The Right to Be Banked: How fintech entrepreneurs can benefit from a financial inclusion law

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Guest Commentary: Fintech entrepreneurs in the US face many challenges when taking their products to market. They have to contend with outdated regulations that sometimes leave them operating in a legal gray area. Then there is the less-discussed issue of banks denying startups access to essential services, like an account. In most cases, this is due to banks being risk-averse. Startups bringing innovative financial products to the market could exhibit unusual account activities that might prompt the bank’s risk team to close the account.

But for startups funded by top-tier VC firms, banks have created a concierge-type service, assigning them with an account manager that liaisons with other departments to ensure they can operate unimpeded. The unintended consequence of this exclusivity is a rigged market where banks choose the winners and losers in the fintech space. Startups directly competing with the bank’s products, women, and entrepreneurs of color (EoC) that are less likely to be funded by a VC are denied accounts and thus prevented from taking their product to market.

The Right to Be Banked Campaign is seeking to pass a financial inclusion law in Washington State. The law will ensure that individuals and businesses that have the appropriate licenses can get a bank account. Startups that are offering innovative financial products or are deemed to be “high risk” by the banks can request inclusion in a regulatory sandbox. This will allow regulators to monitor the startup in a controlled environment while protecting the bank.

The UK and European Union have been more proactive than the US in promoting innovation in the financial space. The UK’s Financial Conduct Authority (FAC) launched its regulatory sandbox in 2016, and the EU is finalizing the legal framework for theirs. These efforts are evident with how many UK fintech startups have successfully expanded to the US and overtaken their US counterparts. Three out of the four top remittance startups worldwide started in the UK.

Roble Musse

I was the CEO of CoinFling, a fintech startup that had to shut its doors in 2018 because no bank would open an account with us. These same banks, however, were serving our venture-backed competitor, which is also Seattle-based. I recall pleading with an account manager at Wells Fargo to take us through the same due diligence. After all, both companies had been audited and licensed by the same regulator — the Department of Financial Institutions (DFI). My plea fell on deaf ears. So much for fair banking.

The denial of accounts is not limited to fintech startups. Cash-based remittance service providers, which are mostly owned by immigrants, have seen their accounts closed through a process known as bank de-risking. These businesses must then store and transport millions of dollars in cash at great risk to the owners and their employees. This has caused a public safety crisis for immigrant communities in King County and across the US. In 2018, a man received five years in prison for iimpersonating an FBI agent and robbing several remittance businesses in Seattle and SeaTac of hundreds of thousands of dollars.

In the last several weeks, the campaign has gained momentum with the City Councils of Seattle, Burien, and Tukwila unanimously passing resolutions in support of unbanked businesses and the immigrant communities that rely on their services.

We call on Gov. Jay Inslee and the Washington State Legislature to explore actions they can take to promote financial inclusion, including passing a law that will ensure that all Washingtonians have equal access to the banking system.

Bank de-risking also needs to be addressed at the federal level. Federally chartered banks have played a prominent role in redlining fintech startups and businesses owned by women and EoC. With the administering of COVID-19 federal assistance to small businesses through these banks, it is incumbent on Congress to ensure that banks provide equal access to their services.

A financial inclusion law in Washington State will democratize the process of bringing innovative financial products to the market. It can also lower the wealth inequality gap by creating opportunities for black and immigrant entrepreneurs.

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Napster’s acquisition by MelodyVR promises to lift a financial weight for Seattle’s RealNetworks

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MelodyVR Group’s deal to acquire music service Napster, announced early this morning, could be a financial boon for RealNetworks, and not just because of the $70 million purchase price.

RealNetworks, the Seattle-based digital media company, currently owns 84% of Napster. The announced $70 million purchase price actually includes just $15 million in cash, and $11 million in Melody VR stock. The deal consists largely of MelodyVR’s assumption of $44 million in payment obligations, “primarily to various music industry entities,” according to a RealNetworks statement.

