominant part of the Android side, which is 85% of the universe.”
Last week, Shawki told me he had an even bigger vision when it comes to contactless payments:
Apple’s entry into the payment acceptance market is sure to ignite the space. But there is an even better vision of softPOS acceptance that goes beyond Apple’s: a vision that is based on an open platform, where all devices and all card networks are welcome, Payment data is truly secure to the highest standards and the platforms are easily scalable. A large ecosystem of technology pioneers, payment networks, issuers and acquirers develop a softPOS solution that extends beyond the walled garden of any business.
In this view, merchants own their own data. On any device and operating system, softPOS is easy to implement and requires no certification. Expensive dedicated devices are becoming obsolete. As these technologies proliferate into everyday life, we will witness the advent of Internet of payments…Together, sooner than you think, the newcomers will overthrow the incumbents. The meteor is about to strike. And we’ll all be better off for it.
The fact that more and more companies are facilitating contactless payment is not surprising and welcome as it means security and convenience for users. It will be exciting to see how it all plays out.
Notable rounds and a new fund
Our startups journalist based in Nigeria, Tags Kene-Okafore last week wrote about Esusu, a New York-based fintech company that targets immigrant and minority groups and provides rental reporting and credit-building data solutions, which raised $130 million in a Series B round led by SoftBank Vision Fund 2. The investment gave four-year-old Esusu a $1 billion valuation, making it one of the very few black-owned unicorns in the United States. United and around the world (love to see this list grow!). Co-founders and co-CEO of Esusu American of Nigerian origin Wemimo Abbey and native american Samir Goel come from immigrant homes and claim to have been directly victims of financial exclusion. This led them to launch Esusu in 2018 with the goal of building credit scores for immigrants and African Americans and “leveraging data to close the racial wealth gap” through rental payments.
Tage also covered NALA, a Tanzanian cross-border payments company that recently transitioned from local money transfers to international money transfers, and its recent $10m fundraise. The startup’s mission is to build the “Revolut for Africa”. You can read all about it here.
Besides Esusu, the last week saw the birth of another fintech unicorn. CaptivateIQ, which claims to automate commission workflows using AI, has lifted its third round in 20 months. Less than 10 months after raising its $46 million Series B, CaptivateIQ raised $100 million in a Series C round at a valuation of $1.25 billion. The San Francisco-based startup, which has developed a no-code SaaS platform to help companies design custom sales commission plans, says it has “more than tripled” its revenue from the previous year. , although she declined to provide concrete revenue figures. A trio of companies co-led CaptivateIQ’s latest investment, including ICONIQ Growth and existing backers Sequoia and Accel.
In the area of mergers and acquisitions, investment bank UBS bought robo financial advisor Wealthfront for $1.4 billion in an all-cash deal. Alex unpacked the case for us here.
Unsurprisingly, Latin America continues to be a hotbed of fintech activity. I covered Brazilian lender Creditas Series F financing of $260 million which valued the company at $4.8 billion. That’s up from the fintech’s $1.75 billion valuation at the time of its $255 million raise in December 2020. Fidelity Management led the latest round. One of the neatest things about this company, besides all the cool services they provide (including offering Latin Americans a way to borrow money at a MUCH lower interest rate to that of traditional banks), is to share all of one’s finances! Seriously, the extent to which this company shares details of its finances is something to be admired and we wish all startups would follow suit.
Impressively, in the third quarter of 2021, Creditas claims to have achieved revenue of $46.8 million, up 233% from the $14 million in the third quarter of 2020. It focused on the growth, it therefore always records a loss. But founder and CEO Sergio Furio told me he’s forecasting annualized revenue of around $200 million for 2021. Not bad at all! Glad to see this one continue to grow.
I also covered a new fintech fund started by a real fintech influencer and nice person, Nik Milanović. For more than two years, Nik has published a newsletter called This Week In Fintech, worked at Google Pay and invested angels. More importantly, it has built a real community of fintech enthusiasts around the world. Now he’s putting his money where he talks and starting his own venture capital fund, simply called The Fintech Fund. Nik is trying to raise $10 million for his fund, which has a bunch of cool LPs, including investors who invest in fintech startups through other vehicles (such as Bain Capital, Better Tomorrow Ventures, and Jillian Williams of Cowboy Ventures ) and several founders, including Jake Gibson, co-founder of NerdWallet, and Mike Dudas of The Block. Additionally, I like that the fund has an explicit goal of no more than 25% or more of its dollars and total investments going to founders from underrepresented backgrounds. I mentioned inclusion at the top and it’s worth noting that Nik is very into that as well. GO NIK!
That’s all for the moment. I hope you had as much fun reading this as I had writing it. Now go enjoy what’s left of this weekend!