It’s the end of crypto as we know it and I feel fine

Watching the current price madness is scary. Bitcoin is falling and rising in $500 increments with regularity and Ethereum and its attendant ICOs are in a seeming freefall with a few “dead cat bounces” to keep things lively. What this signals is not that crypto is dead, however. It signals that the early, elated period of trading whose milestones including the launch of Coinbase and the growth of a vibrant (if often shady) professional ecosystem is over.

Crypto still runs on hype. Gemini announcing a stablecoin, the World Economic Forum saying something hopeful, someone else saying something less hopeful – all of these things and more are helping define the current market. However, something else is happening behind the scenes that is far more important.

As I’ve written before, the socialization and general acceptance of entrepreneurs and entrepreneurial pursuits is a very recent thing. In the old days – circa 2000 – building your own business was considered somehow sordid. Chancers who gave it a go were considered get-rich-quick schemers and worth of little more than derision.

As the dot-com market exploded, however, building your own business wasn’t so wacky. But to do it required the imprimaturs and resources of major corporations – Microsoft, Sun, HP, Sybase, etc. – or a connection to academia – Google, Netscape, Yahoo, etc. You didn’t just quit school, buy a laptop, and start Snapchat.

It took a full decade of steady change to make the revolutionary thought that school wasn’t so great and that money was available for all good ideas to take hold. And take hold it did. We owe the success of TechCrunch and Disrupt to that idea and I’ve always said that TC was career pornography for the cubicle dweller, a guilty pleasure for folks who knew there was something better out there and, with the right prodding, they knew they could achieve it.

So in looking at the crypto markets currently we must look at the dot-com markets circa 1999. Massive infrastructure changes, some brought about by Y2K, had computerized nearly every industry. GenXers born in the late 70s and early 80s were in the marketplace of ideas with an understanding of the Internet the oldsters at the helm of media, research, and banking didn’t have. It was a massive wealth transfer from the middle managers who pushed paper since 1950 to the dot-com CEOs who pushed bits with native ease.

Fast forward to today and we see much of the same thing. Blockchain natives boast about having been interest in bitcoin since 2014. Oldsters at banks realize they should get in on things sooner than later and price manipulation is rampant simply because it is easy. The projects we see now are the Kozmo.com of the blockchain era, pie-in-the-sky dream projects that are sucking up millions in funding and will produce little in real terms. But for every hundred Kozmos there is one Amazon .

And that’s what you have to look for.

Will nearly every ICO launched in the last few years fail? Yes. Does it matter?

Not much.

The market is currently eating its young. Early investors made (and probably lost) millions on early ICOs but the resulting noise has created an environment where the best and brightest technical minds are faced with not only creating a technical product but also maintaining a monetary system. There is no need for a smart founder to have to worry about token price but here we are. Most technical CEOs step aside or call for outside help after their IPO, a fact that points to the complexity of managing shareholder expectations. But what happens when your shareholders are 16-year-olds with a lot of Ethereum in a Discord channel? What happens when little Malta becomes the de facto launching spot for token sales and you’re based in Nebraska? What happens when the SEC, FINRA, and Attorneys General from here to Beijing start investigating your hobby?

Basically your hobby stops becoming a hobby. Crypto and blockchain has weaponized nerds in an unprecedented way. In the past if you were a Linux developer or knew a few things about hardware you could build a business and make a little money. Now you can build an empire and make a lot of money.

Crypto is falling because the people in it for the short term are leaving. Long term players – the Amazons of the space – have yet to be identified. Ultimately we are going to face a compression in the ICO and, for a while, it’s going to be a lot harder to build an ICO. But give it a few years – once the various financial authorities get around to reading the Satoshi white paper – and you’ll see a sea change. Coverage will change. Services will change. And the way you raise money will change.

VC used to be about a team and a dream. Now it’s about a team, $1 million in monthly revenue, and a dream. The risk takers are gone. The dentists from Omaha who once visited accelerator demo days and wrote $25,000 checks for new apps are too shy to leave their offices. The flashy VCs from Sand Hill have to keep Uber and Airbnb’s plates spinning until they can cash out. VC is dead for the small entrepreneur.

Which is why the ICO is so important and this is why the ICO is such a mess right now. Because everybody sees the value but nobody – not the SEC, not the investors, not the founders – can understand how to do it right. There is no SAFE note for crypto. There are no serious accelerators. And all of the big names in crypto are either goldbugs, weirdos, or Redditors. No one has tamed the Wild West.

They will.

And when they do expect a whole new crop of Amazons, Ubers, and Oracles. Because the technology changes quickly when there’s money, talent, and a way to marry the two in which everyone wins.

LendingTree is the secret success story of fintech

For all of the excitement centered around fintech over the past half-decade, most venture-backed fintech companies struggle to acclimate to public markets. LendingClub and OnDeck have plummeted since their late 2014 IPOs after several years of darling status in the private markets. GreenSky, which went public in May of this year, has been unable to return to its IPO price. Square is the exception to the rule.

Sometimes we overlook the companies that hail from the era that precedes the current wave of fintech fascination, a vertical which has accumulated over $100 billion in global investment capital since 2010.

