Fintechs in Freefall 🔥

Why CapWay’s collapse shows no Fintech is safe.                                                                                                                                                                                                                                                                                                                                                                                                                 [Listen Online]( | [Read Online]( Fintechs in Freefall Why CapWay’s collapse shows no Fintech is safe. [Nicolás Cerdeira]( [like]( mailto:?subject=Post%20from%20Failory&body=Fintechs%20in%20Freefall%3A%20Why%20CapWay%E2%80%99s%20collapse%20shows%20no%20Fintech%20is%20safe.%0A%0Ahttps%3A%2F%2Fnewsletter.failory.com%2Fp%2Ffintechs-in-freefall Hey — It’s Nico. Welcome to another Failory edition. This issue takes 5 minutes to read. These are the 5 most important things: - CapWay, a Y Combinator-backed fintech, [has shut down]( — learn why below. - According to a16z, [“AI wedges” can be advantages over incumbents](. - Every’s advice on how to identify and [“make something people want”](. - [Stripe acquires]( stablecoin crypto startup Bridge for $1.1 billion. - Mira Murati, former CTO of OpenAI [is starting an AI company herself]( — learn why this matters below. This issue is brought to you by [dofollow.com](, the B2B SaaS link-building specialists. Let’s get into it. Tired of Playing Hide and Seek with Google? AD At [dofollow.com](, we know a thing or two about getting eyes on your site. Our secret sauce? Top-notch backlinks from the best sites in your vertical. But we're not talking about just any links – we're all about relevant, user-centric links that search engines drool over. Here's the deal: 👉We've spent years cracking the code on B2B SaaS link building. 👉We know which doors to knock on and how to get your content the VIP treatment. 👉No cookie-cutter approach – we're talking fresh outreach, real relationships, and links that will actually move the needle for your business. And the best part? Exclusively for Failory readers: We’re introducing our [Lite Link Building Package](, allowing you to enhance your SEO even on a tighter budget. [Complete this form to learn more and get in touch with us.]( [Complete the form →]( This Week In Startups 🔗 Resources Lessons from Stripe, Lyft, and Airbnb on [why design matters](. How to leverage [business achievements to drive growth in B2B SaaS](. [Exploring “AI wedges”]( as startups' advantages over incumbents. How to identify and [“make something people want”](. Why [not all startups benefit from “unhinged” marketing tactics](. 📰 News [Stripe acquires]( stablecoin crypto startup Bridge for $1.1 billion. [Acrew Capital raises $700M]( to invest in data, security, healthcare, and fintech startups. [Perplexity AI is looking to raise over $500M]( at a valuation of more than $8 billion. VC firm [Benchmark is raising $170M](for its new partners-only fund. a16z-backed Neobank [Current is facing a down round](as fintech funding tightens. 💸 Fundraising [Skimmer raises $74M](for its SaaS platform for pool service businesses. [YC-backed Tennr secures $37M](to automate manual work in the healthcare system. AI-driven bookkeeping startup [Kick raises $9M]( to fuel expansion plans. [Manifest raises $3.4M](to help users build healthy habits and improve well-being. Fail(St)ory Even YC Fintechs Are Struggling CapWay, a Y Combinator-backed fintech, [has officially shut down](. Founded in 2016, the company set out to bring online banking and financial literacy to people in “banking deserts” — places where traditional banking options are out of reach. Despite its promising mission, CapWay ran out of runway, unable to secure the partnerships and funding it needed to stay afloat. What Was CapWay: CapWay provided digital banking services through a no-fee account and a Visa debit card. Users could manage transactions, save with the “Money Goals” feature, and receive direct deposits early. Beyond banking, CapWay focused on financial literacy, offering courses, educational resources, and spaces for community discussions on managing money. The goal was to bridge gaps in traditional banking by equipping underserved communities with both practical tools and financial education. However, scaling proved difficult. CapWay joined [Y Combinator’s Summer 2020 cohort](, but despite the exposure, it raised just under $800,000—far short of what was needed to compete with better-funded fintech players. The Numbers: - 📅 Founded in 2016 - 🏢 Joined the 2020 YC Cohort - 💰 Raised $800,000 in total - 🚀 Launched with a large waitlist Reasons For Failure: - Fintech Trust Issues: After high-profile failures like [Synapse’s collapse]( and the [Evolve Bank hack](, banks got wary of working with fintechs. Many demanded startups keep large cash reserves before partnerships could even start. CapWay couldn’t meet those requirements. - Funding Roadblocks: Fundraising was tough across the board, but according to CapWay’s founder, Black-led startups faced even steeper challenges. In a [LinkedIn post](, she shared that investors often told her they had already invested in “the other Black-owned debit card company.” Some said it outright, while others implied it. She also noted that CapWay was seen as “too far behind” competitors in