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Trends in FinTech
An OurCrowd Briefing
Zack Miller & Mick Weinstein
Your Hosts
Mick Weinstein
VP Marketing
BillGuard
Zack Miller
Head of Investor
Community @ OurCrowd
Focus tonight
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
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
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
Content: 4 Different Approaches
Accel, Northwest
Mutual
Union Square, Bain
Capital Ventures
Steelpoint Partners
Accel, Benchmark
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
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
Payments
10	
  
32	
  
28	
  
33	
  
23	
  
29	
  
10	
  
4	
  
11	
  
4	
  
9	
  
10	
  
6	
  
6	
  
7	
  
6	
  
10	
  
19	
  
70	
  
53	
  
50	
  
49	
  
46	
  
28	
  
5	
  
6	
  
5	
  
7	
  
12	
  
14	
  
2008	
  
2009	
  
2010	
  
2011	
  
2012	
  
2013	
  
January	
  2008	
  –	
  June	
  2013:	
  VC	
  Dollar	
  Amount	
  Share	
  
Banking	
  /	
  CorpFin	
   Capital	
  Markets	
   Data	
  Analy@cs	
   Payments	
   PFM	
  
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
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
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
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
§ 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
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
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
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
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	
  
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
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
Trend: Investor Types
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?
Trend: VC Money Into FinTech
17	
  
18	
  
22	
  
24	
  
18	
  
21	
  
9	
  
7	
  
14	
  
13	
  
14	
  
12	
  
13	
  
16	
  
10	
  
9	
  
12	
  
14	
  
53	
  
50	
  
43	
  
45	
  
47	
  
44	
  
9	
  
9	
  
11	
  
9	
  
9	
  
10	
  
2008	
  
2009	
  
2010	
  
2011	
  
2012	
  
2013	
  
January	
  2008	
  –	
  June	
  2013	
  VC	
  Deal	
  Share	
  
Banking	
  /	
  CorpFin	
   Capital	
  Markets	
   Data	
  Analy@cs	
   Payments	
   PFM	
  
Q&A
Mick: mick@billguard.com | @mickwe
Zack: zack@ourcrowd.com | @newrulesinvest

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Investing in fintech: Trends in financial technology for investors and entrepreneurs

  • 1. Trends in FinTech An OurCrowd Briefing Zack Miller & Mick Weinstein
  • 2. Your Hosts Mick Weinstein VP Marketing BillGuard Zack Miller Head of Investor Community @ OurCrowd
  • 4. 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
  • 5. 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
  • 6. 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
  • 7. Content: 4 Different Approaches Accel, Northwest Mutual Union Square, Bain Capital Ventures Steelpoint Partners Accel, Benchmark
  • 8. 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
  • 9. 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
  • 10. Payments 10   32   28   33   23   29   10   4   11   4   9   10   6   6   7   6   10   19   70   53   50   49   46   28   5   6   5   7   12   14   2008   2009   2010   2011   2012   2013   January  2008  –  June  2013:  VC  Dollar  Amount  Share   Banking  /  CorpFin   Capital  Markets   Data  Analy@cs   Payments   PFM  
  • 11. 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
  • 12. 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
  • 13. 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
  • 14. 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
  • 15. § 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
  • 16. 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
  • 17. 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
  • 18. 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
  • 19. 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  
  • 20. 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
  • 21. 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
  • 23. 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?
  • 24. Trend: VC Money Into FinTech 17   18   22   24   18   21   9   7   14   13   14   12   13   16   10   9   12   14   53   50   43   45   47   44   9   9   11   9   9   10   2008   2009   2010   2011   2012   2013   January  2008  –  June  2013  VC  Deal  Share   Banking  /  CorpFin   Capital  Markets   Data  Analy@cs   Payments   PFM  
  • 25. Q&A Mick: mick@billguard.com | @mickwe Zack: zack@ourcrowd.com | @newrulesinvest