INSUBCONTINENT EXCLUSIVE:
The fintech wars continue to heat up with another major exit in the space.Consumer financial services platform SoFi announced today that it
is acquiring payments and bank account infrastructure company Galileo for $1.2 billion in total cash and stock
The acquisition is dependent on customary closing conditions.Salt Lake City-based Galileo was founded in 2000 by Clay Wilkes and was
bootstrapped to profitability over the intervening two decades
My colleague Jon Shieber wrote a profile of Galileo back in November after the company announced its second round of external funding, a $77
million Series A check from Accel, which was led by growth partner John Locke
The company had previously raised an $8 million Series A round from Mercato Partners in April 2014.Galileo provides APIs that allow fintech
companies like Monzo and Chime to easily create bank accounts and issue physical and virtual credit cards, among myriad other services
While simple in theory, banking regulations and financial rules place a huge regulatory burden on fintech companies, burdens that Galileo
offer it another revenue source outside of consumer services
While SoFi was founded a decade ago to offer ways to secure better financial terms for student loans, it now offers a bevy of consumer
financial options, including loan, investment and insurance products as well as cash and wealth management tools
With Galileo, it now has a clear B2B revenue component as well.SoFi, which is now led by ex-Twitter COO Anthony Noto, has also raised
hundreds of millions of new capital from the likes of Qatar in recent years
The company was most recently valued at $4.3 billion.Galileo will operate as an independent division of SoFi, and will be continuing its
operations with founder Wilkes remaining as chief executive.As fintech valuations have rapidly expanded in recent years, the companies that
empower those fintechs have increasingly become strategic for investors
Earlier this year, Visa bought Plaid for $5.3 billion, in what was considered a key exit for a finance infrastructure company
That exit brought acute investor and strategic interest to the space, interest that almost certainly accrued to Galileo, as well, and helps
mostly bootstrapped companies, sometimes a decade or more after their founding, with examples outside of Galileo including 1Password,
Qualtrics, Atlassian, GoFundMe and Tenable
Given that the acquisition of Galileo was for cash and stock, Accel likely now holds a stake in SoFi, making at least part of the return
unrealized.Galileo was represented by Qatalyst in the transaction.Updated April 7 to include the $8 million Series A funding round led by
Mercato Partners and more context on IRR.
