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

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By Walter Thompson and Annie Saunders

Tuesday, October 12, 2021

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

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

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

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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.

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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?”

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"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.

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

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