I spotted an article by Linus Beliunas on LinkedIn this week, and liked it so much that wanted to share. Enjoy!
2018 was a phenomenal year for FinTech. Over a course of 12 months, Venture Capital-backed FinTech deals and funding set an annual record: in 2018, VC-backed FinTech companies raised $39.57 billion across 1,707 deals globally.
Source: Tech Startups
The number of deals was up by 15% year-over-year while the funding surged 120% on the back of 52 mega-rounds ($100 million+) worth $24.88 billion collectively.
Right now, there are 39 VC-backed FinTech unicorns worth a combined $147.37 billion. It is important to note that the last quarter of 2018 saw five new unicorns births (Plaid, Brex, Monzo, Devoted Health, and Toss) and two in the first month of Q1’19 (N26and Confluent). The cohort’s total valuation in 2018 was boosted by a record year for mega-rounds to existing unicorns, including Gusto and Robinhood, among others.
Let us take a quick look at each of these unicorns in order to understand what they do, who is backing them and what kind of potential they hold.
Valued at $20.5 billion, Stripe is the online payments processor for internet businesses. Founded in 2010, the payments startup has changed the way businesses collect funds online by using a few lines of code. Among its clients there are such names as Under Armor, Target, Lyft, Grab, Deliveroo, Facebook, Google, Uber and others.
At the end of January Stripe has raised another $100 million in Series E round led by Tiger Global Management. Recently it has begun branching out, launching a point-of-sale payments terminal package targeted at online retailers making the jump to offline. It is also trialing the cash advance service that rivals PayPal and Square offer to users.
Stripe is backed by such behemoths as Tiger Global Management, Sequoia Capital, Kleiner Perkins, General Catalyst and others.
Valued at $3 billion, Circle is hard to describe in a few words as it is active in many fronts. For quite some time, the company positioned itself as a social payments company, think a Venmo and Square Cash competitor. Yet, right now it is focused on cryptocurrencies more than ever before.
The company has been operating one of the largest over-the-counter trading desks for big cryptocurrency investors and exchanges. Circle Trade was managing more than $2 billion a month in transactions and is able to fulfill large orders and provide liquidity.
Also, earlier it has acquired Poloniex, one of the largest crypto exchanges in the US at the time.
In the most recent funding round (9 months ago) Circle has secured $100 million funding round led by Bitmain. Other backers include IDG Capital, Accel, Digital Currency Group, Goldman Sachs and others.
Valued at $8 billion, Coinbase is a major cryptocurrency exchange and a wallet provider. The company brokers exchange of Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, and Litecoin with fiat currencies in approximately 32 countries, and Bitcoin transactions and storage in 190 countries worldwide
Company’s most recent funding was back in October 2018, when it raised $300 million led by Tiger Global Management. Other investors include Y Combinator, Andreessen Horowitz, Polychain and others.
Valued at $5.3 billion, Robinhood is a commission-free stock trading app. The company’s service is particularly popular among young people, who appreciate the ease of using the app to trade stocks without fees.
In their most recent funding round back in May 2018, Robinhood attracted $363 million in capital. The Series D round of funding was led by DST Global, with participation from new investors such as Iconiq, Capital G, Sequoia Capital, and Kleiner Perkins. Existing investors included NEA and Thrive Capital.
Valued at $1.8 billion, Affirm is a lending startup that offers loans to young consumers making purchases that may be too much to pay for entirely upfront, such as a new mattress or sofa. The company partners with more than 1,200 online retailers to offer loans at the point of sale. It claims to offer better terms, such as no late fees, than most retailer credit cards.
San Francisco-based Affirm is led by Max Levchin, an entrepreneur and investor who co-founded PayPal where he helped pioneer online payments in the dot-com era.
The most recent funding Affirm raised was in December 2017, when the company raised $200 million. It was led by Singapore government’s sovereign wealth fund, GIC, and was joined by earlier investors including Khosla Ventures, Lightspeed Venture Partners, Founders Fund and Spark Capital.
Valued at $4 billion, Credit Karma is a personal finance company that's focused on helping everyone make financial progress.
To help differentiate itself from the other online tax filing services, Credit Karma upped the ante with data collection and analysis. Through the collection of tax payers’ income and other details entered in the tax filing process, Credit Karma Tax sought to recommend credit cards and financial products.
Beyond tax preparation, Credit Karma launched free ID monitoring in 2017 after the Equifax data breach. With the new free service, the credit monitoring company said it could alert its customers as soon as possible if they have been affected by a data breach or if there was suspicious activity on their accounts.