The company’s precise share of the cash hasn’t yet been disclosed, and RealNetworks cautions that the amount is subject to a variety of contingencies and obligations.

But it could still be meaningful, given its current cash position. RealNetworks reported $19.7 million in cash and equivalents as of June 30, according to the company’s latest earnings report. That was after its cash balance was boosted by a $2.87 million Payment Protection Program loan in April, and a $10 million investment from RealNetworks CEO Rob Glaser in February.

Longer term, the sale of Napster could remove a weight from RealNetworks’ bottom line, and give the company more breathing room to focus on areas where it sees potential growth, including games and facial recognition technology. Napster was the largest RealNetworks segment by revenue, $23.3 million in the quarter ended June 30. However, its financials also reflected the challenges of the music business, with Napster posting an operating loss of more than $2 million in the same time period.

The company overall posted an operating loss of $4.9 million for the quarter. Its consumer media and games divisions posted operating profits of $436,000 and $531,000, respectively, while its mobile services division posted an operating loss of $1 million. (Another $2.8 million of the quarterly operating loss was attributed to corporate operating expenses.)

RealNetworks shares closed up 6% today, at $1.35/share, following the Napster acquisition announcement.

MelodyVR, which specializes in live virtual reality music experiences, is making a bigger strategic bet with Napster, saying in a news release that the acquisition “will enable the creation of a unique music platform that will offer both immersive live performances and music streaming – for the first time ever.”

The acquisition is scheduled to close in the fourth quarter. RealNetworks says it will give more details on the financial implications of the transaction during its next quarterly earnings call in November, or sooner, depending on when the acquisition closes.

RealNetworks CEO Rob Glaser in 2017. (GeekWire Photo / Nat Levy)

RealNetworks has undergone many shifts and pivots over the years as it looks to regain the prominence it had in the late 1990s as a pioneer in streaming music buoyed by its flagship RealPlayer product. It was flush with cash following a $761 million antitrust settlement with Microsoft, Glaser’s former employer, in 2005.

Looking ahead, Glaser said in a statement that RealNetworks will focus on its “primary growth initiatives,” including its SAFR computer vision and facial recognition platform, and its GameHouse casual games business.

The Napster brand rose to fame and controversy as a peer-to-peer file sharing site that was ultimately shut down by court order for its role in the spread of pirated music. It was later reincarnated as traditional music streaming site, and acquired by Seattle-based Rhapsody International in 2011. At that point, RealNetworks had spun out Rhapsody as a standalone company, maintaining a minority stake. Napster later replaced the Rhapsody brand, and RealNetworks retook majority ownership of the company last year.

“Rhapsody and Napster have travelled a long and winding road,” Glaser said in the statement, noting that RealNetworks first got involved in the business when it acquired Listen.com in 2003.

“We are proud of our stewardship of this pioneering business and iconic brand, and grateful for the hard work by the entire Napster team to keep the torch alive all of these years,” Glaser said. “We’re delighted to pass the baton to (MelodyVR CEO) Anthony Matchett and the innovative team at MelodyVR. We’ll continue to root for Napster and are pleased that we’ll be ongoing stakeholders in MelodyVR’s success.”

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Electronic Arts Reports Strong Q1 FY21 Financial Results

REDWOOD CITY, Calif.–(BUSINESS WIRE)–Electronic Arts Inc. (NASDAQ: EA) today announced preliminary financial results for its first fiscal quarter ended June 30, 2020.

“This was an extraordinary quarter, and we’re deeply proud of everything our teams at Electronic Arts are doing for our players and communities,” said CEO Andrew Wilson. “We launched new games, deeply engaged players in our live services, and welcomed tens of millions of new players to our network. It was an unprecedented first quarter of growth in our business, and we will continue building on that strength with more innovative experiences, more groundbreaking content, and more ways to connect with friends and play great games throughout the year.”

“Player engagement through the first quarter was exceptionally high, and well above our forecast,” said COO and CFO Blake Jorgensen. “Our Stay Home, Play Together initiatives have been a strong tailwind for the business, as players look for safe and social entertainment in these difficult times. We are focused on delivering high quality titles for our players, combined with our incredible ongoing live services and increasing reach across platforms and geographies which should continue to expand our business over time.”

