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_Welcome back to The Interchange, where we take a look at the hottest fintech news of the previous week. This week, we take a look at one startup layoff, another offering an employee

ownership buyout option, and much more. If you want to receive The Interchange directly in your inbox every Sunday, head here to sign up!_ FROM A $2B+ VALUATION TO ROUND AFTER ROUND OF

LAYOFFS Last week, I reported on DIVVY HOMES’ third round of layoffs in a year’s time. It was the latest casualty in a beaten down real estate tech sector. I first wrote about rent-to-own

startup Divvy Homes in September 2019 when it announced a $43 million Series B round to help in its mission to help more Americans “move from renters to [home]owners.” I then covered the

company’s $110 million Series C in February of 2021. Of course, at that time, it was a very different housing market. Interest rates were still relatively low and while markets were tight,

people were still buying homes. Like most companies, Divvy was initially unsure as to how the COVID-19 pandemic would impact its business. But as 2020 went on — and the whole world spent

more time at home than ever — Divvy said it only saw increased demand. So much so that the startup managed to raise another $200 million, just six months later, at an estimated $2.3 billion

valuation. Fast-forward to 2022. Mortgage rates had doubled and fewer people were putting their homes on the market or looking to buy a home. For a company like Divvy, whose business model

involves purchasing homes and then renting them to people aiming to build equity, it was not a positive development. Rising interest rates meant that the company likely had to charge more in

rent to cover the mortgages it had taken out. So it’s no surprise that in 2022, both Fast Company and the New York Times reported that Divvy was supposedly charging higher rents than other

landlords in some markets. It’s also not shocking that the startup laid off about 40 people in September 2022. But that was just the beginning. In February 2023, the company let go of more

workers. And last week, I reported on it laying off 94 employees, or about half its staff. Again, not a surprise considering that mortgage interest rates recently reached their highest

levels in more than two decades. The company declined to comment when I reached out, with my email to executives and the media relations team going unanswered. A WARN letter viewed by

TechCrunch stated that the job cuts affected people working in a wide range of roles, including the vice presidents of sales, compliance, people and comms/PR, as well as a senior recruiter,

a number of software engineers and account executives. The real estate tech, or proptech sector, has taken a big hit as mortgage interest rates have surged. Layoffs have abounded at both

publicly traded companies such as Opendoor, Compass and Redfin and startups such as Better.com (which recently went public itself) and Homeward. Other startups didn’t survive at all. Reali

announced in August 2022 it had begun a shutdown and would be laying off most of its workforce by the next month. Real estate is a fascinating space since we’re all affected by it in one way

or another. (Did you know I was a real estate reporter in a former life?!) While it’s not good to see startups laying off or shutting down, it’s unfortunately part of the cycles the

industry regularly goes through. There are always ups and downs. Sometimes it’s a seller’s market. Sometimes it’s a buyer’s market. Sometimes it’s cheaper to rent. Sometimes it’s cheaper to

own. Only one thing is certain: There’s never a dull day when covering this space. — Mary Ann (OPENS IN A NEW WIA NEW BUYOUT OPTION FOR EMPLOYEES There are a number of reasons why a small

business might need to transition to a new owner. And while startups, like Teamshares, have a lock on acquiring companies that don’t have succession plans, that might not always be what a

company needs. Last week I wrote about COMMON TRUST, a startup offering an employee ownership buyout option. The company recently raised $2.6 million in seed funding in a round led by

Crossbeam Venture Partners. Zoe Schlag and Derek Razo founded the company in 2022 with the idea that employees often want to stay at a company with a great corporate culture and history of

helping customers. At Common Trust’s core is a unique legal vehicle called a perpetual purpose trust that enables small businesses to exit while also remaining independent. “Employee

ownership is the most scalable approach to serve this market, preserving generational businesses and quality jobs in cities and towns across America, and can be achieved at a fraction of the

cost that brokers are charging, typically 10% of the transaction,” Schlag said in an email interview. Read more. — Christine WEEKLY NEWS As reported by Zack Whittaker: “SQUARE said there

was ‘no evidence’ a cyberattack caused an outage that left customers and small businesses unable to use the payment giant’s technology on Thursday through early Friday. The payments

technology giant said in a postmortem of the daylong outage that the outage was caused by a DNS issue. DNS, or domain name system, is the global protocol that converts human-readable web

addresses into IP addresses, which allow computers to find and load websites from all over the world.” More here. In a guest post, NAVAN’s Michael Sindicich writes that “fintech faces a

reckoning. Over the past two years, central banks have hiked interest rates from their COVID-era lows to the highest levels for a generation. And now the business models that won consumers’

affection look increasingly tenuous. It’s only a matter of time until the house of cards collapses.” More here. CITIZENS BANK is launching a new startup-focused private bank. Mary Ann talked

at length with Sam Heshmati, who joined the institution as its head of emerging VC and innovation banking in July. Heshmati had worked at First Republic Bank for more than a decade and

helped launch its startup practice. He details what it was like to witness First Republic’s collapse from the inside, as well as how Citizens aims to become the “‘go to bank’ for the

innovation sector.” More here. OTHER ITEMS WE ARE READING: How Charlie Javice got JPMorgan to pay $175M for … what exactly? Deel changes terms of service, cuts off high-risk trading sites

Britain’s $4.5B digital bank Monzo debuts investments feature Fountain offers integration with payments platform Branch Everyware taps Visa Direct and launches Instant Payouts Episode Six

Debuts BNPL plan as companies hunt working capital Chase Payment Solutions partners with Gusto to add payroll FUNDRAISING AND M&A _Seen on TechCrunch_ Perfios raises $229M for its

real-time credit underwriting solutions Swan secures $40M to bring embedded banking to Europe Parallax removes the friction from cross-border payments Alza emerges from stealth to offer

affordable and inclusive financial tools to immigrants  _Seen elsewhere_ Home insurtech Kin reaches $1B valuation Treasury4 raises $20M in new capital CLARA Analytics raises $24M in Series C

funding Exclusive: a16z leads $17M deal in bond trading startup Software development startup Caliza raises $5.3M and launches in Brazil N5 raises funding Spring Activator acquires Future

Capital to expand impact investing DISCOVER THE FINTECH STAGE AT DISRUPT 2023 Check out the Fintech Stage at TechCrunch Disrupt 2023, taking place in San Francisco on September 19–21, where

we cover web3, banking, and more. Last-minute passes are still available. Save 15% with code INTERCHANGE. REGISTER NOW!