Curve’s crowdfunding builds more crowd than funds

The track record of all-in-one cards is grim, but Curve contends the technology can be a viable competitor to neobanks or an accessory for open banking, checkout-free technology and crowdfunding.

The U.K.-based fintech is arguing that a recent crowdfunding campaign shows demand for its product, even though the amount it raised is well below funds obtained from VCs.

Curve reports it reached £1 million target in under 5 minutes, or about $1.268 million; with £4 million in 42 minutes ($5.2 million) and £6 million ($7.6 million) during the course of the campaign in September via the Crowdcube platform. The raise was much smaller than the typical VC investment, which can reach tens or even hundreds of millions of dollars. And while Curve has done traditional capital raises — it drew $55 million in a funding round this summer led by Gauss Ventures — the crowdfunding campaign was as much about raising an actual crowd.

“Almost 10,000 new investors (9,379) signed up to the round — that’s almost 10,000 Curve evangelists who now have a full stake in Curve all talking about the product, using the product, sharing the product,” said Amabel Polglase, head of brand at Curve.

There were skeptics of the crowdfunding round. The Financial Times, for example, criticized its level of disclosure. Curve counters it did disclose details, saying the round averaged 254 investors per minute in the first 10 minutes and was the highest number of investors for a Crowdcube campaign (Chip, a chatbot savings app, had 6,535).

“We are definitely seeing a significant rise in the use of crowdfunding as a way of raising funds for fintechs,” said James Black, counsel for Hogan Lovells International LLP in London. “Typically it is used as an additional fundraising tool, and primarily as a way of rewarding early adopters and driving customer engagement.”

But crowdfunding can’t replace venture capital, Black said. “The amounts that can be raised by tapping traditional sources still dwarf the sums being raised through crowdfunding.”

Curve contends the crowdfunding campaign served to boost downstream adoption. Investors who put in £10, or about $12.68, received a limited-edition red investor card, and those who invested £1,000 or more (approximately $1,268) received a limited-edition metal card, among other loyalty incentives.

Curve reports it has more than 580,000 customers, which is up from 100,000 in December 2018 for Curve’s all-in-one card, which launched in February 2018. The company says the crowdfunding, and the attention surrounding it, has helped contribute to a 30% month over month growth rate.

“The crowdfunding shows the buzz around the business,” Polglase said. “We also have a strong contingent of early adopters and innovators who like trying new stuff and being part of cool new tech. They are more susceptible to 'fear of missing out' and social proof."

Companies in the all-in-one card market have mostly sputtered, including Coin, Swyp, Stratos and Plastc. The idea has not died, as new companies continue to expect consumers will flock to one card that fills in for several, even though mobile wallets are a free version of the same idea.

The remaining companies like Edge, Curve and Dynamics have tried to broaden the idea beyond a centralized card that fits several cards, often latching onto current trends in retail or financial services as a hook. Dynamics, for example, has made installment payments part of its pitch by including it as part of a range of funding options. Edge has added P2P transfers, digital receipts and investing tools to its concept.

Curve is relying on open banking and parallel retail payment advancements such as Amazon Go-style checkout-free technology.

Curve is using PSD2, which mandates easier data sharing between banks and third parties such as payment apps, to improve access to different products and services. Many of the earlier attempts to provide all-in-one cards came before open banking became a global trend, and as such these cards did not have a regulatory environment that’s as amenable to centralizing multiple financial relationships in a consumer-directed app.

“Customers are now used to products and services that are mobile, seamless and frictionless and stored in one place,” Polglase said.

Curve has also added a network of more than 60 brands to a financial incentive marketing program, including Sainsbury's, which is adopting checkout-free technology, and Uber, which is noted for its “invisible” transaction experience. The program also includes Amazon, Transport for London, Apple, Netflix and Spotify—providing access to e-commerce and a brand network to offset the loss of Amex as partner earlier this year. Curve said it's not currently a partner with American Express, though it wants to resume that relationship. Amex confirmed it is not a current Curve partner.

The range of brands and retail technology can be served by the all-in-one model, Curve contends, because it encourages flexible funding options.

“Customers then have the ability to switch to whichever card they wish to use and then pay with their Curve card or use Curve’s patent-pending financial time travel capability,” Polglase said, adding that also lends to Curve’s “back in time” feature, which allows users to change a card used for a purchase for up to two weeks after the payment.