[6 min read]
With $5.3B+ 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]
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
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
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
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
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
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
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
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
Few upcoming FinTech Business Models
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
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
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
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 firstname.lastname@example.org for more.
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Written by Suhas Mallya