fundraising, making it difficult to attract the capital needed to stay in the game. - Failed Acquisition Efforts: When raising more money failed, CapWay looked for an exit through acquisition. But just as the deal seemed within reach, it fell through, forcing the company to shut down. - Niche Market Challenges: Serving banking deserts is a noble mission, but it comes with high customer acquisition costs and thin margins. Convincing people in underserved communities—many of whom rely on cash or infrequent banking services—to switch to a digital platform requires significant time, education, and trust-building. Why It Matters: - Fintech Needs Trust to Survive: CapWay’s story is a reminder that trust is everything in fintech. The entire sector felt the ripple effects of Synapse’s collapse, and smaller startups like CapWay couldn’t recover. - Fundraising Is Still Unequal: CapWay’s experience shows that systemic barriers remain—minority founders still struggle to secure meaningful funding, even in a downturn. - Fintechs Need Deep Pockets: Bank partners now require fintechs to maintain significant cash reserves to reduce risk, making it tough for smaller startups like CapWay to survive without continuous fundraising​ Trend Mira’s Next Move Mira Murati, the former CTO of OpenAI and a driving force behind ChatGPT and DALL-E [is starting an AI company herself](. She’s not easing into it either—she’s reportedly raising $100M to get her new venture off the ground. Though the name of her venture hasn’t been disclosed, her impressive track record signals that this will be a bold play in the competitive AI space. [tw profile: Mira Murati] Mira Murati @miramurati [tw] I shared the following note with the OpenAI team today. 7:34 PM • Sep 25, 2024 21.9K Likes 1.96K Retweets 1.53K Replies Why It Matters: - New Competition: With Murati and other high-profile talent leaving OpenAI, the fragmentation in the AI space is also opening up a world of new challenges and innovations. - Following a Trend: Murati’s move mirrors that of Ilya Sutskever, who left OpenAI to [launch Safe Superintelligence (SSI)]( with $1B in funding. - AI Models Getting Exclusive: Murati’s focus on proprietary models suggests a push for exclusivity and differentiation in the crowded AI market. - Governance Shifts Continue: Murati’s exit highlights the growing wave of leadership changes at OpenAI, driven by its evolving governance model. - Talent Flight Signals Change: With former stars like Barret Zoph potentially joining Murati’s new venture, OpenAI struggles to retain top talent. The Talent War in AI: Murati’s potential partnership with Barret Zoph, another big name who left OpenAI on the same day as her, hints at how quickly the AI talent landscape is evolving. In a space where innovation depends heavily on the brightest minds, keeping star employees is becoming increasingly difficult for even the biggest players. OpenAI isn’t the only company feeling the heat. With new ventures attracting talent from established players, the boundaries between established giants and startups are beginning to blur. This talent migration can accelerate innovation by spreading expertise across smaller, nimble teams, but it also risks fragmenting efforts that benefit from large-scale coordination. For OpenAI, these high-profile departures aren’t just about losing talent—they also mean losing insider knowledge, which could give new competitors an edge. The Rise of Proprietary AI Models: Murati’s decision to focus on proprietary AI models is a strategic one. OpenAI has built much of its reputation around public-facing platforms like ChatGPT, but proprietary systems offer a chance to develop solutions beyond what’s available to the public. These models could be tailored for specific industries or customers, giving her startup an edge in building AI products that are harder to replicate. The decision also suggests Murati’s company will likely avoid the open-source route taken by some AI initiatives, such as Meta's LLaMA models. This means the startup could position itself in the premium AI space, where ownership of unique technology offers a competitive advantage. What’s Next: Murati’s exit adds to the shifts in the AI landscape. OpenAI, still a leader with ChatGPT and DALL-E, faces governance challenges and notable departures. Safe Superintelligence (SSI), backed by Ilya Sutskever with $1B, offers a safer, risk-aware AI approach, competing directly with OpenAI. Other players are also making moves: Anthropic focuses on AI safety with Google’s support, Meta pushes open-source AI with LLaMA, Microsoft embeds AI through Copilot, and DeepMind pursues AGI with research-heavy efforts. Murati’s new venture will fuel this growing fragmentation, driving competition and decentralizing the race between open and proprietary models. So, what do you think? Is Mira's new AI exciting? [✅ Yep, fresh AI sounds good to me.]( [❌ I only use GPT, to be honest.]( Help Me Improve Failory How Was Today's Newsletter? If this issue was a startup, how would you rate it? [🚀 Launches to the moon!]( [🤔 Room for a pivot]( [💀 Crashes and burns]( That's all of this edition. Cheers, Nico Update your email preferences or unsubscribe [here]( © 2024 Failory 1309 Coffeen Avenue Ste 1200, Sheridan, Wyoming 82801, United States of America [[beehiiv logo]Powered by beehiiv]( [Terms of Service](