One of these companies is LendingTree, which got its start height of the Internet bubble, going public in mid-February of 2000, less than a month before the Dot-com bubble peaked.  LendingTree began in 1996 in a founding story that epitomizes the early Internet era. Doug Lebda, an accountant searching for homes in Pittsburgh, had to manually compare mortgage offers from each bank. So he created a marketplace for loans in the same way OpenTable helps you find your restaurant of choice or Zillow simplifies the home buying process. In the words of Rich Barton, iconic founder of Expedia, Zillow, and Glassdoor, this business is a classic “power to the people play.”

The marketplace business model has been the darling that has driven returns for many of the leading VCs like Benchmark, a16z, and Greylock. Network effects are a non-negotiable part of the explanation as to why. Classic success stories that have transitioned nicely into public markets include Zillow, OpenTable (acq.), Etsy, Booking.com, and Grubhub. LendingTree is often left off of this list, yet, the business sits in a compelling space as consumers and lenders continue to manage their financial lives online. 

Insight in a Sea of Ambiguity

The lending process has been defined by significant information asymmetry between borrowers and lenders. Lenders have a disproportionate amount of leverage in the relationship. And that’s not to say it should be different – it’s perfectly logical to require a borrower to prove their creditworthiness. However, aggregation, synthesis, and recommendations modernize a dated dynamic. 

Ironically, in an age where consumers are inundated with information, less than 50% of interested borrower’s shop for loans. Most consumers take the first offer they receive. The benefit of a marketplace, however, is price competition and transparency. The ability to shop the market and access the same information that lenders have is a luxury that didn’t exist twenty years ago. The borrowers who do shop through LendingTree reap significant benefits; on average, roughly $14,000 on mortgages and 570 basis points on personal loans. There’s certainly something to be said for comfortability and hand-holding, but at some point the metrics speak for themselves. 

LendingTree isn’t a marketplace in the purest sense because of the process that takes place after a borrower clicks “apply.” While a diner can reserve a table at any listed restaurant with OpenTable for dinner tomorrow tonight, she can’t simply take the loan she wants. LendingTree lacks the direct feedback loop between consumers and lenders that characterizes most marketplaces. Instead, the platform aggregates information from a network of over 500 lenders to provide options according consumer’s needs. LendingTree is effectively the onramp for interested borrowers, which necessitates the entry of lenders to fill the borrower’s needs.

As this “onramp” continues to serve a larger audience as more consumers conduct their finances online, banks and lenders intend to seize the opportunity. Digital ad spend in the financial services industry is going to continue to grow rapidly at an estimated 20% CAGR between 2014 and 2020, effectively tripling the size of LendingTree’s core market. 

Diversifying away from Mortgages

LendingTree’s revenue mix has change over the years.

For all intents and purposes, LendingTree has been in the mortgage business since its inception. The company experimented with a myriad of business models, including a foray into loan origination through their LendingTree Loans product line, which they ultimately sold off to Discover in 2011. Even in 2013, only 11% of their revenue originated from non-mortgage products.

LendingTree has expanded their platform in a few short years to build their non-mortgage products including credit cards, HELOCs, personal, auto, and small business loans. They have also pursued credit repair services and deposit accounts, with insurance in the pipeline. Whereas mortgage revenue made up roughly 60% of total sales in Q2 2016, it dropped to 36% as of this quarter. They wanted to diversify their product mix, but they realized they were also leaving money on the table. 

Through strategic M&A activity, LendingTree has acquired a number of leading media and comparison properties to expand into new products. Acquiring CompareCards, a leading online source for credit card comparisons, has allowed them to catch up to Credit Karma and Bankrate, who own a large part of the existing market. Additional acquisitions in tertiary products like student loans, deposit accounts, and credit services have enabled the company to expand their market share in markets that are both ripe for growth and sparse of competition. The inorganic growth strategy emulates that of two of LendingTree’s major shareholders: Barry Diller, who’s company IAC previously owned LendingTree before spinning them off in 2008, and John Malone, who owned 27% of shares as of November, 2017.

LendingTree has made significant acquisitions to expand and grow

Enhancing Customer Engagement

The potential scale and success of LendingTree’s business model is predicated on discovering prospective borrowers. If they’re repeat customers, that’s a big win because their promotional costs drop significantly once a customer is familiar with the platform.

My LendingTree, the company’s personal financial management (PFM) app launched in 2014, has 8.8 million customers and generates roughly 20% of the company’s leads. It offers free credit scores, credit monitoring, and goals-based guidance through a proprietary credit and debt analyzer. At the surface, it’s not especially different from any of the other leading consumer PFM apps. That’s been the issue with these apps: the service is valuable, but it’s very difficult to differentiate beyond UI/UX, which is far from a defensible moat.

However, the ability for LendingTree to lock in customers and accumulate customer data to personalize product recommendations is a breakthrough for both consumers and lenders. Consumers outsource the loan diligence process to their phone, which explores the universe of lending options in order to find the most suitable options. 

LendingTree’s new personal finance management app. (Photo by LendingTree)

The leader in this space is Credit Karma, and by a wide margin. They’re estimated to have around 80 million customers. Those numbers appear starkly different at first glance, but it’s important to keep in mind LendingTree is relatively new, launching in 2014. Credit Karma developed a more captive relationship with customers from their inception in 2007, beginning as a free credit score platform. They’re effectively in an arms race, trying to emulate each other’s primary value propositions in order to win over a larger share of customer attention. 

