Marqeta has agreed to acquire Power Finance, a two-year-old fintech infrastructure startup, for $223 million in cash.
Approximately one-third of the purchase price will be paid over two years, subject to certain undisclosed conditions. And he said Marqeta will pay an additional $52 million to the startup, especially if an undisclosed milestone is achieved within the next 12 months, bringing the total acquisition price to $275 million.
New York-based Power Finance, founded in early 2021 by Randy Fernando and Andrew Dust, announced last September that it had raised $16.1 million in a seed funding round jointly led by Anthemis and Fin Capital. bottom. Other backers include CRV, Restive Ventures (formerly Financial Venture Studio), Dash Fund, Plug & Play, and a group of angel investors. The company also announced a $300 million line of credit at the time.
Oakland, Calif.-based Marketa, which will go public in 2021 and is valued at nearly $3.7 billion today, will create a “single, global, cloud-based open marketplace for modern card issuance and transaction processing. provides an API platform.” In other words, it provides tools for companies (such as fintechs) to offer cards, wallets and other payment mechanisms. Its customers include Block (formerly Square), Uber, Google, Affirm, DoorDash, JP Morgan, Citi, Goldman Sachs, Instacart, Ramp and more.
Power’s first product is a credit card issuing program that allows businesses, brands and banks to integrate embeddable fintech experiences such as customized credit card programs, targeted promotions and personalized rewards into their existing mobile applications. and web applications.
The main goal with the Marqeta acquisition is to expand and “significantly accelerate” the functionality offered in credit products. Specifically, the acquisition will allow Marqeta’s customers to create a “wider range” of credit products and structures by incorporating Power’s data science toolbox and the ability to embed experiences within existing mobile and web applications into their offerings. The company says it will be able to launch. Historically, Marketa has focused on debit and prepaid cards, but in February 2021, Marketa will expand into the consumer credit card space to help other brands launch credit card programs. officially expanded to
Once the transaction closes, Power Finance CEO Randy Fernando will lead product management for Marqeta’s credit card platform.
Fernando said in a statement: At Power, he built a full-stack, cloud-native credit card issuance platform, and being part of Marqeta will allow us to bring this innovation to a larger market on a global scale. “
The news of the acquisition comes just three days after Marqeta announced the appointment of Simon Khalaf as its new CEO effective January 31st. organization last August. Founder Jason Gardner, who has expressed his belief that running a public company is “fundamentally different from running a private company,” transitions to the role of chairman of the board.
In an exclusive interview, Khalaf told TechCrunch:
“Our approach to credit so far has been the processor, but our customers have asked us to do a lot of things in very ‘Yes,’ said Calaf.
Rather than devoting resources to building the technology it wanted to offer its customers, Marqeta decided to look at acquisition targets. As Khalaf admits, some were willing to negotiate, others weren’t. The company ultimately decided that Power was the perfect fit, both culturally and technically.
Marqeta operates under the premise that consumers increasingly want personalization, he said.
“If you look at credit cards, there hasn’t been much innovation,” Khalaf told TechCrunch. “However, many people want dynamically changing credit limits based on the user’s current financial situation, dynamically changing rewards, and, more importantly, credit cards that can be integrated into e-commerce and retail workflows. Hope it survives…that’s what Power was built for.
The company said “most” of Power’s roughly 30 employees will join Marqeta. Marketa currently employs approximately 1,000 people.
In general, Khalaf said Marketa has experienced rapid growth but is now moving to a sustainable and profitable stage.
“We are very focused on a sustainable, mature and predictable operating cadence for the company,” he said. “The embedded finance market is growing very fast and is a market that we spend a lot of energy on. The way we have delivered our product and packaged it to be API first….the embedded finance space is Made for us, we are made for them, a perfect match.”
Through the acquisition, Khalaf said Marqeta also hopes to meet growing demand from emerging mobile-first retailers, creator marketplaces and the labor market.
“We’re going to see a lot of new demand around co-branding,” he said. “Companies want a living branded card that is integrated with their assets, and will be able to serve their market better than issuing a piece of plastic with standard rewards.” prize.”
In November, Marqeta posted a third-quarter net loss of $53.2 million, adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $13.6 million, and earnings of $191.6 million, down from the year-ago quarter. reported compared to $131.5 million. Meanwhile, total throughput he reported increased by 54% to $42 billion. Once valued at $18 billion, Marqeta, like many other fintech companies, has seen its share price and valuation drop due to high inflation and a rising interest rate environment. Still, the company continues to win new customers and grow relationships with existing ones, while outperforming analyst estimates.
In appointing Calaf as Marketa’s new CEO, Gardner told investors his goal was to find a leader who would “take Marketa to the next level” after taking Marketa “from zero to one.” rice field.
“That meant finding leaders with experience building and operating global businesses at scale, while also focusing on the path to profitability,” he added. “…our Board of Directors has concluded that Simon is the clear choice to become Marqeta’s next CEO. His decades of experience scaling large technology organizations, his product insights and relentless focus on customer experience will help us as we enter our next phase of growth.”
Khalaf said further acquisitions are not out of the question and would be very cautious.
“Acquisitions are more tactical than strategic,” he told TechCrunch. “Determine which customers you want to serve, which markets you want to pursue, and evaluate whether to build, buy or partner. ”
The acquisition of Marqeta is just one of many M&A deals in the fintech space so far this year.
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