Airwallex Worth $6.2Bn; CapOne-Discover Deal Clsoes; Brex & Zip Partner
Cole Gottlieb, Research Analyst
Fed can wait and see on rates and inflation. Circle cofounder’s “AI-native” financial institutions startup emerges from stealth. Greenlite, Airwallex, and Clair all announce new funding. Capital One-Discover deal closes. Klarna losses double. Brex partners with Zip.
New here? Subscribe here to get our newsletter each Sunday. For even more updates, follow us on LinkedIn.
Interest Rate Wait and See
Fed Vice Chair Phillip Jefferson said last week the central bank must work to ensure any price hikes due to tariff (or other) policy coming out of Washington, D.C., doesn’t turn into persistent inflationary pressure. Jefferson said that, given the current climate, it is appropriate for the Fed to “wait and see” how the Trump administration’s policies evolve and how they impact the economy and inflation. “I believe it’s important that monetary policy make sure that any increase in the price level is not converted into a sustained increase in inflation,” Jefferson said during a conference hosted by the Atlanta Fed last week.
Circle Cofounder Raises $18Mn for “AI-native” Financial Institution
Circle cofounder Sean Neville’s new project, Catena Labs, emerged from stealth mode last week and announced an $18Mn funding round. Circle is best known as the issuer of the USDC stablecoin. Catena Labs aims to develop the first “fully regulated AI-native financial institution” to support the “AI economy.” The funding round was led by a16z crypto, with participation from Coinbase Ventures, CoinFund, Pillar VC, Stanford Engineering VF, Breyer Capital, and Circle Ventures. Of the announcement, Neville said, “AI agents will soon conduct most economic transactions, but today’s financial systems are unprepared and resistant to interactions with automated intelligence. That’s why we’re building an AI-native financial institution that will give AI agents, and the businesses and consumers they serve, the ability to transact safely and efficiently.” The company plans to use the funding to support the development of its infrastructure and underlying technology.
Greenlite AI Announces Series A
Greenlite AI, a compliance-focused startup, announced it has raised a $15Mn Series A. The round was led by Greylock, with participation from Canvas Prime, Thomson Reuters Ventures, and Y Combinator. Greenlite’s clients include business banking startup Mercury and Grasshopper Bank, among others. Firms use Greenlite’s software to source and analyze information used for KYC, sanctions screening, and AML investigations. Greenlite’s AI-powered solution reduces the amount of time necessary to gather and conduct investigations, the company says. Grasshopper Bank’s chief compliance officer Christopher Mastrangelo said in an interview last year that using Greenlite’s platform can reduce the time needed to conduct an enhanced due diligence review by as much as 70%.
Airwallex Valued at $6.2Bn in New Funding Round
International payments and banking startup Airwallex announced a new $300Mn round of funding. The transaction included $150Mn in secondary sales. The Series F values the company at $6.2Bn. DST Global, Lone Pine Capital, Blackbird, Square Peg, Airtree, Salesforce Ventures, and Visa Ventures participated in the latest funding round. Airwallex, which is headquartered in Australia, is lesser known in the U.S., but has been aggressively expanding into new territories and recently opened new offices in San Francisco, New York, and Toronto. The company has recently acquired a payment institution license in Brazil and bought Mexican payments service provider MexPago. Airwallex has also said it intends to apply for a U.K. banking license and is seriously considering making a run at acquiring a U.S. bank.
Clair Announces $23.2Mn Series B
Earned wage access provider Clair also announced a new round of funding last week. The company, which partners with Pathward, Gusto, and TriNet to offer its product through 80,000 businesses, raised a $23.2Mn Series B. The round was led by Upfront Ventures, with participation from Thrive Capital, Fortune was the first to report. Clair, led by Swiss-born CEO Nico Simko, says the company has sought to differentiate from others in the EWA space by focusing on a bulletproof regulatory and compliance strategy. Simok told Fortune, “Transparently, from the beginning, I wanted to sell this product to ADP, and the biggest payroll companies. And I knew they’d have a team of 25 lawyers reviewing what we do. I wanted to make sure we were crystal clear and clean.”
