British fintech technology start-up TrueLayer is raising $ 70 million

LONDON – British financial technology start-up TrueLayer says it has raised $ 70 million in new funding, highlighting the persistence of investor appetite for fast-growing tech companies.

TrueLayer allows fintech applications such as Revolut and Freetrade to connect to customers ’bank accounts using technology known as APIs or application programming interfaces. This means that users of these apps can make payments from their bank or view balances and transactions from different accounts.

The company said its latest round of investments was led by Addition, the venture capital firm founded by former Tiger Global partner Lee Fixel. Existing investors Anthemis Group, Connect Ventures, Mouro Capital, Northzone and Singapore Temasek also invested.

Francesco Simoneschi, CEO and co-founder of TrueLayer, said in an interview that the firm decided to raise more money thanks to strong growth in 2020, helped in large part by the coronavirus pandemic and the shift of consumers to digital management media their finances.

“We were closing 2020 in an extremely positive way,” Simoneschi told CNBC. “We were having an incredible year of growth,” he said, adding that the company saw its payment volumes increase up to 600 times.

TrueLayer declined to share your financial or valuation data. The company, which also has Chinese Internet giant Tencent as a shareholder, has so far raised $ 142 million in financing.

TrueLayer said it will use the new cash to expand its services internationally, expanding its presence in Europe before getting a launch in Australia. It is also exploring whether to launch in Brazil further down.

The news comes a day after Silicon Valley firm Plaid, which competes with TrueLayer in Europe, announced it had raised $ 425 million in a new investment, valuing the company at $ 13.4 billion. Plaid had initially agreed to be acquired by Visa last year for $ 5.3 billion, but rejected the deal after the U.S. government raised antitrust concerns.

Plaid and TrueLayer are part of a new finance movement called “open banking,” which aims to open valuable payment data and banking services to fintech technology companies and other approved third parties, as long as they have customer consent. . Other players in the space include Swedish Tink and British Bud. They are taking advantage of the new technology-compatible rules in the UK and the European Union, known as PSD2.

TrueLayer and some other companies are now looking to reduce card networks like Visa and Mastercard, as they allow fintech applications to initiate bank transfers on behalf of their users, at much lower rates. GoCardless, a fintech platform that processes direct debit payments, is also developing open banking technology for transactions.

“Open banking can be a real contender in traditional card networks,” Simoneschi said. “The question is, can card companies accept this change or will they resist it?”

It’s worth noting that Visa is still an investor in Plaid as well as TrueLayer, which means it could benefit in the long run from the rise in open banking. Meanwhile, Mastercard bought Finicity, another space player, last year.

Plaid expects to double its European workforce from 40 to 100 employees by the end of 2021.

“I think the competition is good and it benefits the ecosystem,” Keid Grose, Plaid’s international chief, told CNBC. He added that the firm has “good competitors,” but that its rivals do not offer the “transatlantic bridge” built with operations in both the United States and Europe.

TrueLayer has its own plans to boost its team. The company currently employs 200 people and plans to increase its workforce by another 50 employees this year, Simoneschi said.

Fintech has attracted billions of dollars in venture capital as investors aim to capitalize on the wild growth of the sector. Globally, venture capitalists amassed more than $ 17 billion in fintech technology in the first quarter of 2021, according to PitchBook data, 44% more than the same period last year and the highest quarterly amount since the second quarter of 2018. Meanwhile, tech companies like PayPal and Square have seen their market values ​​exceed those of Wall Street titans like Goldman Sachs.

However, the meteoric growth of the sector has exploded some leaders in the banking world. JPMorgan CEO Jamie Dimon recently said banks should be “less afraid” of smart technologies and accused Plaid of “unfair competition” and of using bank details “incorrectly”. Plaid, which has JPMorgan as a customer, said that “privacy and data security are critical to everything we do, including the data sharing agreements we have with JPMorgan Chase among many other banks.”