Dorothy Kilroy (she/her)

When I first read Jevgenijs Kazanins's very excellent fintech take on why Cash App Pay could be the next major driver of Block’s growth, I was floored by his initially compelling case that if Cash App can incentivize more payments payments volume to go through Cash App Pay, they can drive massive gross profit uplift, because Cash App Pay’s take rate is substantially higher than Cash Card’s take rate on purchase volume (2-3x). But if it were true, why hasn’t Cash App taken advantage? Whereas Jevgenijs is more optimistic about the ~$2.5bn in GPV that Cash App Pay has generated in its first ~2.5 years of existence, I find it downright embarrassing. That’s less than 1% of Square’s GPV after two years in the wild? And that’s despite it being essentially pre-installed on every terminal with no change in hardware required. I started to have a sinking feeling that maybe something was missing in the calculus. And as I dove deeper, it became clear that the “magic” take rate uptick we thought we’d found was more of a magic trick, relying on some deception. The seeming increase in take rate comes about like this. Normally, when a Cash App user makes a purchase, Cash App acts as the Issuer which means there are several intermediaries between what the merchant is charged and what Block earns on the transaction, meaning its ultimate take rate is relatively low. But in the case of Cash App Pay, there’s potentially a few magic tricks at work. The first is that in this case, Block is facilitating the Square merchant’s acquiring POS AND it’s issuing the Cash App user’s debit card, thereby cutting the intermediaries down in the typical payments flow and seemingly increasing Cash App take rates by 35-50% (instead of just interchange, you’re now getting interchange and markup). But then gets even better with the second trick, because if you’re both the acquirer and the issuer, *you don’t even need the payment network at all*. You can simply move money by book transfer between your merchant’s bank account and your user’s bank account in a perfectly closed loop payment network. Suddenly, Cash App Pay has a magical 2.9% take rate with no money movement costs at all. The problem with these magic tricks, like the ones in life, is that they are actually using some deception to hide what’s truly happening. Let’s play it out. In the status quo, without Cash App Pay, Square would earn ~1.85% in acquirer markup and Cash App would earn 0.90% in interchange for a total of 2.75% in take rate. In the Cash App Pay case, Square and Cash App would split the 2.90% Merchant Discount rate they artfully charged without having any money movement. So instead of the 2-3x markup, the uptick is more like +15bps (+5%). So maybe there isn’t a massive take rate arbitrage, but Block should still be focusing on its closed loop payment network because it represents huge opportunity for other reasons. Read the full post at https://lnkd.in/d93nkn29.

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💡Benchmarks in the investment industry serve as a standard for measuring the performance of securities, mutual funds, or investment managers. They provide a reference point for analyzing allocation, risk, and return of a portfolio, enabling investors to make informed decisions. Thanks Peter Walker for keeping us all informed!! Can’t wait for this!! Follow and get on the waitlist for this one! #benchmarks #fundraising #Capitalraise #founders #womenshealth #femhealth #medtech #wellness

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If you're building a fintech startup, you likely know of this investor, but just in case... This week's findfunding.vc spotlight is on Neil Kapur from TTV Capital. He: 🛫 Is based in SF & Atlanta 💲 Has spent time at Google in consumer-facing payments & at two fintech startups  🏔️ Loves alpine mountaineering and has climbed Kilimanjaro, Denali, Rainier, and more!! Amongst founders, Neil and the team at TTV Capital , including Gardiner Garrard, Mark Johnson, Sean Banks, Lizzie Guynn, and Laney Lewis are known for saying “lift, not lean.” They believe that their job as investors is not to create work for founders, but instead ask the right questions and help navigate to the best outcomes. Knowing Neil well personally, he's not only my go-to person for anything related to fintech but I can also highly recommend having him on your cap table - he's the kind of human you want to have in your corner during both good times and bad. Make sure to: ✉️ Pitch him at nkapur@ttvcapital.com ➡️ Follow TTV Capital on LinkedIn For more, check out our funder spotlight card below along with TTV Capital's profile on findfunding.vc (link in comments).

