In a tumultuous year for the banking-as-a-service (BaaS) industry, Synapse has filed for Chapter 11 bankruptcy and its assets will be acquired by TabaPay. The deal is pending bankruptcy court approval.
Synapse’s Struggles
Founded in 2014 by Bryan Keltner and India-born CEO Sankaet Pathak, San Francisco-based Synapse operated a platform enabling banks and fintech companies to develop financial services. In 2020, the company raised $30 million in Series C funding, but it seems that wasn’t enough to sustain its growth.
According to reports, Synapse’s struggles began when several of its investors filed lawsuits against the company, including FTV Capital, which demanded its money back. The case was settled out of court, and FTV is no longer involved with the business.
TabaPay Acquisition
In a surprising move, TabaPay has agreed to acquire Synapse’s assets in a deal that is pending bankruptcy court approval. TabaPay is a BaaS provider that offers a range of financial services, including payment processing, lending, and digital banking.
The acquisition marks a significant shift in the BaaS industry, as larger players like FIS are also making moves to expand their offerings through acquisitions. Last June, FIS acquired Bond, a startup specializing in embedded finance.
Industry Trends
The BaaS market has seen significant growth in recent years, with companies like Synapse and TabaPay leading the charge. However, the industry is not without its challenges, including intense competition, regulatory hurdles, and funding constraints.
Despite these challenges, many experts believe that the BaaS market will continue to grow, driven by increasing demand for digital financial services and the need for banks and fintech companies to collaborate on innovation.
M&A Activity in Fintech
The Synapse-TabaPay deal is just one example of the significant M&A activity happening in the fintech industry. Last year saw several high-profile acquisitions, including FIS’s acquisition of Bond and the sale of online lender Lending Club to GTCR.
As the BaaS market continues to evolve, it will be interesting to see how these deals shape the future of the industry.
Timeline
- 2014: Synapse is founded by Bryan Keltner and Sankaet Pathak
- 2020: Synapse raises $30 million in Series C funding
- October 2022: FTV Capital files lawsuit against Synapse
- January 2023: Synapse files for Chapter 11 bankruptcy
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About the Authors
Mary Ann Azevedo is a senior reporter at TechCrunch, covering fintech and venture capital. She has more than 20 years of business reporting and editing experience for publications such as FinLedger, Crunchbase News, Crain, Forbes, and Silicon Valley Business Journal.
Christine Hall is a senior reporter at TechCrunch, covering enterprise/B2B, e-commerce, and foodtech for TechCrunch, and venture capital rounds for Crunchbase News.