The latest funding round happened in March 2018 when Silver Lake has bought equity in the company in $500 million deal. Among others, Credit Karma is backed by Tiger Global Management, Viking Global Investors, Valinor Management and others.
Valued at $3.2 billion, Oscar is a health insurance company that employs technology, design, and data to humanise health care. With a team of technology and healthcare experts, Oscar looked at the current state of the US healthcare system, and were frustrated by the consumer experience. In response, they decided to revive how healthcare is delivered.
Oscar was founded in 2012 by current CEO Mario Schlosser, Kevin Nazemi (who is no longer with the company), and Joshua Kushner, brother of senior Trump advisor Jared Kushner. Its mission was to take advantage of the new marketplaces for individuals to buy health insurance created by the Affordable Care Act (Obamacare). It started out in New York, but has now expanded to other states.
The company’s last funding round was back in March 2018, when the FinTech startup has raised $165 million in a round led by Founders Fund, with participation from two branches of Google's parent company Alphabet: the Capital G growth investment arm, and the Verily life sciences segment.
Valued at $1.2 billion, Clover Health is reinventing the health insurance model by integrating technology into every aspect of its members’ healthcare. The Clover data and analytics platform uses continuous, real-time monitoring to prevent hospital admissions, reduce avoidable spending, and identify and better manage chronic diseases.
San Francisco-based Clover Health was founded in 2012 by chief executive officer Vivek Garipalli, the former founder of New Jersey healthcare system CarePoint Health; and Kris Gale, who served as the startup’s chief technology officer until transitioning into an adviser role in December 2017.
The company’s latest funding round was just 2 weeks ago where it raised $500 million. Existing investor Greenoaks Capital led the round. Other backers include Alphabet’s venture arm GV, Sequoia Capital, Floodgate, Bracket Capital, First Round Capital and more.
Valued at $3 billion, UiPath is a global software company that develops a platform for Robotic Process Automation (RPA or RPAAI).The company started from Bucharest, Romania and later opened offices in London, New York, Bengaluru, Singapore, and Tokyo. The company was founded in 2005 by the Romanian entrepreneurs, Daniel Dines and Marius Tirca.
The most recent funding round that the company had was back in September 2018, when the FinTech unicorn raised $225 million in series C funding co-led by existing investor CapitalG and new investor Sequoia Capital. Accel, which led both Series A and B rounds also participated in this round.
Valued at $2.7 billion, Plaid is a FinTech unicorn whose API software quietly powers such enterprises as the popular peer-to-peer payment app Venmo, the mobile investing app Robinhood and cryptocurrency exchanges Coinbase and Gemini.
The company says it integrates with more than 10,000 banks and connects to roughly 20 million consumer accounts. While it does not give specific numbers or a full list of companies, Plaid said its customer base doubled from 2017 to 2018.
The company’s latest funding round was announced in December 2018 where the $250 million was poured into the startup led by Kleiner Perkins' partner Mary Meeker, who also joined Plaid's board. Andreessen Horowitz and Index Ventures were among the new investors while former backers Goldman Sachs, NEA and Spark Capital also participated.
Valued at $1.8 billion, Devoted Health a healthcare company serving seniors and giving them a health care plan with personal guides and world-class technology.
Todd and Ed Park, brothers and serial health-tech entrepreneurs, founded Devoted in 2017, jumping into the market for Medicare Advantage (MA) plans, which provide coverage for people over age 65. It's a lucrative opportunity for business, because baby boomers are aging into Medicare, and people who use MA receive benefits through private health plans but with big government payouts to the insurers — about $10,000 on average per member.
The most recent funding the company has received was back in October 2018, where $300 million was raised from lead investor Andreessen Horowitz, Premji Invest and Uprising.
Valued at $1.1 billion, Brex is providing a commercial card solution targeting technology startups. It differentiates itself from other commercial card companies by not requiring clients to hold personal liability for their company spend on the card.
The company is first targeting tech startups, which have trouble getting banked and accessing capital — even startups that raise a significant amount of money. According to the co-founders of Brex, they are in a pursuit to disrupt American Express.
The most recent funding round the company had was back in October 2018, where $125 million Series C funding round was closed. The round was led by Greenoaks Capital, DST Global and IVP.
Valued at circa $1.5 billion, Dataminr is a New York City-based startup that analyzes public data about events in real time.
Tools like Dataminr are increasingly in demand as an inundation of data and information makes it harder to cut through the noise. Dataminr's customers include companies in finance, media and government.
Dataminr’s most recent funding round was in June 2018 where it managed to raise $392 million in funding. The company is backed by Morgan Stanley’s Tactical Value Fund, Valor Equity Partners, MSD Capital, Declaration Partners, Moore Strategic Ventures, Vulcan Capital, the Pritzker Family Business Interests, Fidelity Investments, Institutional Venture Partners, and Goldman Sachs.
