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Why we’re seeing so many seed-stage deals in fintech

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Welcome back to The Interchange, where we take a look at the hottest fintech news of the previous week. If you want to receive The Interchange directly in your inbox every Sunday, head here to sign up! It was a relatively quiet week in fintech startup land, so we took the time to scrutinize where we’re seeing the most funding deals.

Seed deals everywhere

Across the board in all industries, except perhaps AI, we’ve seen a big drop in later-stage funding deals and no shortage of seed-stage rounds.

When it comes to fintech, I can tell you at least anecdotally that the vast majority of pitches that hit my inbox are for seed rounds. It is very rare these days to get pitched for Series B or later, or even for Series A rounds.

Venture banker Samir Kaji, co-founder and CEO of Allocate, points out that the private markets often take their cues from the public markets and as such, it’s no surprise that we’re seeing far fewer later-stage deals and a plethora of seed rounds. The Fintech Index — which tracks the performance of emerging, publicly traded financial technology companies — was down a staggering 72% in 2022, according to F-Prime Capital’s State of Fintech 2022 report.

“Seed is typically the least affected because those companies are just too early to really feel like you have to worry about where the public markets are,” he told me in a phone interview last week. “We’re so far divorced from the time period where these companies are going to be large enough where the public market sentiment is going to really matter.”

Allocate, which recently just closed on $10 million in capital, is currently an investor in about 60 funds. But Kaji is seeing the tide beginning to turn.

“The investment pace in 2022 was just so slow, and the beginning of 2023 was incredibly slow as well, but we’re starting to see things pick up as people are now starting to see that the bid ask on deals at the Series A and later are starting to narrow,” Kaji added. “And I think entrepreneurs have started to capitulate to this new environment. This always is the case — it’s like an 18- to 24-month lag in the public markets. So I would expect much more later-stage activity again in the next 18 to 24 months.”

I asked our friends at PitchBook what they’re seeing, and unsurprisingly, in the second quarter, there were more seed deals forged in the retail fintech space (135) compared to any other stage. When it came to the enterprise fintech space, early-stage deals accounted for most of the deal activity (239) with seed-stage coming in a close second (221), according to PitchBook.

Will we start seeing more later-stage deals in 2024? I sure hope so. Will we see any fintechs actually go public? That’s probably less likely. But you can be sure we’ll be on the lookout.

Slope continues its climb

It’s always great to see startups rise through the ranks, especially at a time when fintech hasn’t been doing so well. One of the companies I have had the pleasure of following is Slope. The company, founded by Lawrence Murata and Alice Deng, developed a business-to-business payments platform for enterprise companies.

When covering the company’s initial $8 million seed round in 2021, I learned that Slope’s origins came from Murata watching his wholesaler family struggle with an easier way to manage payments. He and Deng built the company so that moving to a digital order-to-cash workflow was seamless.

Last year, Slope raised another $24 million in Series A funding, and this week banked $30 million in a venture round led by Union Square Ventures, which co-led the Series A. It also included participation from OpenAI’s Sam Altman and a list of other heavy VC hitters. Read more. — Christine

co-founders Lawrence Lin Murata and Alice Deng, B2B payments

Slope co-founders Lawrence Lin Murata and Alice Deng. Image Credits: Slope

Weekly News

TechCrunch Opinion: Fintech actually has a value system: Here’s how we can reclaim it

Introducing the a16z Global Payments Hub

Other items we are reading:

Apple is ordered to face Apple Pay antitrust lawsuit

Greenlight celebrates launch of web-based financial literacy library

Funding and M&A

As seen on TechCrunch

Pan-African contrarian investor P1 Ventures reaches $25M first close for its second fund

QED and Partech back South African payment orchestration platform Revio in $5.2M seed

Crediverso takes on legal after $3.5M capital infusion

Series, which aims to replace ERP systems, lands $25M

Seen elsewhere

Luge Capital: $71M first close of second fund completed

Colektia completes purchase of non-performing loans for $72M

Mexico’s albo receives $40m in Series C funds, striving for neobank profitability

Grow Credit Inc., a top 30 fintech app, secures $10m funding with USAA as lead investor in Series A round

StretchDollar raises $1.6M in pre-seed funding

WealthTech Vega exits stealth with over $8M funding

Farther closes Series B funding round to gain $131M valuation — This new round comes a little over a year after the wealth tech firm raised a Series A on a $50 million valuation. Check out TechCrunch’s earlier coverage of Farther.

Image Credits: Bryce Durbin



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NASA reveals footage of astronauts training in desert for moon mission

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It’s taken more than half a century, but NASA really is going back to the moon.

Some of the space agency’s astronauts have been training in the Northern Arizona desert for the looming Artemis 3 mission, which is currently slated to land in September 2026. Decades of other U.S. space priorities (such as the Space Shuttle and building the International Space Station), along with the astronomical costs of sending astronauts to our natural satellite, have impeded such a return endeavor.

But after the successful launch of NASA’s new megarocket in 2022 — the Space Launch System — the moon mission’s wheels are turning, albeit slowly. That’s because every component of the agency’s new lunar campaign, dubbed Artemis, must be profoundly safe. Lives will be aboard.

NASA has released images of the astronauts’ May 2024 training in the desert, including a recent view of NASA astronauts Kate Rubins and Andre Douglas simulating a nighttime space walk (the official Artemis 3 astronaut crew has yet to be announced). Training in the dark or twilight is essential, as the conditions mimic the dark, shadowy regions Artemis astronauts will explore: NASA is going to the moon’s south pole region, a place where the sun barely rises over the lunar hills. It’s a world of profoundly long shadows and dim environs.