By all accounts, the My LendingTree product is still in its infancy. Personal loans make up nearly two-thirds of revenue generated through My LendingTree. Credit cards were integrated through CompareCards earlier this year; deposits will be integrated in the fourth quarter through DepositAccounts. As the platform more formally integrates mortgage refinancing and HELOCs, there are more channels to drive user engagement.

For the consumer, this app reinforces the aggregation and connection between interested borrowers and willing lenders. Arguably more significant, however, is the personalization of individual customer experience that will drive further engagement and improve the recommendation engine. With the continued migration to online and mobile for financial services, this product benefits from natural demographic tailwinds.

If LendingTree can successfully reengage with customers on a more recurring basis via My LendingTree, the app should be accretive to overall variable marketing margin because they’ll have to spend far less on promotional activities due to organic customer. The combination of a market-leading aggregator with a comprehensive PFM tool creates a flywheel effect where success begets success, particularly with a major head start in the lending aggregation business. 

Removing the Informational Asymmetry 

In LendingTree’s business model, customer demand drives the flow of ad dollars and ultimately origination volume. Lenders follow customer demand. LendingTree helps expedite that process. Lenders can expand their conversions by boosting the number of high-quality leads and reducing obstacles to the loan application process. LendingTree improves both catalysts. 

On the lender side, My LendingTree fundamentally changes LendingTree’s value proposition. They used to be responsible for connecting lenders with warm leads to drive conversions. With an existing customer base, the lead generation suddenly gets easier. It also significantly reduces the customer acquisition cost for lenders, notoriously a major component of their expense profile.

Nearly 50% of all consumer interactions with banks and financial services companies occur online. It’s not controversial to say that figure is likely heading in only one direction. Currently, credit cards and personal loans are the most automated online application processes because the decisioning occurs relatively quickly. Of the expansive network of mortgage lenders on LendingTree’s platform, only 40 currently enable borrowers to continue their application online. As mortgages and small business loans become more automated through partnerships with third-parties like Blend and Roostify, LendingTree will benefit from more seamless integrations and likely, higher conversions. 

The real value proposition for the lender, however, is in the headcount consolidation. Just as the number of stock brokers and equity traders has diminished significant, the role of the loan officer will follow a similar trajectory. LendingTree initially supplemented loan officers in their borrower sourcing from a marketing perspective, which drove loan officer commissions down significantly.

Doug Lebda’s next conquest is to supplant the entire sales function. In response to a question about LendingTree’s impact on lender headcount, Lebda responded: “what will happen is [lenders will] be able to reduce commission. So the real competitor, if you will, to LendingTree…is the fully commissioned loan officer…In the future, you’re going to have LendingTree convincing the borrower through technology and then you’re going to have an individual lender just basically processing and getting it through.” 

The relationship between a loan officer and a prospective borrower is marred by informational asymmetry. Incentives aren’t aligned.  Soon enough, the pre-approval process launched through their new digital mortgage experience, “Rulo” will help to solve a problem that has plagued LendingTree since its inception: an exhaustive pursuit from loan officers.

With Rulo, LendingTree sorts and filters the list of offers and provides a recommendation based on the best option. Then, the app allows you to contact the lender directly, offering the consumer the freedom they historically haven’t had. Commenting on the early success of the new experience, Lebda said “[the conversion rate is] literally about triple what it is on the LendingTree experience.” LendingTree is streamlining a low value, yet operationally costly element of the lending business that has remained more or less stagnant for half a century. 

Seeing the Forrest through the Trees

The fawning over fintech companies has driven exorbitant amounts of global investment from venture capitalists and private equity firms who are ultimately looking for exit opportunities. Two things are happening: first, most of the major fintech companies aren’t going public, although that is beginning to change. Second, and perhaps more importantly, the ones that do go public don’t fare particularly well. 

The tried and true strategy of most emerging financial technology startups is to focus on user growth and monetize later. LendingTree did the opposite; they created a cash-flow generating platform that served a critical purpose, simplifying a historically complex landscape for consumers, while simultaneously driving directly attributable revenue for lenders. They have proved their original value proposition, connecting borrowers with lenders, and now they’re playing catch up to provide supplementary tools to add more value for customers. It’s a rare pathway, but a productive one that more fintech startups should consider.

Costco now supports Apple Pay across all of its US stores

Apple has landed a big new partner for Apple Pay in the U.S. after Costco began accepting the mobile payment service across 750 stores. The retailer plans to include support at its gas stations, but that isn’t yet complete.

The rollout — first reported by MacRumors — follows limited trials at selected Costco outlets, including a warehouse near its corporate headquarters in Washington.

This new partnership comes hot on the heels of Apple’s landing similar deals with CVS and 7-Eleven. The deal with CVS is particularly notable since the retailer had held off on supporting the Apple service, to the point that it even developed its own alternative that is based on barcodes. Apple also secured a deal this summer to add Apple Pay support to eBay which gives it more breath among online retailers, too.

