Who wins and loses in the Plaid/Visa divorce, and the $10 Billion in new Fintech SPACs (Bakkt and SoFi)

Hi Fintech Futurists,


Welcome to our podcast series!


SoFi is going public with a SPAC deal worth over $8 billion. A
few things we touch on in detail: (1) this is still largely a
lender, (2) there is a gem of an embedded finance play called
Galileo that SoFi owns, and (3) the multiple is a little over 10x
T12 revenues, which is not crazy expensive, but not cheap.


Speaking of Galileo and finance APIs, we transition to Plaid, and
how it is is not going to be one of the networks in Visa’s
network of networks. Who wins and who loses in the equation? And
last, we cover the Bakkt SPAC of over $2 billion and our view on
its future.


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Excerpt

Lex Sokolin:
If I could hop in to caricature it even a little bit more, as
you're saying, 10 years ago, 12 years ago, whenever it was, SoFi
is starting to do this arbitrage. They're arbitraging the
government's decisions to non-discriminate for student loans, and
it's a 400 basis point arbitrage, and they're getting all of the
wealthier, better credit students from business schools and law
schools to come to them. And if you're running a lending
business, all you're doing really is printing money now because
you're taking fees upfront and you've got credit risk way, way,
way in the back. So on a revenue basis, you look pretty
fantastic. So because you look fantastic, you might pick up $500
million or a billion from your friends at SoftBank and all of the
other FinTech VCs which are trying to build gigantic consumer
brands and are doing it on consumer growth and revenue growth and
not really are super worried about credit risk.


Now you fast forward 10 years and the world is in many ways on
fire, everybody's bankrupt, money's being printed every which
way, and it so happens that your largest investor SoftBank itself
is losing 12 billion bucks, printing $10 billion options
contracts on tech companies and all sorts of shenanigans. And you
start getting calls. You start getting calls from a variety of
billionaires, from people that are managing hedge funds and
creating these SPAC structures, to the Facebook billionaires like
Chamath who are printing SPAC structures, to FinTech
billionaires, or near deca-millionaires like The Bancorp's Betsy
Cohen. So you start getting these calls saying, "Wow, you have
some nice economics, let's go public." I think this is the first
fancy one, right? The first fancy FinTech that is going this
route. Is that fair to say?


 


Disclaimer here — this newsletter does not provide investment
advice and represents solely the views and opinions of FINTECH
BLUEPRINT LTD.


Contributors: Lex, Laurence, Matt, Farhad, Mike, Daniella


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