News and ongoing updates regarding EA and its games are available on EA’s blog at http://www.ea.com/news.

Selected Operating Highlights and Metrics

Net bookings* for the trailing twelve months was $5.980 billion, up 17% year-over-year.Launched Command & ConquerTM Remastered and Burnout ParadiseTM Remastered during the quarter.During the quarter, EA delivered over 30 new content updates, including two major game expansions, and more than 50 mobile updates.Launched nearly 30 titles on the Steam platform during the quarter.During the quarter, Apex LegendsTM launched Season 5 with engagement reaching its highest levels since Season 1.During the quarter, player acquisition for FIFA was up more than 100% year-over-year and up nearly 140% year-over-year in Madden NFL.Life to date, The Sims 4TM has more than 30 million players across all platforms; daily, weekly, and monthly active player totals reached record highs for a first quarter.

* Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net revenue for online-enabled games.

Selected Financial Highlights and Metrics

Net cash provided by operating activities was $378 million for the quarter and a record $2.017 billion for the trailing twelve months.EA repurchased approximately 747,000 shares for $78 million during the quarter, completing its $2.4 billion, two-year repurchase program.

Quarterly Financial Highlights

The following GAAP-based financial data and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results:

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2020.

Financial Highlights for the Trailing Twelve Months

The following GAAP-based financial data and tax rate of 18% was used internally by company management to adjust its GAAP results in order to assess EA’s operating results:

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2020.

Operating Metric

The following is a calculation of our total net bookings for the periods presented:

Business Outlook as of July 30, 2020

The following forward-looking statements reflect expectations as of July 30, 2020. Electronic Arts assumes no obligation to update these statements. Results may be materially different and are affected by many factors detailed in this release and in EA’s annual and quarterly SEC filings.

Fiscal Year 2021 Expectations – Ending March 31, 2021

Financial metrics:

Net revenue is expected to be approximately $5.625 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $325 million.Net income is expected to be approximately $869 million.Diluted earnings per share is expected to be approximately $2.97.Operating cash flow is expected to be approximately $1.850 billion.The Company estimates a share count of 293 million for purposes of calculating fiscal year 2021 diluted earnings per share.

Operational metric:

Net bookings is expected to be approximately $5.950 billion.

In addition, the following outlook for GAAP-based financial data and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:

Second Quarter Fiscal Year 2021 Expectations – Ending September 30, 2020

Financial metrics:

Net revenue is expected to be approximately $1.125 billion. Change in deferred net revenue (online-enabled games) is expected to be approximately $(250) million.Net income is expected to be approximately $61 million.Diluted earnings per share is expected to be approximately $0.21.The Company estimates a share count of 293 million for purposes of calculating second quarter fiscal year 2021 diluted earnings per share. If the Company reports a net loss instead of net income, a basic share count for calculating earnings per share would be 289 million shares.

Operational metric:

Net bookings is expected to be approximately $875 million.

As previously announced, Madden NFL 21 will launch on August 28, 2020 and FIFA 21 will launch on October 9, 2020, moving FIFA 21 out of the second fiscal quarter and into the beginning of the third fiscal quarter. These launch dates affect the original estimated phasing of net revenue and net bookings as well as the year-over-year quarterly comparison. Refer to the slide presentation on EA’s IR website for additional details.

In addition, the following outlook for GAAP-based financial data and a long-term tax rate of 18% are used internally by EA to adjust our GAAP expectations to assess EA’s operating results and plan for future periods:

For more information about the nature of the GAAP-based financial data, please refer to EA’s Form 10-K for the fiscal year ended March 31, 2020.

Conference Call and Supporting Documents

Electronic Arts will host a conference call on July 30, 2020 at 2:00 pm PT (5:00 pm ET) to review its results for the first fiscal quarter ended June 30, 2020 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number (866) 324-3683 (domestic) or (509) 844-0959 (international), using the conference code 5955287 or via webcast at EA’s IR Website at http://ir.ea.com.

