[6 min read]

With $5.3B+ being poured into 360+ deals, FinTech seems to be a favourite among investors. Here are a few quick bits on the FinTech funding scene. This piece is based on Neha Singh’s talk at the August Edition of Startup Saturday, Neha is the co-founder of research and analytics firm Tracxn[More on them below]

Investment themes:

1. P2P Lending Platforms for Unsecured Personal Loans

Platforms that facilitate peer-to-peer lending without collateral requirements. A significant proportion of the population globally isn’t considered creditworthy by traditional institutions due to the lack of a credit score. These startups use alternative credit scoring models to gauge risk for lending.

Deals in the last 24 months: $762M in funding across 54 deals

Notable investments: $300M PE round in Pave by Seer Capital. $200M PE round in Harmoney by P2P Global.

2. Robo Advisors

Platforms providing low-cost, automated wealth management solutions to individual investors.

Deals in the last 24 months: $978M in funding across 15 deals

Notable investments: $115M Series E Round in Personal Capital led by IGM Financials. $100M Series E Round in Betterment led by Kinnevik, Bessemer, Menlo Ventures, Anthemis Group.

3. API based Payment Gateway

Payment gateways that can be integrated with websites to accept payments.

Deals in the last 24 months: $484M in funding across 40 deals

Notable investments: $172M Series D Round in Stripe led by Sequoia, GC and Capital G. $150M Series C Round in Billdesk led by Temasek and General Atlantic.

4. Real Estate Investment Platforms

Platforms that facilitate fractional investment in the real-estate sector for individual investors and financial institutions. This way risk is distributed.

Deals in the last 24 months: $279M in funding across 42 deals

Notable investments: $65M Series C Round in Cadre led by Andreessen Horowitz, Ford Foundation, General Catalyst, Goldman Sachs and Khosla Ventures.

5. Insurance Comparison Platforms

Insurance quote aggregators. Platforms which offer quotes for comparison from various insurance providers.

Deals in the last 24 months: $393M in funding across 69 deals

Notable investments: $45M Series D Round in Trov led by Oak HC/FT, Suncorp Group, Anthemis and Munich Re. $33M Series C Round in Coverhound led by Ace Group, RRE, Blumberg and Route 66.

6. Marketplace Lending Platforms for Purchase Financing

Platforms that enable consumers to borrow from financial institutions while making purchases at online and offline points of sale.

Deals in the last 24 months: $620M in funding across 52 deals

Notable investments: $126M Series B in Bread Finance led by Menlo, RRE, Bessemer. $100M Series D in Affirm by Founders Fund, A16Z, LSVP, Khosla Ventures.

7. Internet-First Personal Health Insurers

Online-first insurers offering health insurance. Complicated application and claims processes have lead to insurance industries having one of the lowest satisfaction rates. Internet first insurers provide a painless experience for the users by streamlining the application and claim processes.

Deals in the last 24 months: $1.2B in funding across 17 deals

Notable investments: $400M PE Round in Oscar led by Fidelity, General Catalyst, Founders Fund, Khosla Ventures, PingAn Ventures. $160M Series C in Clover Health led by Greenoaks, Sequoia, Spark and Nexus.

8. Challenger Banks

Companies providing online banking services without a physical branch network. Challenger Banks have reduced overheads owing to complete online operations. Additionally, these companies provide a superior user experience in comparison to that offered by traditional banks.

Deals in the last 24 months: $205M in funding across 29 deals

Notable investments: $27M PE Round in Varo Money by Warburg Pincus. $14M Series A in Tide led by Anthemis, Passion Capital and LocalGlobe.

9. P2B Lending Platforms for Business Term Loans

Platforms that facilitate peer-to-business lending for long term loans(Given the large gap in global SME financing). These companies have broader eligibility norms, and also use alternative data points to assess creditworthiness.

Deals in the last 24 months: $169M in funding across 34 deals

Notable investments: $150M Series E Round in Funding Circle led by DST, Temasek and Baillie Gifford. $13M Series B Round in Lendix led by CNP Assurances, Matmut, Zencap and Partech Ventures.

10. Balance Sheet Lending for Working Capital Financing

Platforms that lend to businesses on their balance sheet for working capital requirements without any collateral.

Deals in the last 24 months: $243M in funding across 15 deals

Notable investments: $60M Series B in Prospa led by Carlyle, Ironbridge and others. $34M Series B in Spotcap led by Holtzbrinck and Finstar Financial.

Few upcoming FinTech Business Models

Insurance:

On-demand insurance: Companies that offer flexible insurance products that allow users to select the policy duration and item to be insured as and when required. Ex: Trov and Sure

IoT solutions: Companies that enable insurance providers to offer customized insurance quotes using data from sensors connected to the vehicles. The data from these sensors can alone be used to settle claims in the event of an accident. Ex: Metromile

Payments:

Tokenization-as-a-Service: Companies which encrypt payments data using tokenization in order to prevent fraudulent attacks. Ex: Token.io

AI-based fraud protection: Companies which use Artificial Intelligence to monitor and identify fraudulent transactions. Ex: Signifyd

Remittance:

Blockchain-based remittance: Companies that use blockchain to offer cross border money transfer services. These companies provide a quicker and a relatively cost efficient manner to facilitate the money transfer. Ex: Circle

Financial markets:

AI-based sentiment analysis: Companies that use machine learning algorithms to predict market sentiments and direction. These companies analyze earnings releases, FDA drug approvals, product launches, and other triggers and events to predict stock movements. Ex: Kensho

For the slide deck: http://bit.ly/2iQq7Mu

About the speaker:

This post is based on Neha Singh’s(Co-founder, Tracxn) talk at the August Edition of Startup Saturday. Tracxn is one of India’s fastest growing data and research platforms which helps venture capital funds scout interesting startups. Tracxn has sector focused analyst teams covering various high invest-able areas across enterprise, consumer, Internet, mobile, health-tech, Ed-tech and more. Tracxn tracks millions of private companies to help VCs, corporates and IBs find and connect with upcoming startups. Found this useful? You can reach out to Tracxn at research@tracxn.com for more.

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Written by Suhas Mallya