The service is operational in 30 international markets and, in the U.S., it is tipped to account for half of all contactless payments operated by an OEM by 2020, according to a recent analyst report.

The market for such services — which includes Samsung Pay, Google Pay and others — is tipped to reach 450 million consumers. Apple, though, is already seeing the benefits. Apple Pay is part of the company’s ‘services’ division which recorded revenue of $9.6 billion in the last quarter, that’s up 31 percent year-over-year.

The dramatic rise and fall of online P2P lending in China

Editor’s note: This post originally appeared on TechNode, an editorial partner of TechCrunch based in China.

When Emily Zhang was interning with a peer-to-peer (P2P) lending firm in the Summer of 2016, her main task was to carry out research on other P2P lending firms. She found the rates of return tempting and some underlying assets reliable, so she decided to invest in the market herself. Until now, none of her investments have matured, but she worries about whether she can actually withdraw her profits, much less get back the principal.

Even so, Zhang considers herself lucky that the companies that sold her the assets are still in business while many other P2P companies have collapsed, leaving their investors in despair.

Stories have been circulating across Chinese social networks about desperate investors who have lost their life savings. Zhang Xue, for instance, a 47-year old single mother with a 13-year-old son, was reported to have lost the 3.8 million RMB her husband left her with when he died of a heart attack. “I am totally desperate. 3.8 million RMB. It’s finished, all finished,”” she told local media.

Some of those affected protested in front of police stations and chanted the Chinese national anthem, March of the Volunteers, in an effort to pressure authorities. Others organized online investor rights groups, making a collective effort to get the money back. Together, the protesters made headlines in domestic media and sparked intense online debates on who is responsible for the losses and where the industry is heading.

P2P lending, or online lending, is generally considered as a method of debt financing that directly connects borrowers, whether they are individuals or companies, with lenders. The world’s first online lending platform, Zopa, was founded in the UK in 2005. China’s online lending industry has seen rapid growth since 2007 without significant regulation.

Default rates have been soaring since June. In May, only 10 platforms were considered in trouble. But by June, that number had increased to 63. By the end of July, 163 platforms were on the concern list. The Home of Online Lending (网贷之家), a platform that compiles the data, defines ‘troubled’ as companies that have difficulty paying off investors, have been investigated by national economic crime investigation department, or whose owners have run away with investors’ money.

One of the key factors contributing to the sudden surge is the national P2P rectification campaign that was supposed to have been finished by June. “The due date of rectification has passed, but many P2P platforms have not met the requirements. Strict regulations have propelled a break-out of the compliance issues,” Shen Wei, Dean and Professor of Law at Shangdong University Law School, told TechNode.

In late 2017, the platforms were asked to register with local authorities by June 2018, according to China Banking Regulatory Commission, which has now merged with China’s insurance regulator to become China Banking and Insurance Regulatory Commission.

Shen said the main purpose of the regulations is to restrict P2P lending platforms to be information intermediaries only, matching borrowers and investors. Under such regulations, the platforms are not allowed to pool funds from investors or grant loans to any client or provide any credit services, which most of the platforms were doing when they first started.

The rise of P2P lending in China

China’s first online lending platform, PPDAI Group (拍拍货), launched in 2007 and went public on the New York Stock Exchange in late 2017. The industry has gone through rapid growth since then. In January 2016, there were 3,383 platforms in business with combined monthly transactions reaching 130 billion RMB, according to Home of Online Lending.
In a recent research paper, Robin Hui Huang, professor of law at the Chinese University of Hong Kong, attributed the increase of P2P in China to three factors: a high 56 percent rate of internet penetration by 2018, a large supply of available funds from investors, and financial demands of small-to-medium-sized companies that cannot be satisfied by the existing banking system.

P2P lending is a tempting and easy investment option because the loans usually promise 8-12 percent interest rates, according to Home of Online Lending, of which many mature within a year, much higher than the 2.75 percent rate for three-year fixed deposits found at most banks.

P2P lending is also friendlier to smaller businesses since major banks in China generally prefer state-owned enterprises or large companies. Huang cited a joint 2016 report by the Development Bank of Singapore and Ernst & Young, that only 20-25 percent of bank loans went to small to medium-size enterprises, even though they accounted for 60 percent of China’s gross domestic product.

China’s financial system is still dominated by banks, especially the established ‘Big Four’ — the Bank of China, China Construction Bank, the Agricultural Bank of China, and the Industrial and Commercial Bank of China. Ryan Roberts, a research analyst at MCM Partners, told TechNode that about 70 percent of the banks’ loans are commercial loans, with just 30 percent for individuals.

Unresolved regulations

Before the government first signaled regulations in 2016, the P2P lending industry aggressively expanded. Compared with the current defaulting scandals, the situation back then wasn’t any better.

By the end of 2015, there were 1,031 total troubled platforms out of 3,448 platforms still in operation. So, on average, one out of four was problematic. Chinese media reported on a number of Ponzi scheme stories concerning dubious platforms that tempted would-be investors with fat bonuses for referring family and friends, too.

Despite the fact that there was no established regulatory framework, the government was watching. Since mid-2015, a series of announcements set the stage for China’s first regulatory instrument for online lending in August 2016. Called Interim Measures on Administration of Business Activities of Online Lending Information Intermediaries, violations of its articles can lead to administrative or even criminal penalties.

