Investing in fintech: Trends in financial technology for investors and entrepreneurs
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Trends in FinTech An OurCrowd Briefing Zack Miller & Mick Weinstein
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Your Hosts
Mick Weinstein VP Marketing
BillGuard
Zack Miller Head of Investor
Community @ OurCrowd
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Focus tonight
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The History of FinTech Post-Internet
§ Broker on the phone >> Charles Schwab § Low cost passive investing via online ETFs >> fully
automated, low or no cost robo-management § Expensive, slow, inconvenient bank transfers >> fast,
cheap payments § Bank lending >> P2P debt financing § Private placements >> equity crowdfunding § Illiquid holdings & networks of friends >> new secondary
markets
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Asset Management / Robo-visers
$300M valuation Index, Ribbit, Greylock,
Benchmark
$75M valuation Canvas Ventures
Bessemer, Citi Ventures, NW Mutual
Institutional Venture Partners, Venrock,
BlackRock
JP Morgan, Goldman, Foundation Capital,
Norwest VP Union Square, Spark
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Asset Management / Robo-visers
§ Well-funded, maturing space § Competing on price § Are these creating new
services or simply replicating existing services online?
§ Another big challenge: is passive management going to zero cost?
» Lower costs >> bigger scale >> more data
» Big data world means that data will be a core corporate asset
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Content: 4 Different Approaches
Accel, Northwest Mutual
Union Square, Bain Capital Ventures
Steelpoint Partners
Accel, Benchmark
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Content: 4 Different Approaches
§ Differentiating and competing on product quality § Companies like SigFig (automated professional service)
and LearnVest (subscribing to advisers) are creating new business models to deliver financial services.
§ Can these sites be stand-alone traffic destinations?
§ UPDATE: Seeking Alpha broke up with Yahoo Finance yesterday
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Payments
Blumberg, Lool, Rhodium
Khosla, Sequoia, KPCB, Citi, Starbucks, Goldman, Morgan Stganley, Barclays, JP Morgan
Ebay - $1.5B acquisition
Greylock, Accel
Accel
Khosla, Founders Fund, Sequoia, General Catalyst,
Andreessen Horowitz
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Payments
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January 2008 – June 2013: VC Dollar Amount Share
Banking / CorpFin Capital Markets Data Analy@cs Payments PFM
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Payments
Starbucks processing 6M transactions/week (7/14)
70% + penetration in home market, rapidly growing across
Africa & Eastern Europe
Big entrants are expected to arrive soon
Approaching $1B market cap on NASDAQ
~$2B market cap on NASDAQ
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Today’s retail banking space § Bain & Co: “more than half” of
top 80 institutions are not meeting benchmarks consumers already expect from banks
§ Offline, inconvenient, expensive, low value-add
Retail Banking: slow adaptation to the Internet
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Simple’s Features: § Goals – ability to set daily
savings towards a goal § “Safe to spend” – bird’s-eye
view of spendable money given budgets, goals, cash flow, recurring charges, etc
Acquired by Intuit ~$170M
Retail Banking & Personal Finance Tech
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Retail Banking & Personal Finance Tech
Innovation Endeavors, Founders Fund, Khosla, Bessemer, OurCrowd
Benchmark, Shasta, First Round, Founders Fund – acquired, Intuit $170M
Acquired, Intuit $360M Sanford Weill, former CEO of Citibank
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§ Challenges of moving up the value chain
§ A very funded space, but relative to total possibilities maybe not
§ But: A lot of opportunities still exist with
Trend: Personal Finance Management Challenges
“PFM is dead”
SOURCE: http://bit.ly/ocfintech1
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Personal and SMB loans today: § Classic case of
middleman in an automatable process
§ Credit crunch despite increasing bank profits has material effect on job growth
P2P Debt Financing
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P2P Debt Financing
Sequoia, Blackrock, DFJ, Accel, Institutional Venture Partners
T. Rowe Price, Wellington, Blackrock, Sands Capital,
Norwest, Canaan, Union Square
Bessemer, Rothschild Family, Arrowgrass
Index Ventures, Accel, Union Square, Ribbit Capital
Greylock, Accel, Meritech
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Equity Crowdfunding
Angels
Google Ventures, Atlas, DFJ, KPCB, SV Angel, Floodgate
First Round, Y Combinator, Felicis, Spark, Intel Capital,
Andreessen Horowitz, General Catalyst, SV Angel
Canaan Partners, Google Ventures, Union Square, Maveron
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Equity Crowdfunding
Virgin America Partnership February 2014 Sharing hot consumer brands with Virgin Airline’s ameni7es procurement team
GE Ventures – OurCrowd Partnership November 2013 Exclusive dealflow sharing agreement allowing GE Ventures alloca7on in crowdfunding rounds
ZionTech – IBM Incubator Deal April 2014 IBM’s first accelerator in Israel opened in conjunc7on with ZionTech’s parent company, a bou7que investment firm ZionTechBlue Ini7a7ves
Unique products
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The Internet has changed (almost) everything in finance
§ Asset-ification of everything: » Unsecured personal loans » Bets & predictions in some niche futures/options markets » U-Haul investing club example
§ Internet finance 1.0 is now being disrupted by fintech 2.0 » Personal broker >> Charles Schwab >> Robo-Visors >> zero fee passive platforms
§ Who is disrupting who, though?
» Robo-visors claim to go after all passive investment firms, but are they going after anyone outside the low-cost, passive management firms like Vanguard?
§ Fintech is slower & more expensive to build
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Trend: Challenges in disrupting the bank
§ Simple and the like are skins on top of the UI of existing bank tech § A disruptive bank would be one that owns the full technology stack
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Trend: Investor Types
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Corporates are getting particularly active: § In 2013, corporate venture
funds invested more than traditional VCs in the fintech space
Fintech's star investor: Google Ventures (?!) § Angel List § CircleUp § Lending Club § LendUp
Trends: Who is investing?
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Trend: VC Money Into FinTech
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Banking / CorpFin Capital Markets Data Analy@cs Payments PFM
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Q&A Mick: [email protected] | @mickwe Zack: [email protected] | @newrulesinvest