When it comes to investments and the payments and commerce tech startups that need them, 2016 so far is shaping up to be a rather tense time. The World Bank thinks global markets are heading for a “perfect storm” of instability and the first two weeks of trading in the new year have done little to disprove that rather grim prediction.
The buzz over a coming wave of unicorns in 2015 has been replaced by concerns about the coming wave of unicorpses in 2016 as investors once fervent enthusiasm was visibly chilled in the ending weeks of 2015, which saw FinTech investment “fall off a cliff.”
However, while apocalyptic predictions are always a good time, it seems that early 2016 on a second glance might not be quite the barren wasteland for FinTech startups that early predictions have called for. PYMNTS’ Investment Tracker is showing a big turnaround, with a $640 million answer last week to the sluggish activity that had been the hallmark of the week that preceded it.
And some firms, like eCommerce outfit Hubba, are on their way to some fun with funding.
The Toronto-based firm announced yesterday that it is on track to close out a $45 million funding round in the next few weeks.
Hubba is in the eCommerce business, but not the part that is involved in connecting consumers to retailers or brands. Instead, Hubba works to connect those groups to each other through a platform where, according to their website, “product information, photos and videos are shared between brands and retailers.
(We also learned from their site that two containers of Nutella are sold someplace in the world every 5 seconds, which we didn’t know.)
Hubba’s brand list is 1,000-deep and chock-full of names most people would recognize: Anheuser-Busch and Unilever, for example — and their retail partners include Walmart, Target and Amazon.
“We are a little bit like LinkedIn for products,” CEO Ben Zifkin told The Wall Street Journal.
Hubba’s client list is particularly impressive considering that the firm has only existed for the last 18 months, during which time it has collected more than 10,000 companies and created a site that lists over 1 million products. The newest round of fundraising, according to their CEO, will largely go toward helping Hubba take its show on the road and expand into the United Kingdom. Zifkin noted that the U.K. is a natural initial point in a global expansion for Hubba, given the national levels of eCommerce enthusiasm and access to global brands.
The fundraising round that is meant to finance that expansion is expected to close in March of this year, according to their CEO. The Journal reports that, at $45 million, it would be the fourth-largest venture-capital financing among publicly disclosed investments during the time period. Zifkin notes that as smartphone ownership is becoming an increasingly standard part of every consumer’s arsenal of tools, interest in Hubba has been expanding — as both brands and retailers have an ever increasing incentive to make sure that the content about their goods or services is as up to date as possible.
What exactly a $45 million pick-up will mean for Hubba’s valuation remains unknown, as Zifkin has no official comment on that subject. He also has no current interest in disclosing the identity of Hubba’s next round of big investors, other than the rather expected revelation they are VCs based in Silicon Valley, New York and the U.K. The round may also include some current investors in the service.
A good round for Hubba would be a nice win for retail tech investment, which has had a tough year. Gilt, for example — once valued in the billion-dollar range for its flash-sale based eCommerce — sold to Hudson Bay earlier this month for only $250 million, and is often cited as evidence of either a coming run of soft-landing acquisitions that aren’t so soft, or high risk, low gain IPOs.
Meaning a retail player getting some continued funding love in the private marketplace might be the goods news some FinTech players are looking for to get the year going on a somewhat cheerier note.
Now that’s a bit more like it. Investment activity, as measured by our Tracker, rebounded sharply from the torpor of the prior weeks, with $640 million in activity through the week that ended Jan. 8.
Yet again, and as has been the case for several weeks, FinTech and traditional banking stole the show, and we can see some traction in the sector, with not one, not two, but three relatively larger deals in the segment coming in at triple digits, and perhaps hinting at a real interest in the sector, with investors willing to deploy capital of some size.
Below are the Top 5 deals of the week, ranked by size of investment.
At the top of the list, we can see that Bank Dhofar, which is based in Oman, grabbed a $250 million loan with a consortium of half a dozen banks last week, and the group included Bank ABC, BNP Paribas, and HSBC, among others. The facility, which has a term of three years, will be used on what Bank Dhofar said would be projects large in scale and of national importance. And in what might be a surprise given the rocky state of Argentina’s fiscal landscape, Grupo Supervielle SA has filed for a $100 million initial public offering with the United States Securities and Exchange Commission. Caution: When this initial number was disclosed, the financial trade press noted that, as is the custom with first SEC filings of this sort, that number is known as a “placeholder” with the ability to be ratcheted up or down, likely depending on the market’s own volatility. Finally, rounding up the Top 3, via triple digits, the European Investment Bank Group has announced a $100 million investment in Qredits, which operates in microfinance in the Netherlands. The one overarching theme of all these relatively significant deals is that they are taking place beyond the shores of the United States. Is that a trend in the making? Of course it is too early to tell, but the earliest signs are promising ones for at least a balanced playing field, wherein investments are truly international in scope. Certainly the continuation of debt financing implies that even with rising interest rates, the demand is still there for credit. See below for a depiction of financing in the week that was, both in terms of type and round.