The interim measures set the business scope of the platforms to be mere information intermediaries. It also asked all platforms to set up custody accounts with commercial banks for investor and borrower funds held by the platforms in order to reduce the risks that platform owners abscond with funds. The measures require online lending platforms to register with their local financial regulatory authority.

Later, a specific timeline was set for the implementation. Provincial government agencies were told to complete general investigations into local P2P platforms by July 2016 and formulate regulatory policies based on regional conditions. Overall rectification and registration should have been completed by June 2018, the latest.

It’s August now and, obviously, the work still isn’t finished. Huang said the measures, in general, have covered all the factors of the industry that should be regulated, but when it came to implementation, all we really saw was a delay.

“It’s good that the measures are carried out locally, which means that local government can develop policies in line with local conditions,” Huang explained to us. However, in order to attract more capital locally, local authorities have engaged in a race to the bottom, competing with one and another to have the loosest regulations, and therefore, have been hesitant to finalize them.

Moreover, the general public has a different understanding of the registration process. “Registering with local authorities doesn’t mean that local governments have recognized or will guarantee the legitimacy and quality of platforms. However, in reality, the public seems to perceive registration as official assurance,” Huang said. This has lead to very cautious approaches from government agencies towards the whole registration project since they don’t intend to be held responsible for the fallout or future wrongdoings of the P2P firms.

The concern is quite reasonable. Huoq.com—a P2P lending platform launched in December 2016 and backed by state-owned enterprises—announced on July 11, 2018, that it went into liquidation. The platform is owned by Dingxi Zhuoyue Online Lending Information Intermediary. One-third of Dingxi is owned by Xinjiang Tianfu Lanyu Optoelectronics Technology while Tianfu Lanyu itself is partly owned by a state-owned company in Xinjiang. On July 10, however, owners of the platform disappeared. Neither the company nor investors were able to locate them.

Their still-functioning official site doesn’t show the slightest sign of liquidation, displaying various certificates and recognition from government agencies and industry associations. A banner at the bottom of their mobile app icon still says “Central enterprises are our majority shareholders.”

The unresolved regulations are also affecting P2P lending companies listed overseas. Shares of PPDAI plummeted to $4.77 as of July 30 from $13.08 when it was first traded in late 2017. The stock price of Yirendai (宜人贷), the first Chinese online lending company to go public overseas, dropped to $19.33 compared with $38.26 the same period last year.

That the shares of these companies don’t trade well indicates that investors are skeptical towards the business, said Roberts. With the ongoing regulations, it’s still possible that regulators can outlaw and ban their businesses, he explained. Some borrowers even take advantage of the unsettled regulation and stop paying back their loans, in the hopes that the platform they have borrowed from would fail, Roberts added.

Buyer beware

In June 2018, 17.8 billion RMB worth of transactions took place on China’s P2P lending platforms and outstanding loan balance reached 1.3 trillion RMB. The number looks insignificant if compared with 1.8 trillion RMB in net new bank loans in June alone.

However, they have made quite a splash. Victims of the troubled online lending platforms gathered in Hangzhou in early July, filling two of the largest local sports stadiums, which the local government had set up as temporary complaint centers.

“One of the reasons why the current wave of defaults has drawn so much attention is that many troubled platforms were pretty big,” Huang said. Some of the platforms violated the rules, pooling funds illegally, and some were suffering from China’s slowing economic growth and the ongoing deleveraging campaigns.

P2P lending has helped fund small-to-medium-sized enterprises in some way, but in general, the role it plays in the financial system is limited, said Shen. Most of the P2P investors are speculative and they themselves should be responsible for their losses, he added.

“If the rate of return exceeds 6 percent, investors should be alert; if it is more than 8 percent, the investment is very risky, and if it’s more than 10 percent, investors should prepare themselves for losing all their capital,” said Guo Shuqing, chairmen of China Banking and Insurance Regulatory Commission at a finance forum in June in Shanghai, referring to financial scams that lure investors in with high returns.

Although P2P lending is only a relatively small piece in China’s financial industry, there are still concerns that the collapse of these platforms should trigger systematic risks, Shen said. This also implied that Chinese investors have very limited investment options.

According to research by China International Capital Corporation, experts predicted only 10 percent of the current P2P lending companies, less than 200, could still be in business after three years.

Zhang said P2P lending needs regulations because many platforms are not innocent. “P2P platforms have high moral hazards and it’s really easy to fake borrowers’ information. However, I believe the government is supportive towards the industry and some platforms will survive till the end,” said Zhang. “I just wish I can be lucky enough to pick the right one.”

BlockFi just gathered up $50 million to lend to bitcoin and ethereum holders who don’t want to cash out (yet)

Because cryptocurrency prices are almost comically volatile owing to challenges involved in valuing them, it’s hard to know when or why to sell.

Enter crypto-asset backed loans, around which a small but growing number of startups is beginning to spring up. The idea is to lend money to cryptocurrency holders who don’t want to offload their holdings but also don’t necessarily want so much of their assets tied up in cryptocurrencies.

