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Cash Is King

Cash Is King
September 29 2020

The pandemic has created many interesting trends in fintech. 

The first winner that emerges is products that can provide short term liquidity, like overdraft accounts and paycheck advances (Cash App, Varo) have seen a spike in demand. This perhaps is not surprising, given the financial pain some people are experiencing. These apps shorten the payment period from the usual bi-weekly paychecks to daily paychecks. 

Ram Palaniappan, the founder of Earnin, said the company has seen a usage spike since the COVID-19 pandemic’s onset. In April, Earnin is reported to have had over 5 million downloads in the Google Play app store and another cash advance app, Dave, is reported to have had over a million. 

These apps work by letting you draw small amounts of your earned wages before payday. It's part of a wave of companies that say they provide alternatives to expensive payday loans or racking up high overdraft fees. In addition to the advances -- which are automatically paid back when the user gets their next paycheck--, these apps also offer free or low-cost, fee-based financial services including banking overdraft protection, budget management tools, and even job searches.

However, these apps don't come without downsides. Consumer advocates warn that paying to get your earnings early is not a healthy long-term habit. It's cheaper than a payday loan, but it might enable people to get into the habit of spending their wages early and end up paying to access their wages on a regular basis. 

 

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Paycheck Advance Apps:

Earnin is a developer of a mobile application designed to give people access to their pay beating the rigid paycheck system. The company's mobile application tracks the number of hours employee has worked and gives them access to their pay in advance without any charges or fees using electronic timesheet and direct deposit right from the smartphone, enabling users to have more financial control to pay their bills on time, avoid late and overdraft fees.

Dave is an app that provides cash advances to its members to help them avoid bank overdraft fees. Dave doesn’t charge interest — it asks for tips instead. But members do have to pay a small monthly membership fee to use the app and the maximum cash advance amount is low. Dave lets you borrow up to $100, for a fee of $1.00 payable every month. There is no interest; however, you can leave a tip to support the app.

MoneyLion is a private fintech company that offers lending, financial advisory, and investment services to consumers — empowering the American dream by providing everyone access to better products for borrowing, saving, and investing. With its built-in system of rewards, points, and incentives, MoneyLion encourages good financial behavior and better financial outcomes.

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Since last week, PrivCo has added:
2856 Companies | 264 Funding Activities | 78 M&A Deals

Funding & Deal Highlights:

Libra Therapeutics, Inc. launched today to develop novel drug candidates focused on restoring the cellular balance lost in neurodegenerative diseases. These include amyotrophic lateral sclerosis (ALS) and frontotemporal dementia (FTD), which are both characterized by disequilibrium caused by the production and decreased clearance of neurotoxic proteins. In conjunction with the company's launch, Libra Therapeutics has secured $29 million in Series A financing co-led by Boehringer Ingelheim Venture Fund (BIVF), Epidarex Capital, and Sante. The round was joined by Yonjin Venture, Dolby Family Ventures, and Sixty Degree Capital.

Point Predictive Inc., the San Diego-based company that provides machine learning solutions to the lending industry, announced that it has completed its Series B growth financing. Napier Park Financial Partners led the investment round with participation from the company's existing investor, Mosaik Partners. The company also announced it has hired Michael Housman as its new Chief Technology Officer and promoted Eric Werab to Chief Revenue Officer to facilitate the rapid growth Point Predictive is experiencing.

SigmaSense, the global leader in touch screen performance, today announced the closing of $22 million in Series A funding led by Foxconn Technology Group with participation from strategic investors Corning, E Ink, GIS, and MRI (managing partner of LG-MRI). Former Dell CFO Tom Meredith also participated in the round.

Silo, a San Francisco-based platform for supply chains in the perishable food system, raised $9 million in Series A funding. Andreessen Horowitz led the round and was joined by investors including Initialized Capital and Haystack Ventures.

Brokerage app Robinhood has raised an additional $460 million for a now-closed Series G funding round. Robinhood now touts an $11.7 billion post-money valuation. The company’s valuations were just $8.6 billion in July and $11.2 billion in August.

Paya Inc. has announced today the acquisition of The Payment Group (TPG), a company offering integrated payment solutions to over 600 utility and municipal government clients.

Odyssey Investment Partners announced today that it has entered into an agreement to acquire ProPharma Group from Linden Capital Partners. The financial terms of the transaction were not disclosed.

Banyan Software, Inc., a company focused on acquiring, building, and growing great enterprise software businesses, is pleased to announce the acquisition of Trans Plus Software, a company that provides an end-to-end software solution to optimize and automate fleet and logistics management.

Palladium Equity Partners, LLC, a middle-market private equity firm with approximately $3 billion in assets under management, today announced that it has acquired Trachte USA, a leading provider of engineered buildings, hardware, and related solutions that house electrical controls, switchgear, and other advanced equipment and systems, in partnership with management and members of the Trachte family, who will continue to be investors in the business.

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