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Welcoming Carta's Peter Walker to Above Board. In our conversation, we talk about Carta's data from over 45,000 startups and Peter shares thoughts on: Why founders should understand the VC model in order to have realistic expectations around their VC conversations How (and why) founders can better structure advisor agreements Why VC's should be ensuring that their data points are up-to-date with the market The half life of data and when to be revisiting employee equity grants https://lnkd.in/gSqe_ifa

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PR PSA 💡 If you want to secure more media opportunities via Linkedin - start sharing more industry insights and far less company news. About 90% of CEOs I connect with here only post company news, and the 10% who regularly share broader insights and industry wisdom are the ones getting invited to interview. *Most* company announcements are only interesting to your company and those invested. Thought-leadership is interesting for all. 🔥 For more simple and actionable PR tips that can help 10X your company's industry visibility make sure to sub to our bi-weekly newsletter here ---> bit.ly/fintechfriends

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One perspective shared at our Annual Summit last month was that the era of BaaS as we knew it is over. There was a time when Banking as a Service (BaaS) providers were the go-to for startups. They offered a quick market entry with the enticing promise, "you do you, we will take care of everything else." This approach meant FinTechs could abstract away the challenges of compliance and operations. But that era is now behind us. Today, whether you're a bank, a BaaS player, or a FinTech, compliance is becoming a core business focus—and it should have been all along. This shift means launching a program in the future will likely require more resources—dollars, employees, and expertise—than before. This will inevitably impact growth rates, funding rounds, and the scale we've come to expect from FinTech programs. While the landscape will look different, it will be for the better. The future of FinTech will be more sustainable, grounded in solid compliance and operational foundations. Tune in to the latest episode of Commerce Conversations to hear more about this topic and others! https://lnkd.in/gAG-7trY #FinTech #BaaS #Compliance #Sustainability #Growth #Innovation

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As we dive into 2024, the Series A fundraising landscape is becoming increasingly daunting. Investment standards are soaring, and fewer startups are making the cut. Series A investors are finding many seed stage companies too premature. The median valuation jump from seed to Series A skyrocketed from $19.5 million in Q1 2022 to $28.7 million in Q1 2024. Investors now demand stronger revenue performance, targeting $2 million to $3 million in ARR, up from $1 million to $2 million. Alarmingly, only 12% of Q1 2022 seed startups secured Series A funding within two years, down from 31.8% in Q1 2020. #venture #earlystage #seedtoseriesa #seed #seriesa #inspireglobalventures https://lnkd.in/gW4bkcNy

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Just in! 🎧 We got a fascinating Default Global podcast episode with Vit Koval where he sits down with Ohad Samet, the Co-founder and CEO of TrueML Products. 🌐From joining a random startup out of university that became a global leader in fraud prevention, to experiencing PayPal's first ever acquisition, Ohad has been a part of some major shifts in the fintech industry. 🌍 He shares his journey of creating TrueML, a company revolutionising the debt collection process and making it customer-centric. It's an episode brimming with insights from a true global-first entrepreneur!

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Last week at Stripe Sessions, we at OMERS Ventures, in partnership with Recall Capital and Gusto Embedded, hosted a few founders, builders and investors to chat about current and future trends in embedded fintech and vertical software. A few of my big takeaways from the evening: 🤖 A lot of us on the media and content side see AI as an existential threat, but many of those on the SMB and entrepreneur side actually view it as a solution to the 'cold-start' problem of 'wtf do I actually put on my website?' when they sign up for a Shopify, Squarespace, Wix, whatever and have to actually populate a customer-facing surface for the first time 🥞 Point solutions are increasingly losing out to full-stack offerings, even in vertical markets where requirements up and down the stack are unique. Everyone building a point solution is looking at how and when to expand. I think the differentiator will be in what the starting line was and how that cascades through the company's DNA as it adds additional features and capabilities. 👩‍💻 Technical integration of embedded solutions remains a complex and frictionful process, even for so-called 'two lines of code' 'simple' plug-ins (they end up not being this when they encounter complicated, aging legacy codebases). Is this a place for AI to excel – can agents handle heavy lift codebase stitch-ins without the time and effort it takes devs on either or both sides now? All in all a fantastic evening with great discussions and a terrific panel hosted by Somrat Niyogi! Thanks to Fred (Fady) Helou, Elizabeth Olveda, Charity Hudnall, Jackson Reynolds, Jeremy Butteriss, Lucy Wang, Isabelle Cole, Sarah Tierney Niyogi, Matt Bocci, Yi Liu, Yanett Burgueño and many more for provoking the above thoughts and many more!