Mashable Light Speed

The endeavor you see below is called the Joint Extravehicular Activity and Human Surface Mobility Test Team Field Test 5, or JETT5.

NASA astronauts Kate Rubins and Andre Douglas simulating a moonwalk for the looming Artemis 3 mission.

NASA astronauts Kate Rubins and Andre Douglas simulating a moonwalk for the looming Artemis 3 mission.
Credit: NASA / Josh Valcarcel

On left: Astronaut Andre Douglas reviews sample collection procedures. On right: Astronaut Kate Rubins ensures she has the necessary tools.

On left: Astronaut Andre Douglas reviews sample collection procedures. On right: Astronaut Kate Rubins ensures she has the necessary tools.
Credit: NASA / Josh Valcarcel

Astronaut Kate Rubins used a hammer to drive in tube that will collect soil samples from the ground. On the moon, these samples will be sealed and then returned to Earth.

Astronaut Kate Rubins used a hammer to drive in tube that will collect soil samples from the ground. On the moon, these samples will be sealed and then returned to Earth.
Credit: NASA / Josh Valcarcel

The two astronauts pushing a tool cart across the desert surface.

The two astronauts pushing a tool cart across the desert surface.
Credit: NASA / Josh Valcarcel

NASA captured these images in a rugged region called the San Francisco Volcanic Field. The area astronauts are headed to is also quite rugged. It’s a heavily cratered region, teeming with volcanic rocks. Crucially, they’ll be hunting for ice deposits, too.

“The ice deposits could also serve as an important resource for exploration because they are comprised of hydrogen and oxygen that can be used for rocket fuel or life support systems,” NASA explained.

The moon may one day serve as a lunar fuel depot, where after burning copious amounts of fuel during launch, spacecraft stop to fill up for deeper space missions. They may be headed to Mars, resource-rich asteroids, or beyond.





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Webb Telescope Discovers Galaxies Formed Right After Birth Of The Universe With Earliest Elements

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A group of astronomers sifting through the James Webb Space Telescope have found three galaxies from the earliest universe. According to their findings, which have been published in the journal Science, the universe was just 400 to 600 million years old when the said galaxies were born. According to current estimates, the universe is about 13.8 billion years old.

Kasper Heintz, the lead author and an assistant professor of astrophysics at the University of Copenhagen, called these galaxies “sparkling islands in a sea of otherwise neutral, opaque gas.”

ALSO SEE: Webb Telescope Finds Best Evidence Of Potential Atmosphere Around A ‘Super-Earth’

Scientists believe that the universe was very different during the Era of Reionisation – the period of several hundred million years after the big bang. At this point, gas between stars and galaxies was largely opaque and things became transparent only after one billion year later.

About the galaxies discovered using the Webb telescope‘s data, they are believed to be surrounded by almost purely hydrogen and helium which are the earliest elements to form in the universe.

Darach Watson, a co-author of the paper, said that the large gas resorvoirs suggest that “the galaxies have not had enough time to form most of their stars yet.”

Moving forward, the researchers will work to build large statistical samples of these galaxies and measure the prevalence and prominence of their features.

ALSO SEE: Webb Telescope Discovers Oldest Ever Black Hole Merger From Over 13 Billion Years Ago

(Image: NASA)





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Neuralink’s Rival Company Precision Creates World Record By Placing Over 4,000 Electrodes In Human Brain

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Elon Musk-owned Neuralink’s rival Precision Neuroscience has set the world record for placing 4,096 electrodes in the human brain. It is double the number of electrodes placed last year – 2,048.

According to the official statement, the record-setting operation took place in April at the Mount Sinai Health System in New York, as part of an ongoing clinical trial for the brain chip.

Precision’s chip in the brain. Image: Precision Neuroscience

Precision’s implant uses a thin-film microelectrode array containing 1,024 miniature electrodes covering 1.6 square cm of area. Four such arrays were placed on the patient’s brain.

More number of electrodes will ensure higher data transmission to and from the brain, and this will determine the capability of the chip.

ALSO SEE: Neuralink’s Paralysed Patient Desires A Tesla Robot Assistant He Can Control With His Mind

“This record is a significant step towards a new era. The ability to capture cortical information of this magnitude and scale could allow us to understand the brain in a much deeper way,” said Benjamin Rapoport, Precision’s co-founder and Chief Science Officer.

Also a co-founder of Neuralink, Rapoport exited the company and established Precision with two other Neuralink members in 2021.

According to Ars Technica, he told The Wall Street Journal that the reason for his exit from Neuralink were the safety concerns regarding the brain implants which he says are too invasive.

ALSO SEE: Elon Musk’s Neuralink Gets Approval For Second Chip Implant In Human Brain

The company claims that its ‘Layer 7 Cortical Interface’ can conform to the brain’s cortex with minimal invasiveness and without damaging any tissue.

Neuralink is currently at the forefront in the brain-computer interface game. It implanted the chip in the first patient earlier this year and is preparing for the second operation.

As for Precision, it is testing its chip through research collaborations with West Virginia University’s Rockefeller Neuroscience Institute, Perelman School of Medicine (Penn Medicine), and New York’s Mount Sinai Health System.

(Image: Precision Neuroscience)





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