Among these is Lendingblock, a London-based startup that enables holders of crypto assets to lend them out and accrue interest on their holdings. Other outfits — and we aren’t vouching for these so much as letting you know they exist — include CoinLoan, a 1.5-year-old outfit in Estonia that is itself trying to raise money through an initial coin offering; Nexo, a Switzerland-based platform powered by a Bulgarian consumer finance company called Credissimo; and SALT Lending, a Denver-based outfit that started crypto lending earlier this year, and recently told American Banker that it has already made just shy of $40 million in loans and has had no losses. (AB notes that the company’s founder, Blake Cohen, refers to himself at “The Blockchain Cowboy.”)

Still, it’s already looking like if there is one to watch in this new world, it might be BlockFi, a year-old, 12-person, New York-based non-bank lender that had raised roughly $1.5 million in seed funding earlier this year from ConsenSys Ventures, SoFi and Kenetic Capital, and just today quietly announced a massive infusion of capital — $52.5 million — led by Galaxy Digital Ventures, the digital currency and blockchain tech firm founded by famed investor Mike Novogratz.

Most of the capital — $50 million — will be used to loan to BlockFi’s customers. The rest — $2.5 million — is an equity investment in the company from Galaxy and earlier backers, including ConsenSys.

Founder Zac Prince comes from a background of consumer lending, having worked recently as a senior vice president with the company Cognical (now operating as Zibby). He’d also logged time as a vice president at the broker dealer Orchard Platform (since acquired by the lending company Kabbage).

As he told us of BlockFi’s origins earlier today, Prince started personally investing in crypto in early 2016 and also started attending related events. It was there that he “watched the crowd shift from purely computer scientists and anarchists to [also] VCs and bankers.”

As it happens, he was in the process of getting a loan for an investment property around the same time. instead of using a traditional bank, he decided to list his crypto holdings to see what would happen, and the response was overwhelming. It was, he says, a “lightbulb moment. I realized that there was no debt or credit outside of [person-to-person] margin lending on a few exchanges and I had the feeling that this was a big opportunity that I was well-suited to go after.”

Clearly, Novogratz agrees. So does former Bank of America managing director Rene van Kesteren, who ran a seven-person equity-structured financing business before joining BlockFi in May as its chief risk officer.

Currently, BlockFi allows investors to take out a loan as high as $10 million using either bitcoin or ethereum as collateral.

Prince wouldn’t say how much money the company has lent to its retail, corporate and institutional clients. He did offer that the number is “seven figures,” adding half-kiddingly that it “may be eight” figures by later today.

CowryWise micro-savings service opens high-yield government bonds to everyday Nigerians

In emerging market countries where economic volatility is a way of life, there aren’t a lot of relatively safe options for members of the burgeoning middle class to park their money.

For instance, countries like Nigeria have experienced a tremendous growth in the number of citizens entering the middle class, which now accounts for about 23 percent of the population (it’s around 50 percent in the U.S.), according to a recent article citing the African Development Bank.

While Nigeria now faces some significant headwinds from a weak domestic currency (the naira), high interest rates and a manufacturing recession, there are ways that local investment can both protect the wealth that’s been created and encourage investment domestically to potentially spur development.

At least, that’s the conclusion that college friends Razaq Ahmed and Edward Popoola came to while they were thinking about opportunities for new financial services options in their home country of Nigeria.

The two men, Ahmed with a background in finance and Popoola in computer science, are launching a company called CowryWise that gives Nigerian investors a way to save their money by investing in high-yield government bonds. The rates on those products are high enough to absorb the wild swings in value of the naira and still provide a healthy return for investors, according to Ahmed.

Set to present at this year’s demo day from Y Combinator, CowryWise is one of a number of startups that Y Combinator has backed coming from the African continent, and an example of the wellspring of entrepreneurial talent that is flourishing in sub-Saharan Africa.

Using CowryWise, a customer would just have to sign up with their email address and phone number and link their bank account up to the CowryWise platform.

There are already roughly 57 million savings accounts in Nigeria and 32 million unique bank users. By investing in the bonds, these savers gain access to interest rates that range between 10 percent and 17 percent, according to Ahmed.

“The bonds… are similar to the treasuries issued by the U.S. government, which is A-rated,” says Ahmed. Even if there were foreign currency risk from investing in the naira, the inflation rate is currently around 11 percent, according to Ahmed. Given that most of the bonds are yielding interest rates on the higher end, it’s just a better deal for consumers, he said.

“There’s more value in keeping the money in government treasury bills” than in the bank, says Ahmed.

For Ahmed and Popoola, the decision to launch CowryWise was a way to bring investment opportunities to a retail investor that hadn’t been able to access the best that the financial system in Nigeria had to offer.

To target these retail investors meant leveraging technology to scale quickly and cheaply across the country. The two men started developing their service in January and tested it in February and March with friends and family.

CowryWise isn’t without competitors. Another Nigerian company, Piggybank, recently raised $1.1 million for its own automated savings solution. Like CowryWise, Piggybank also taps into government bonds to offer better rates to its investors.

That company already has 53,000 registered users — who have saved in excess of $5 million since 2016, according to a release.