Capital One-Discover Deal Officially Closes
Capital One and Discover’s deal to merge has officially closed, in a transaction that is likely to have far-reaching and long-felt implications in the U.S. banking and payments markets. The most interesting part of the deal for many industry observers is Discover’s card network, which has largely been an “also ran,” trailing far behind Visa, Mastercard, and American Express. While the deal raised antitrust concerns among some, given that both Capital One and Discover are major credit card issuers, with the added heft Capital One may bring to Discover’s network, particularly on the debit side, there’s an argument to be made that the merger could catalyze competition in the card network space. In other Capital One news, the bank agreed to a $425Mn settlement in a class-action case against it related to its high-yield savings accounts. The suit alleged that Capital One concealed details about its higher-yielding “360 Performance Savings” product from existing “360 Savings” users, to avoid paying them higher rates. Capital One froze the 360 Savings product at 0.3%, while the 360 Performance Savings product rose as high as 4.35% as interest rates climbed. While Capital One looks ready to put this civil suit behind it and the CFPB dropped a case against the bank over the same matter, the New York Attorney General filed suit against Capital One over the same issue earlier this month.
Klarna Hits 100Mn User Milestone, Losses Double
Buy now pay later provider Klarna announced it has hit a 100Mn user milestone. But that positive news was offset by rising red ink at the lender, with pretax losses jumping to $92Mn in Q1 vs. $47Mn the year prior. While some social media commentary implied the increase in losses was driven by credit losses, in fact, share-based compensation payments, severance-related restructuring costs, and expenses related to its delayed IPO drove the bulk of the difference compared to 2024. The company has shrunk its headcount by some 40% since 2022, which, Klarna says, has been made possible by its aggressive adoption of AI.
Brex Partners with Zip
Expense management startup Brex is partnering with procurement startup Zip (this is different than the buy now, pay later provider by the same name). The announcement is the latest example of Brex choosing to strategically partner with another fintech firm instead of going its own way. Last year, Brex and travel and expense platform Navan launched a partnership, BrexPay for Navan, which integrated Brex’s corporate card offering with Navan’s travel management capabilities. The new partnership with Zip will embed Brex’s virtual cards directly into Zip’s procurement and payment flows, giving enterprises the ability to streamline and better manage these workflows.
New here? Subscribe to get the latest from Cross River. For even more updates, follow us on LinkedIn.
Disclaimers
All content is original and has been researched and produced by Cross River Bank (“Cross River”) unless otherwise stated herein. No part of this content may be reproduced in any form, or referred to in any other publication, without the express written consent of Cross River.
Cross River is not a broker-dealer or investment adviser and as such, this information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any investment in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change. This content does not constitute an offer to sell or the solicitation of an offer to sell or buy any security in any jurisdiction where such an offer or solicitation would be illegal. There is not enough information contained in this content to make an investment decision and any information contained herein should not be used as a basis for this purpose.
This content does not constitute a recommendation or take into account the particular investment objectives, financial situations, or needs of investors.
Investors are not to construe this content as legal, tax or investment advice, and should consult their own advisors concerning an investment in any instrument. The price and value of assets referred to in this content and the income from them may fluctuate. Past performance is not indicative of the future performance of any instruments referred to herein. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments.
Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on Cross River’s views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements. In addition to statements that are forward-looking by reason of context, the words “may, will, should, could, can, expects, plans, intends, anticipates, believes, estimates, predicts, potential, projected, or continue” and similar expressions identify forward-looking statements. Cross River assumes no obligation to update any forward-looking statements contained herein and you should not place undue reliance on such statements, which speak only as of the date hereof.
Although Cross River has taken reasonable care to ensure that the information contained herein is accurate, no representation or warranty (including liability towards third parties), expressed or implied, is made by Cross River as to its accuracy, reliability, or completeness. You should not make any investment decisions based on these estimates and forward-looking statements.
There is no guarantee that the market conditions during the past period will be present in the future. Rather, it is most likely that the future market conditions will differ significantly from those of this past period, which could have a materially adverse impact on future returns.
NO REPRESENTATION IS BEING MADE THAT ANY INVESTOR WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. We selected the timeframe for our analysis because we believe it broadly constitutes the most complete historical dataset for the industry or company that we have chosen to analyze.
