JPMorgan cools deal to back British fintech start-up Yapily

  • JPMorgan has cooled off on a deal to back London-based fintech startup Yapily, Insider understands.
  • Talks of injecting $25 million into the startup were at an advanced stage, sources said.
  • Yapily, founded in 2017, had been looking for several months to raise new funds.

JPMorgan has given up pursuing a strategic investment in London-based fintech Yapily, according to Insider.

Yapily, which is backed by investor Square and Wise Sapphire Ventures, operates in the booming open banking sector. The startup licenses an API to a range of Fortune 500 companies that allows them to accept payments from customers without having to go through card issuers like Visa and MasterCard.

The US financial giant had considered a deal that would have seen the bank inject around $25 million into the startup, a London-based source said. However, the bank has decided not to invest in Yapily for the time being, said two sources with knowledge of the matter. Talks between JPMorgan and Yapily were first reported by Bloomberg in September.

JPMorgan declined to comment when contacted by Insider. A Yapily spokesperson said the startup did not comment on the market speculation.

A deal between Yapily and JPMorgan had reached an advanced stage but the financial giant opted out of investing in the company, a source said. For now, JPMorgan will work with US firm Finicity, which Mastercard bought for $825 million in 2020, and Tink, a European open banking startup which Visa acquired in 2021, the London-based source said.

The bank’s decision not to invest in fintech does not mean it will not seek to partner with the British firm in the future, said a London-based source familiar with the matter.

Yapily, which has raised $69 million from investors like Latitude and Sapphire Ventures to date, had been looking to raise funds for months and reportedly thought the deal was moving forward. The bank’s decision to change its mind late in the process was described as a “kick in the teeth” by an investor familiar with the process. The startup’s last funding round was a $51 million Series B round in July 2021.

The deal with JPMorgan could well have hinged on a broader funding round with other investors taking shape, a London-based Yapily investor told Insider, meaning the bank could still participate in a future round. financing should Yapily decide to raise additional capital in the future.

Open banking startups were born out of rule changes requiring banks and financial institutions to share customer data, with their permission, with third parties. Services like Yapily plug into a customer’s bank account and then feed into services on behalf of other businesses, such as loans, business payments, and financial management.

The demise of the deal is seen as a problem for Yapily, but not something that will cause significant problems for the company, the London-based source said. However, funding for fintech startups has plummeted in 2022. Startups in the sector raised $13.4 billion globally in Q3 2022, down 64% from their all-time high in Q4 2021, according to Dealroom. .

Yapily previously acquired German competitor FinAPI and would likely have used some of the funding to further integrate the business given the regulatory and technical costs of those deals.

JPMorgan previously acquired British wealth management startup Nutmeg and has reportedly been on the lookout for further fintech acquisitions amid falling valuations of consumer financial services companies in areas including trading and leasing. ‘saving.

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