There are subtle differences between the two. Piggybank touts its ability to save through bonds, but it is primarily working with banks to get Nigerians saving money. CowryWise is using Meristem Financial (Ahmed’s old employer) as the asset manager for its investments into the bond market.

Another difference is the time customers’ funds are locked up. Piggybank has a three-month savings period required before investors can withdraw funds, while CowryWise will let its customers withdraw cash immediately, according to this teardown of the two services.

Ultimately, there’s a large enough market for multiple players, and a need for better financial services, according to Ahmed.

“We kept having interest from retail investors on why they want to do micro-savings and micro-investment, but they didn’t have the required capital,” Ahmed says. “That was the major reason for staring the company. Why not democratize the assets? And make them available in investments and savings in this traditional instrument?”

N26 updates its web app

Fintech startup N26 wants to compete with traditional banks on all fronts. And it means providing a useful web interface to view your past transactions, transfer money and more. Most users likely interact with N26 through the mobile app. But it doesn’t mean web apps are useless.

Contrary to Revolut, N26 has had a web interface since day one. It lets you control most things in your account. For instance, you can add a new recipient and send money. You can configure notifications, get a PDF with your IBAN number and download banking statements.

You can also lock your card, reset the card pin, reorder one or block some features from the web. This way, if somebody steals your phone with a wallet case, you can still go to the website and disable your card.

With today’s update, N26 is mostly refining the design of the interface. The left column is gone, and you now get a feed of transactions front and center. When you press the download button, you can download bank statements, a CSV with all your past transactions in case you want to put them in Excel and the PDF with your IBAN number.

But the company seems to be really excited about one new feature in particular — dark mode. You can now switch the entire interface to black. This will be particularly useful when Apple introduces macOS Mojave with dark mode across the operating system.

You can now also tick a box when you log in to enable discreet mode. This feature hides your balance and transactions in case you don’t want your coffee shop neighbor to look at your bank account.

The new web app is responsive, which means that it works on computers with big screens as well as mobile phones. The information on your screen changes depending on the width of your browser window. The new N26 for web should be available now.

Truecaller makes first acquisition to build out payment and financial services in India

Sweden’s Truecaller started out life as a service that screens calls and messages to weed out spammers. In recent times the company has switched its focus to India, its largest market based on users, adding services that include payments to make it more useful. Now Truecaller is putting even more weight behind its India push after it announced its first acquisition, mobile payment service Chillr.

The vision is to go deeper into mobile payments and associated services to turn Truecaller into a utility that goes beyond just handling messages and calls, particularly payments — a space which WhatsApp is preparing to enter in India.

Truecaller doesn’t have WhatsApp -like scale — few companies can match 200 million active users in Indua, but it did recently disclose that it has 100 million daily active users worldwide, while India is its largest country with 150 million registered users.

Truecaller has raised over $90 million from investors to date, according to Crunchbase. TechCrunch reported in 2015 that it was in talks to raise $100 million at a valuation of around $1 billion, but a deal never happened. Truecaller has instead raised capital from Swedish investment firm Zenith. Chillr, meanwhile, had raised $7.5 million from the likes of Blume Ventures and Sequoia Capital.

Truecaller isn’t disclosing how much it has paid for the deal, but it said that Chillr’s entire team of 45 people will move over and the Chillr service will be phased out. In addition, Chillr CEO Sony Joy will become vice president of Truecaller Pay, running that India-based payment business.

“We’ve acquire a company that is known for innovation and leading this space in terms of building a fantastic product,” Truecaller co-founder and CSO Nami Zarringhalam told TechCrunch in an interview.

Zarringhalam said the Truecaller team met with Chillr as part of an effort to reach out to partners to build out an ecosystem of third-party services, but quickly realized there was potential to come together.

“We realized we shared synergies in thought processes for caring for the customer and user experience,” he added, explaining that Joy and his Chillr team will “take over the vision of execution of Truecaller Pay.”

Truecaller added payments in India last year

Joy told TechCrunch that he envisages developing Truecaller Pay into one of India’s top three payment apps over the next two years.

Already, the service supports peer-to-peer payments following a partnership with ICICI Bank, but there are plans to layer on additional services from third parties. That could include integrations to provide services such as loans, financing, micro-insurance and more.

Joy pointed out that India’s banking push has seen many people in the country sign up for at least one account, so now the challenge is not necessarily getting banked but instead getting access to the right services. Thanks to gathering information through payments and other customer data, Truecaller could, with permission from users, share data with financial services companies to give users access to services that wouldn’t be able to access otherwise.

“Most citizens have a bank account (in each household), now being underserved is more to do with access to other services,” he explained.

Joy added that Truecaller is aiming to layer in value added services over its SMS capabilities, digging into the fact that SMS remains a key communication and information channel in India. For example, helping users pay for items confirmed via SMS, or pay for an order which is tracked via SMS.

The development of the service in India has made it look from the outside that the company is splitting into two, a product localized for India and another for the rest of the world. However, Zarringhalam said that the company plans to replicate its approach — payments and more — in other markets.

“It could be based on acquisitions or partners, time will tell,” he said. “But our plan is to develop this for all markers where our market penetration is high and the market dynamics are right.”

