BaaS served three ways: A closer look at a rapidly evolving market

Tuesday, October 12, 2021

BaaS served three ways: A closer look at a rapidly evolving market

Image Credits: Sadeugra / Getty Images

Most of the people who poured into California during the Gold Rush have been long forgotten.

We remember Levi Strauss, however: Before he and Jacob Davis patented those denim jeans, he sold shovels and other supplies to fortune-seekers.

Today’s banking-as-a-service startups are similarly placed — instead of digging for treasure in the crowded consumer financial services marketplace, BaaS companies offer fintech companies access to APIs, compliance tools and other software needed to move money around.

In recent weeks, Ryan Lawler has been mapping the landscape of BaaS companies. For his latest report, he studied three different strategies:

Turnkey banking as a service
Playing matchmaker between banks and fintechs
Buying a bank to get into BaaS

“If you're looking to spin up a new fintech app or want to add banking, debit cards or other financial services to your existing business, knowing how each of these competitors is positioned to work with customers and bank partners is key,” he writes.

On Tuesday, October 19 at 3 p.m. PST/6 p.m. EST, I’m hosting a Twitter Spaces chat to discuss TechCrunch’s guest contributor program.

If you’re interested in submitting a post to TechCrunch or TechCrunch+, please read our guidelines and join the conversation. Bring your questions!

For a reminder, please follow @techcrunch on Twitter.

Thanks very much for reading!

Walter Thompson
Senior Editor, TechCrunch+
@yourprotagonist

How I went from a college dorm brainstorm to leading edtech image

Image Credits: Catherine McQueen / Getty Images

Earlier this year, note-sharing network StuDocu raised a $50 million Series B, but Marnix Broer, the company’s CEO, says he didn’t initially intend to co-found an edtech startup.

“It was more of a project to create a tool that we could use while studying in school,” he writes in a TechCrunch+ guest post that explains how the company scaled up from storing notes on a USB thumb drive to serving more than 15 million users.

Selling into the enterprise: How Slack and other startups get it wrong

Image Credits: Fanatic Studio/Gary Waters/SCIENCE PHOTO LIBRARY / Getty Images

Going up against large enterprise companies may be daunting for a startup, but Scribe CEO and co-founder Jennifer Smith says you're never too small to start.

Much to their detriment, many early-stage companies wait too long to spin up strategies for competing with industry leaders, she writes. One example: 12 years after its founding, Slack exited to Salesforce for $27.2 billion.

“The question is, if Slack had considered selling into the enterprise sooner, could it have survived as an independent public company?”

NerdWallet's IPO filing reveals high-margin content business, accelerating marketing spend image

Image Credits: Nigel Sussman

A casual observer might assume that NerdWallet was a fintech company with a strong marketing game, but after perusing the company’s S-1, Alex Wilhelm concluded that it is "essentially a weaponized content play.”

In his analysis for The Exchange, he looked at how well NerdWallet has fared during the pandemic, its profitability, growing revenue, “and how the company manages to stay trustworthy, a question that we'll address through the lens of editorial independence.”

Fintech founders can learn a lesson about frugality from these industry leaders image

Image Credits: Jeffrey Coolidge / Getty Images

Dave Mullen, a fintech-focused investor with SVB Capital, takes a look at how well leading fintech firms are allocating their mountains of cash.

"There are now a slew of fintech startups approaching or far surpassing $10 billion in value … so we can glean some insight into their capital allocation strategies by considering how they have spent to achieve their position in the ecosystem," he writes.

In a guest column, he unpacks data from Coinbase, Robinhood, Affirm, Chime, Marqeta and others, offering suggestions to founders in the fintech space.

"Dollars may buy growth, but they can't guarantee a good business."

Private equity is ready to take MSP consolidation to the next level image

Image Credits: Richard Drury / Getty Images

Good news: Businesses of all stripes are digitizing their operations faster than ever before, creating huge advantages for companies that start the work now.

Bad news: Many technical workers are already looking for new jobs, and companies must compete to find the right people who can build robust, secure IT environments.

Managed services providers (MSPs) are filling the gap, and private equity firms are paying attention.

"MSPs have all the ingredients that private equity loves," write Mike McGill and Kevin Jolley of Cowen and Company, LLC.

"A strong demand trend, low risk of obsolescence, a 'sticky' service that attracts long-term customers and high recurring revenues, strong cash flow margins and a relatively 'asset-light' business."

5 common growth marketing mistakes startups make image

Image Credits: Jeffrey Coolidge / Getty Images

We don’t run many articles that call out mistakes or describe dysfunctional processes; most of us have a fairly good handle on what’s going wrong at any given moment, so we focus on solutions.

With that in mind, growth marketer Jonathan Martinez shared a guest post with strategies for tackling these endemic issues:

Low testing velocity
Reliance on incorrect measurements
Focusing only on top-of-funnel traffic
Lack of incrementality
Insufficient product-growth integration

Venture capital is going to need a record-breaking run of IPOs to clear its own decks image

Image Credits: Nigel Sussman

Global venture capital is flowing so freely, there are unicorn herds in more regions than ever before.

“Which, in turn, boosts the scale of unexited private-market value that will eventually need to exit,” writes Alex Wilhelm in this morning’s The Exchange.

“And with some U.S. tech giants limiting acquisitions as a way of playing defense against antitrust concerns, there is an implicit expectation that the IPO market will eventually have to make room for a stampede of unicorn debuts.”