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Goldman’s New Robo-Advisor; Coinbase’s $77 Bn Valuation

By Tito Donis

February 22, 2021


This week, we focus on Goldman Sachs’ new robo-advisor, Marcus Invest, and Coinbase’s $77 Bn Nasdaq private market valuation.

Let’s get to it.

Unemployment is on the Rise, but so are Retail Sales

Unemployment claims rose to 861,000 in the week of February 12th and continue to be above the pre-COVID pandemic peak of 695,000 since the start of the pandemic last March.

Retail sales have increased to a seasonally adjusted 5.3% in January, setting the stage for what could be the best year of economic growth in nearly four decades.

The latest round of $600 stimulus payments helped spark retail sales gain and the report shows that when fiscal aid “arrives to household balance sheets, it does get turned around fairly quickly and materializes in economic activity.”

Source: U.S. Commerce Department, Bloomberg

Regulation in the Time of Biden: Regtech Growth; Crypto and Continued AML Focus

The CFPB is expected to strengthen enforcement and increase fines. Regtechs that help lenders self-regulate and stay in good standing with the Justice Department stand to benefit.

The crypto industry is also likely to face much greater scrutiny with the new administration. Janet Yellen, the new Treasury Secretary has said, “I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”

Goldman Sachs Launches New Robo-Advisor, Marcus Invest

Goldman Sachs launched an automated investment tool, Marcus Invest, with a $1,000 account minimum and a 0.35% advisory fee. 

GS-Marcus is eschewing the self-directed gamified approach of RobinHood, choosing instead the robo-advisory strategy pioneered by fintechs such as Wealthfront and Betterment.

GS Head of Consumer and Wealth management division Stephanie Cohen said, “Goldman believes the best way to create wealth over time for most consumers is through diversified portfolios and that the firm didn’t design the app to drive user engagement”. 

Despite entering a crowded market, Marcus' robo-advisory offering is more accessible than other incumbents' and threatens to displace digital wealth managers.

Additional perspective on Marcus Invest from fintech advisor and commentator Jason Mikula. Some highlights:

There’s Room for a Few Winners in BNPL

Although competition in the buy now, pay later space is intensifying, the space is too big and diverse to have one POS lender dominate.

POS loans vary by different loan terms and purchase amounts, which makes buy now, pay later a loosely defined product. And while BNPL payment volumes are growing rapidly, they collectively represent just a couple percentage points of the rapidly growing global e-commerce spending.

For Affirm, a small number of major deals with marketplaces such as Shopify, have the potential to power big growth. Meanwhile PayPal continues to have vast growth potential as it integrates Pay in 4 into its existing checkout button and pricing across its platform of ~30 MMmerchants.  Furthermore, BNPL also is just one of a growing list of features for what PayPal terms its evolving consumer “super app,” like discounts, pay-with-rewards, crypto, bill payments and more.

Apple Pay Helps “Cheat” Banks out of $250 Bn

A study found 75% of Americans are using big tech and fintech to make their payments and manage their personal finance.

Consumer adoption of tech companies like Apple, Google, Amazon, Paypal, and Credit Karma has created over $250 Bn in payments displacement for banks. Most consumers don’t link their primary credit and debit cards to their mobile payment apps, effectively “cheating” on their primary payment providers.

Coinbase Valued at $77 Bn in Nasdaq Private Market

Coinbase is trading at a remarkable $77 Bn valuation, based on the value of their shares in the Nasdaq private market. This makes the startup’s value greater than Intercontinental Exchange Inc., the owner of NYSE. This new valuation was announced just around the time that Bitcoin surpassed $51k per coin.

Here is the bull case for Coinbase’s valuation for those interested.

SeedFi Secures $65 MM in Funding and Debt

The financial health startup led by CEO Jim McGinley raised $15 MM in Series A funding and $50 MM in debt. SeedFi strives to help consumers save money while improving their credit. Since inception in 2019, SeedFi has helped consumers build over $500k in savings.

The company will use the proceeds to grow its customer base as it continues to rollout products alongside banking partners like Cross River.


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