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Shopify partners with Adyen to pursue enterprise merchants

Shopify partners with Adyen to pursue enterprise merchants, Robinhood acquires a credit card startup X1, and Root Insurance receives a takeover bid

June 23, 2023

Hi!

We finally had rain yesterday, which was a much-needed relief for humans and nature after weeks of heat. The sun is shining again, so I started thinking that, perhaps, 2022 was just a rainy day during an otherwise sunny Fintech summer. In the meantime:

  • Shopify partnered with Adyen to pursue enterprise merchants,

  • Robinhood agreed to acquire a credit card startup X1, and

  • Root Insurance received a takeover bid

As always, thank you for reading, and have a great weekend!

Jevgenijs

Shopify Partners with Adyen to Pursue Enterprise Merchants

Shopify (NYSE: SHOP) announced a multi-year partnership with Adyen (AMS: ADYEN) to pursue opportunities in the enterprise merchant segment. Enterprise merchants using Shopify will have the option to integrate Adyen as their payment provider during the setup process. The Adyen payment app will be available on the Shopify Payment Partner Platform later this year, offering enterprise merchants a more flexible payments experience. The integration will begin with a payments app supporting major cards and wallets like Apple Pay and Google Pay, followed by support for local payment methods such iDEAL in the Netherlands and Cartes Bancaires in France.

In addition to the partnership with Adyen, Shopify announced that it is opening access to its checkout solution, Shop Pay, to large brands and enterprise retailers, even if they are not using the Shopify platform. This move is in response to high demand from retailers who have observed the success and scale of the Shop Pay buyer network. By transforming Shop Pay into a “commerce component”, Shopify enables enterprise customers to enhance their customer experience without the need to completely replace their existing commerce infrastructure. This offering is available to enterprises in the US, Canada, the UK, Australia, and New Zealand.

Robinhood to Acquire Credit Card Startup X1

Robinhood (NASDAQ: HOOD) announced signing an agreement to acquire X1 Inc., a San Francisco-based company that offers a no-fee (stainless steel) credit card with rewards on each purchase. By acquiring X1, Robinhood aims to offer its customers access to credit, further expanding the range of financial services it provides. “This acquisition will bring us closer towards our goal of serving the entirety of our customers’ critical financial needs,”  commented Vlad Tenev, CEO and co-founder of Robinhood, on the acquisition. The final acquisition price is expected to be approximately $95 million in cash, subject to customary closing adjustments.

Source: X1

The transaction is expected to be completed in the third quarter of 2023, and as part of the acquisition, the entire X1 team will join Robinhood, with Deepak Rao and Siddharth Batra, co-founders of X1, overseeing the new business. “When founding X1, we set out to create a different kind of credit card with an unparalleled experience for customers, similar to Robinhood’s mission to make our financial markets more accessible to all,” commented Deepak Rao, CEO and co-founder of X1. X1 was founded in 2017 and raised $62 million from such venture firms as Craft Ventures, Spark Capital and Global Founders Capital.

Root Insurance Receives Takeover Bid

Car-insurance startup Root (NASDAQ: ROOT) has received a takeover bid from Embedded Insurance, led by insurance-technology entrepreneur James Hall, The Wall Street Journal reported on Wednesday. The offer is set at $19.34 per share, a significant premium to Root's Tuesday’s closing price of $6.02 (the stock rallied to $12.90 since the Journal broke the news). Embedded Insurance has been attempting to negotiate a deal, including directly with the company’s founder and CEO Alex Timm, since July of last year, but so far negotiations have not yet been successful.

The acquisition offer from Embedded Insurance values Root at $277 million. Root was founded in 2015 and went public in 2020 with a market capitalization of over $6 billion. However, similar to other insurtech companies that went public in the 2020-2021 period, its stock has been decimated (the stock was down almost 99%, before the WSJ story). In July 2022, Lemonade (NYSE: LMND) acquired another car insurtech company, Metromile. Metromile went public in February 2021 with a market capitalization of $1 billion, and was acquired for $145 million in an all-stock deal.

Two charts from me today: Visa (NYSE: V) and Mastercard (NYSE: MA) stocks outperformed Nasdaq Composite Index in the last 5, 10 and 20 years….

…however, in the last 12 months, Nasdaq Composite has been doing better. I’d guess that’s because Visa and Mastercard have not embraced the AI hype?

Cover image source: Shopify

Disclaimer: Information contained in this newsletter is intended for educational and informational purposes only and should not be considered financial advice. You should do your own research or seek professional advice before making any investment decisions.