TRUELAYER, a fintech backed by Tiger Global and Stripe, has seen its valuation slashed by roughly 30 per cent in its latest funding round, according to a person familiar with the matter.
The move comes just weeks after the company began reducing headcount to shore up profitability, the person said, asking not to be named discussing non-public information. chief executive officer Francesco Simoneschi also recently announced at an internal meeting that the company would restructure operations, the person said.
The open banking company raised US$50 million in a round led by the venture capital fund Northzone, TrueLayer said in a statement. The fundraising values the company at about US$700 million, the person familiar with the matter said.
That compares to the more than US$1 billion price tag it garnered in 2021 in a fundraising that lent the startup so-called unicorn status.
“Separately to this fundraise, we have taken important steps to chart our path towards profitability,” Simoneschi said in the statement. “This funding is yet another vote of confidence in our company, our technology.”
The open banking payments platform provides underlying infrastructure for some of the world’s biggest financial technology players including Revolut, Coinbase Global and Robinhood Markets. It’s also a champion of pay-by-bank, a technology that allows merchants to receive money directly from consumer’s bank accounts rather than rely on costly other forms of payment like Visa and Mastercard cards.
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Usage of the company’s platforms has soared in recent years and TrueLayer now processes more than US$50 billion in total payments volume a month. It reported revenue of £12.4 million (S$21.2 million) last year, roughly triple what it produced in 2022.
While operating losses narrowed in 2023, they still came in at £54.1 million as the company reported £61.9 million in administrative expenses for the year.
Existing investors Tencent Holdings, Tiger Global, Temasek Holdings and Stripe also participated in TrueLayer’s latest fundraising round, which is an extension of the 2021 round, when it raised US$130 million.
“This investment reflects our confidence in TrueLayer’s vision and leadership position in their market,” Northzone Partner Jeppe Zink said in the statement. “We’re excited to support them as they push this space forward.”
In recent years, rising interest rates forced many investors to reconsider backing financial technology platforms, forcing many of Europe’s most valuable startups to accept lower valuations in order to raise much-needed cash. For instance, Klarna Bank AB received a US$6.7 billion valuation in a 2022 funding round, a far cry from the US$45.6 billion valuation it received from investors just one year earlier.
There has been signs that a turnaround is in the offing, though. With interest rates slowly starting to fall around the world many fintechs have been able to garner higher valuations again. Revolut, for example, recently said a secondary share sale valued the company at US$45 billion, which was up from a US$33 billion price tag the company received in 2021. BLOOMBERG
