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

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    11-Aug-2014
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Join Zack Miller, Head of the Investor Community at OurCrowd, and Mick Weinstein, VP of Marketing at BIllGuard for an in depth discussion of the recent trends and opportunities in the dynamic financial technology industry. Zack and Mick have both helped build some of the top companies in the space including Seeking Alpha, Covestor, OurCrowd, BillGuard, Lending Club, SigFig and more. Join us to learn about: How top investors and entrepreneurs think about the entire fintech ecosystem, from online asset management, to financial content, to consumer finance apps, and crowdfunding. Which business models are taking hold and their future prospects. The challenges and opportunities for investing and building a valuable company in the financial space.

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

  • 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
  • Todays 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
  • Simples Features: Goals ability to set daily savings towards a goal Safe to spend birds-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 Airlines ameni7es procurement team GE Ventures OurCrowd Partnership November 2013 Exclusive dealow sharing agreement allowing GE Ventures alloca7on in crowdfunding rounds ZionTech IBM Incubator Deal April 2014 IBMs rst accelerator in Israel opened in conjunc7on with ZionTechs parent company, a bou7que investment rm 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