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As a VC firm grows, so does the size of their investment team. But while that relationship is often linear, how do other key teams within VC firms scale during growth periods? True Search Partners Daniel Miller, Stina Ladd and Pamela Golding share their findings in “Scaling VC firms: Insights into Investors & Operations.” https://lnkd.in/edNEdsFR #VC #InvestmentManagement #Operations #Investors

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Seed VCs are turning to new ‘pro rata’ funds that help them compete with the big firms Alpha Partners, SignalRank and now SaaS Ventures help seed VCs pay for shares when big VCs try to price — or push — them out Lee Edwards, partner at Root VC, has a saying at his firm that “pro rata rights are earned, not given.” That may be a bit of a stretch since pro rata refers to a term that VCs put in their term sheets that gives them the right to buy more shares in a portfolio company during consequent funding rounds to maintain an ownership percentage and avoid dilution. Still, while these rights are not exactly “earned,” they can be expensive. One of the latest trends in VC investing these days are funds dedicated to helping seed VCs exercise their pro rata rights. https://lnkd.in/dRM3RvdA By Christine Hall

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Catch another episode of This Week in Startups where Upfront Managing Partner Mark Suster interviews Max Altman and Ben Braverman, two of the three co-founders of Saga Ventures. With Saga’s new $125 million fund, the trio talk about: ➡ Fundraising challenges the co-founders faced as a first-time fund and the playbook of how referrals can be the best leads for increasing the chances of success ➡ Nuances of determining a fund size to maintain competitive advantages in deal strategies ➡ Ben’s learnings from working with Ryan Peterson at Flexport as well as Max’s experience and unique advantages working with his brothers Jack and Sam Here's a short clip below about the attributes of successful founders that they look for, including those willing to take unconventional risks 👇

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Unlock a world where transactions are not just processed, but optimized for growth! Wurkzen's AI-driven platform combined with Stripe's seamless payment processing redefines what's possible, offering an unmatched experience for you and your customers. 🌐 Dive into Benefits:  - Tailor payment experiences to fit your customer's needs  - Access real-time insights for informed decision-making  - Streamline operations and boost efficiency  - Stand out with competitive advantages that drive growth  - Transform your payment process and accelerate your business success with Wurkzen and Stripe. Check out our latest blog to know it all about it: https://lnkd.in/d_NJiJHZ #PaymentProcessing #WurkzenXStripe #BusinessGrowth #Innovation

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Interesting new surrvey about the VC industry by PitchBook: 13% of VC firms are not planning to raise a new fund and 27% of VC firms have been pushed further thier plans to raise a new fund. That means a 40% decline. No wonder that startups are haveing tough time to raise funds. See article below. https://lnkd.in/exYYyCPu

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🚨 Startup friends - If you bank with Evolve through one of their fintech partners (such as Mercury or Stripe Treasury), take some steps now to try to protect your identity. If you aren't sure if you bank with Evolve, you can confirm by looking at your wire details in your account. I recommend: 1. Setting up credit freezes with each of the major bureaus 2. Signing up for an identity protection and credit monitoring service, such as Lifelock (especially if you aren't able or willing to do #1) 3. Be hyper vigilant for phishing attacks 4. Change your passwords with the fintech partners (while allegedly credentials were not leaked, I say better safe than sorry) Lastly, consider diversifying your financial stack (happy to chat about this with folks, just DM me). From SVB last spring, to Synapse's collapse, to this - there's always something.

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Big things on the horizon, we are motivated and blessed to be at the dawn of a new age for the internet. Read more about our journey below or listen to the podcast: https://lnkd.in/eJeNhvVa