EA has posted a slide presentation with a financial model of EA’s historical results and guidance on EA’s IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA’s IR Website.

A dial-in replay of the conference call will be available until August 13, 2020 at 855-859-2056 (domestic) or 404-537-3406 (international) using pin code 5955287. An audio webcast replay of the conference call will be available for one year on EA’s IR Website.

Forward-Looking Statements

Some statements set forth in this release, including the information relating to EA’s fiscal 2021 expectations under the heading “Business Outlook as of July 30, 2020,” and other information regarding EA’s fiscal 2021 expectations contain forward-looking statements that are subject to change. Statements including words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “plan,” “predict,” “seek,” “goal,” “will,” “may,” “likely,” “should,” “could” (and the negative of any of these terms), “future” and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management’s current expectations. Our actual results could differ materially from those discussed in the forward-looking statements.

Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: the impact of the COVID-19 pandemic, sales of the Company’s products and services; the Company’s ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company’s sales and marketing programs; timely development and release of the Company’s products and services; the Company’s ability to realize the anticipated benefits of acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company’s ability to predict consumer preferences among competing platforms; the Company’s ability to develop and implement new technology; foreign currency exchange rate fluctuations; general economic conditions; changes in our tax rates or tax laws; and other factors described in Part I, Item 1A of Electronic Arts’ latest Annual Report on Form 10-K under the heading “Risk Factors”, as well as in other documents we have filed with the Securities and Exchange Commission.

These forward-looking statements are current as of July 30, 2020. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts.

While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2020. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended June 30, 2020.

About Electronic Arts

Electronic Arts (NASDAQ: EA) is a global leader in digital interactive entertainment. The Company develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers.

In fiscal year 2020, EA posted GAAP net revenue of $5.5 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS FIFA, Battlefield, Apex Legends, The Sims, Madden NFL, Need for Speed, Titanfall and Plants vs. Zombies. More information about EA is available at http://www.ea.com/news.

EA SPORTS, Command & Conquer, Burnout Paradise, Battlefield, Need for Speed, Apex Legends, The Sims and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL and FIFA are the property of their respective owners and used with permission.

Results (in $ millions, except per share data)

The following table reports the variance of the actuals versus our guidance provided on May 5, 2020 for the three months ended June 30, 2020 plus a comparison to the actuals for the three months ended June 30, 2019.

Contacts

For additional information, please contact:

Chris Evenden
Vice President, Investor Relations
650-628-0255
cevenden@ea.com

John Reseburg
Vice President, Corporate Communications
650-628-3601
jreseburg@ea.com

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Fintech startup Jirav raises $8.3M for financial planning and analysis software

San Francisco-based startup Jirav raised $8.3 million for its cloud-based financial planning software.

Founded in 2015, the company helps more than 1,400 customers monitor, analyze, and forecast their finances. The startup has 30 employees, including five people in Seattle.

Information Venture Partners led the round, which included participation from Bend, Ore.-based Seven Peaks Ventures and others. Total funding to date is $13.6 million.

“Good technology should remove friction and make our jobs easier. Jirav is doing that for finance,” Tom Gonser, DocuSign co-founder and general partner at Seven Peaks.

Jirav is led by co-founder and CEO Martin Zych, a University of Washington grad who was previously worked at Atlas Accelerator, Limeade, and Zephyr Health. He co-founded the company with Steven Turner. a veteran of Genesys, Alcatel-Lucent, LiveVox, and Zephyr Health.

Celebrate the leading innovators, entrepreneurs, and technologists at the 2020 GeekWire Awards, livestreaming on GeekWire.com starting at 4 p.m. on Thursday, July 23. 

Don’t miss one of the region’s most-anticipated and hotly-contested tech events. 

Thanks to presenting sponsor Wave Business for supporting us as we’ve transitioned to a virtual event. 

Register today

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