INSUBCONTINENT EXCLUSIVE:
Over the past several years, ‘fintech& has quietly become the unsung darling of venture
A rapidly swelling pool of new startups is taking aim at the large incumbent institutions, complex processes and outdated unfriendly
interfaces that mar billion dollar financial services verticals, such as insurtech, consumer lending, personal finance, or otherwise.
In
just the past summer, the startup community saw a multitude of hundred-million dollar fintech fundraises
In 2018, fintech companies were the source of close to 1,300 venture deals worth over $15 billion in North America and Europe alone
according to data from Pitchbook
Over the same period, KPMG estimates that over $52 billion in investment pour into fintech initiatives globally.
With the non-stop stream of
venture capital flowing into the never-ending list of spaces that fall under the ‘fintech& umbrella, we asked 12 leading fintech VCs who
work at firms that span early to growth stages to share where they see the most opportunity and how they see the market evolving over the
long-term.
Charles Birnbaum, Partner at Bessemer Venture Partners
Ian Sigalow, Co-founder - Partner at Greycroft
Matt Harris, Partner at
Bain Capital Ventures
Angela Strange, General Partner at Andreessen Horowitz.
Adam Valkin, Managing Director at General Catalyst
Rob Moffat,
Partner at Balderton Capital
Brendan Dickinson, Partner at Canaan Partners
Manuel Silva, Partner at Santander InnoVentures
Ruth Foxe Blader,
Managing Director at Anthemis
Sean Park, Chief Investment Officer at Anthemis
Amol Helekar, Principal at TCV
Jim Robinson, General Partner
at RRE Ventures
The participants touched on a number of key trends in the space, including rapid innovation in fintech infrastructure,
fintech companies embedding themselves in specific verticals and platforms, rebundling and unbundling of financial services offerings, the
rise of challenger banks and the state of fintech valuations into 2020.
Charles Birnbaum, Partner, Bessemer Venture Partners
The great
‘rebundling& of fintech innovation is in full swing
The emerging consumer leaders in fintech — Chime, SoFi, Robinhood, Credit Karma, and Bessemer portfolio company Betterment — are moving
quickly to increase their share of wallet with their valuable customers and become a one-stop-shop for people financial lives.
In 2020, we
anticipate continued entrepreneurial activity and investor enthusiasm around the infrastructure and middleware layers within the fintech
ecosystem that are enabling further rebundling and a rapid convergence of product themes and business models across the consumer fintech
landscape.
Many players now look like potential challenger bank models more akin to what we have seen unfold in Europe the past few years
Within consumer fintech, we at Bessemer are more focused on demographically-specific product offerings that tap into underserved themes,
whether that be the financial problems facing the aging population in the US or new models to serve the underbanked or underserved
population of consumers and small businesses.
Ian Sigalow, Co-founder - Partner, Greycroft
What trends are you most excited in fintech from
an investing perspective?
I suspect that many enterprise software companies become fintech companies over time — collecting payments on
behalf of customers and growing revenues as your customers grow
We have seen this trend in many industries over the past few years
Business owners generally prefer a model that moves IT expenditures from Operating Expenses into Cost of Goods Sold, because they can
increase prices and pass their entire budget onto the customer.
On the consumer side, we have already made investments in branchless
banking, insurance (auto, home, health, workers comp), cross-border payments, alternative investments, loyalty cards/services, and
The companies we funded are already a few years old, and I think we will have some interesting follow-on activity there over the next few
We have been picking spots where we think we have an unfair competitive advantage.
Our fintech portfolio is also more global than other
This is because there are opportunities to achieve billion dollar outcomes in fintech, even in countries that are much smaller than the
That is not true in many other sectors.
We have also seen trends emerge in the US and move abroad
As an example we seeded Flutterwave, which is similar to Stripe, and they have expanded across Africa
We were also the lead investor in Yeahka, which is similar to Square in China
These products are heavily localized —tin for instance Yeahka is the largest processor of QR code payments in the world, but QR code
payments are not popular in the US yet.
How much time are you spending on fintech right now? Is the market under-heated, over-heated, or
just right?
Fintech is about a quarter of my time right now
We continue to see interesting new ideas and the valuations have been more or less consistent over time
The broader market doesn&t impact us very much because we tend to have a 10 year holding period.
Are there startups that you wish you would
see in the industry but don&t?
