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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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

Page 1: Investing in fintech: Trends in financial technology for investors and entrepreneurs

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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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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Q&A Mick: [email protected] | @mickwe Zack: [email protected] | @newrulesinvest