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🚨 A fintech veteran and early-stage VC who’s backed companies including LendingClub and Practice Fusion, Canvas Ventures’ Rebecca Lynn joins us for for this week’s VC Wednesdays. 🚨 🖋️ You’ve invested mostly in fintech and digital health. What's your focus in 2024? I’m really excited about the boost AI gives both verticals. A lot of the models we’ve wanted to find or companies we’ve wanted to fund didn't make sense until technology caught up with them, and because of AI, we’re looking at them again. An illustration is Casetext, Part of Thomson Reuters. They were doing well and growing year-over-year, but they weren't a rocketship until that final puzzle piece with AI came into play, and they were truly able to deliver what they set out to — replacing legal associates. 🖋️ What other AI applications are you thinking about? In fintech, we’ve always really liked the wealth management space, and believed that technology can take the load off the investment adviser. Until generative AI came along, you couldn't do that efficiently, but now we're leading a deal doing exactly that. And in healthcare, there’s an opportunity to take patient communication off the shoulders of the doctor's office. We’re seeing both fintech and digital health companies solve things from the consumer perspective, but the real issue is on the payer and enterprise side, because they’re now going to have to deal with these inbound AI calls, and they're already overwhelmed. 🖋️ What’s the No. 1 thing you look for in a startup?   I look for the kind of company that if I wasn’t an investor, I'd want to start or join myself. That makes me say, ‘Damn, I should have thought of this.’ The team, market, opportunity and how big it can be comes below that. An example is Marvin. Behavioral health startups have their own set of challenges, but the CEO understood the issues well and developed a network of trained therapists to deal with high trauma patients: surgeons, doctors and anyone in the healthcare sector. When they came to us, they already had significant revenue and were selling to hospitals directly. The value-add of Marvin is that they have delegated credentialing, which solves the big problem of churn.   🖋️What’s the most atypical piece of advice you give startups? I don’t believe in a first mover at all, which is what I was taught by the CEO and president of Procter & Gamble. Why on earth would you ever want to be a first mover, when you have to pay so much money to get your consumer and prove out a market? Letting somebody else do that, and then coming in lightning fast on a more agile tech stack to win in the market is a much better way to do it. Which of the top companies today were first movers? Certainly not Google or Apple. I’d rather back a fast follower like LendingClub or Doximity — that did something other people had done in the past but did it infinitely better. #VCWednesdays #vc #venturecapital #startups #TechonLinkedIn

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Yesterday, Underscore Partner Lily Lyman joined TechCrunch Early Stage to share tactical advice on how founders can effectively build relationships with the right investors. Importantly, she shares the nuance between the "nurture phase" and the "actively raising phase" of fundraising. Turns out fundraising has a lot of parallels to the 2000s romcom "He's Just Not That Into You" - So we were sure to have some fun drawing out the similarities! Explore the deck here by swiping right *pun intended*:

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Here’s a question investors are often asked: When evaluating early stage companies, how much time do you spend on due diligence around future exits? It’s not surprising we hear this question a lot. Also not surprising: it’s got a wide range of answers depending on the firm. Some don’t spend much time here at all. Others make it a point to put meaningful time in as part of their process. Our current thinking: take the time to do the work on public market comps. At Alpaca VC, we spend significant time understanding how public market investors will  realistically value a business based on margin profile, product, business model & TAM. In short, we want to know: how will this company be valued at scale when we get taken out? Yes, we can acknowledge that the journey toward exit is a windy road and that there may be pivots along the way, but there are still public market companies that have a business model similar to the early stage company you're evaluating. And you can always look at gross profit multiples if you think the margin profile will change over time. So we still do the work on the comps. Quantitative metrics we look at when making the comparison to public market comps include EBITDA multiple, revenue multiple, Gross Profit multiple or all of the above. As part of this process, it’s also important to factor in the public market company’s year-over-year revenue growth as this will also significantly impact the multiple it trades at. Simple example: if you have two public market companies with similar business models and similar margin profiles, but one's growing 100% year over year, and one's growing 50% year over year, then obviously the DCF (discounted cash flow) analysis is going to spit out a very different valuation for the one that's growing faster. Why this matters: When you take all of that information into account as you evaluate an early stage business, you can begin to create a realistic picture of how this company will be valued in the public markets at exit - or how an acquirer will value the company for an acquisition. Strategic acquirers may, of course, pay a premium, but we won’t underwrite for that. This allows us, for example, to form conviction around valuation based on revenue and gross profit predictions. If we think they can do $100M of revenue five years from now, we use this diligence process to form a thesis about whether the characteristics above (product, margin, business model, etc.) will cause the company to be valued at $200M vs. $500M vs. $1B at exit. Curious how other early stage investors think about underwriting an exit and how much time they’re spending on public market comps even though these companies are in their infancy.

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