Truecaller has raised over $90 million from investors to date, according to Crunchbase. TechCrunch reported in 2015 that it was in talks to raise $100 million at a valuation of around $1 billion, but a deal never happened. Truecaller has instead raised capital from Swedish investment firm Zenith.

Nigeria’s Piggybank.ng raises $1.1M, announces group investment product

Seeking to tap into Africa’s informal savings groups the Nigerian investment startup Piggybank.ng closed $1.1M in seed funding and announced a new product — Smart Target, which offers a more secure and higher return option for Esusu or Ajo group savings clubs common across West Africa.

The financing was led with a $1 million commitment from LeadPath Nigeria, with Village Capital and Ventures Platform contributing $50,000 each.

Founded in 2016, Piggybank.ng offers online savings plans — primarily to low and middle income Nigerians — for deposits of small amounts on a daily, weekly, monthly, or annual basis. There are no upfront fees.

Savers earn interest rates of between 6 to 10 percent, depending on the type and duration of investment, Piggybank.ng’s Somto Ifezue told TechCrunch in Lagos with co-founders Odunayo Eweniyi and Joshua Chibueze.

Users need an account with one of PiggyBank.ng’s bank partners to use the products. The startup generates returns for small-scale savers (primarily) through investment in Nigerian government securities, such as bonds and treasury bills.

PiggyBank.ng generates revenue through asset management and from the float its balances generate at partner banks.

The startup looks to grow clients across younger Nigerians and the country’s informal saving groups.

“The market that we are trying to serve is largely the millennial market, though we do not exclude anyone,” said Eweniyi, the company’s chief operating officer. The venture also looks to meet a demand in Nigeria for accessible investment options, citing a survey they conducted indicating that as a top priority for people with discretionary income.

“Piggybank offers savings, but our vision is not just savings, but to become a holistic platform — a financial warehouse — where other financial providers can plug in their services for PiggyBank users,” said Eweniyi. She cited banks, investment houses, insurance, and pension funds as possible partners.

The company currently has 53,000 registered users — 60 percent of whom are Nigerian Millennials — who have saved in excess of $5M since 2016, according to a release.

PiggyBank.ng will use its $1.1M in new seed funding for “license acquisition and product development.”

The startup has taken preliminary steps to launch in other African countries (Kenya in particular) but could not offer exact details.

Groups will be able to choose savings options and goals through PiggyBank.ng’s app and receive automated disbursement of returns across their individual bank accounts, according to COO Eweniyi .

As for how the company assures savers it won’t become another Ponzi scheme, Piggybank.ng and its lead investor point to the startup’s pending banking license with Nigeria’s Central Bank. The company is in the process of acquiring a micro-finance banking license, something LeadPath Nigeria founder Olumide Soyombo confirmed on a call with TechCrunch. He also pointed to Piggybank’s client balances being held with registered banks, which are protected under Nigeria’s own FDIC type banking insurance.

Soyombo will take a role on Piggybank.ng’s board and he’d like to see them open up new options for individuals to input money on the platform. “The agent network business is a huge play we plan to go into. They’ve basically become like human ATMs,” Soyombo said. He referenced Nigerian digital payment company Paga and Safaricom’s M-Pesa with large agent network stations where clients can fund digital accounts with cash.

While digital payments products have caught on in certain parts of Africa, E-Trade type citizen investment platforms have yet to emerge at any scale.

Soyombo doesn’t see Piggybank.ng moving from fixed income investments to equities just yet. “Maybe down the line stocks could be an interesting play, but not right now. People are currently looking for a more risk free place to e-tail,” he said.

Soyombo believes Piggybank.ng has the potential to become an acquisition target.

“They usually only happen in our market with two main players: banks and telcos,” he said. “The banks have been slow to try new things in this savings space. Piggybank is coming in…and filling a particular need, so they are in a very acquisitive space.”

London’s street performers are embracing cashless payments

The drive to digitize payments in the UK is modernizing income for London’s famous street performers.

Thanks to a new development backed by London mayor Sadiq Khan, buskers — aka street performers and musicians — in the British capital will be able to solicit tips from credit cards as well as the traditional cash and coins method.

The initiative uses Swedish payment firm iZettle — which U.S. giant PayPal recently agreed to buy for $2.2 billion — to provide buskers with card readers that passers-by and commuters can use to make donations. A recent trial will be expanded to cover all of London’s registered buskers over the coming months, according to a report from the BBC. One busker, Charlotte Campbell, who took part in the test phase said the addition of contactless payments “had a significant impact on contributions” she received.

“More people than ever tap-to-donate whilst I sing, and often, when one person does, another follows,” Campbell added.

The deal is perhaps the most visible piece of business from iZettle, which has quietly made a mark in helping UK payments go digital.

iZettle will be PayPal’s largest acquisition to date. The company has operations in 12 markets, which include northern Europe and Mexico in Latin America. Its business is particularly strong in the UK where it has been successful in building out a point of sale business through card-reading dongles that link up with a smartphone or tablet. Like Square in the U.S., these dongles allow smaller businesses that are priced out of traditional point-of-sale solutions for taking cards to go beyond cash without a lot of hassle.

From that base, iZettle has expanded into other financial services for small businesses, which include inventory management loans and more.