Valued at $1 billion, Tradeshift is a supply chain payments and marketplaces late-stage startup which also has blockchain in its armory.
Tradeshift enables supply chain payments and marketplaces for more than 1.5 million businesses around the world, including large companies such as Air France-KLM, DHL, Fujitsu, HSBC, Siemens, Société Générale, Unilever, and Volvo. The company enables alternatives for trade financing, spend and receivables management, lending and payments, and private marketplaces.
In the most recent funding round (9 months ago), the company has raised $250 million in a Series E funding round led by Goldman Sachs and Public Sector Pension Investment Board (PSP Investments). Additional participation came from HSBC, H14, GP Bullhound and Gray Swan, a new venture company established by Tradeshift’s founders.
Valued at $1.4 billion, Toast is a point-of-sale (POS) platform aimed at restaurants and catering businesses.
Founded in 2011, Toast offers a POS system that integrates with restaurants’ front-of-house, back-of-house, and online systems while also serving up data and insights into sales patterns, costs, and customer loyalty trends.
In July 2018 Toast has raised $115 million in funding led by T. Rowe Price, with participation from Tiger Global Management and existing investors such as Bessemer, Generation Investment Management, and Lead Edge Capital.
Valued at $1 billion, Root is an Ohio-based car insurance startup.
Root provides car insurance to drivers. It establishes the premium customers based on their driving along with other factors. Drivers download the app and take a test drive that typically lasts two or three weeks. Then Root provides a quote that rewards good driving behavior and allows customers to switch their insurance policy. Customers can purchase and manage their policy through the mobile phone Root app.
Six months ago, Root has raised $100 million in a Series D funding round led by Tiger Global Management. Redpoint Ventures, Ribbit Capital and Scale Venture Partners all participated as follow-on investors in this latest round.
Valued at $2 billion, Gusto sells payroll, benefits and human resources management and monitoring services to small businesses.
Gusto targets businesses with fewer than 200 employees, offering payroll services as well as additional features like health insurance and 401(k) retirement plans. The company currently counts more than 60,000 companies as customers, and believes it has room to grow among the more than 30 million small businesses in the U.S., which employ about 48 percent of American workers, according to the U.S. Small Business Administration.
In July 2018, the company has raised $140 million led by T. Rowe Price Associates Inc., Y Combinator Continuity Fund and General Catalyst.
Valued at around $2 billion, Zenefits offers free software-as-a-service (SaaS) for human-resources functions like onboarding, payroll, benefits, and vacation tracking to businesses with fewer than 1,000 employees. It makes its money on broker fees when users of the software choose to buy insurance and other HR services from it.
4 years ago, the company has raised $500 million in a round led by Fidelity and TP. At that time, the valuation peeked to $4.5 billion, yet it has halved since then.
Valued at $1.24 billion, AvidXchange is a software company that helps mid-sized companies automate their invoicing and bill payments.
Founded in 2000, AvidXchange has more than 5,500 North American business customers using its cloud-based automated payment processing software.
In June 2017 the company raised $300 million from investors including Mastercard, Silicon Valley investor Peter Thiel and Canada’s second largest public pension fund.
Valued at $1 billion, Symphony is a secure messaging app that has more than 15 of the world’s biggest banks among its investors and more than 200,000 paying customers.
Symphony has built its business predominantly targeting the financial services sector with a messaging service that not only lets those within a company communicate with each other, but also lets them speak with contacts outside their organizations using the same secure framework. You can think of Symphony as somewhat like Slack and other messaging services except that, in collaboration with its strategic investors, it has built a platform that meets their particular requirements when it comes to encryption and reporting requirements.
The company was founded in 2014 and has nearly $300 million in total funding. The latest funding round was 2 years ago, where leading investors from Barclays, Bpifrance and CSLA poured $63 million into Symphony Communication Services. Other investors include Google, BNP Paribas, HSBC and others.
Valued at $1 billion, Kabbage a billion-dollar startup that combines machine learning algorithms, data from public profiles on the internet and other factors to rate and then loan people money for their small businesses.
The company has focused mainly on loans with a six-month payback up to now, and it declares to have a loss rate — the amount of money on each dollar that does not get paid back — lower than the rest of the industry, including institutional banks (it’s not publicly disclosing that loss rate). The startup makes revenues on fees around the loans,
The latest funding round was 2 years ago when SoftBank has invested $250 million into the company. Other Kabbage backers include Reverence Capital Partners LLC, ING Group NV, Santander InnoVentures, Bank of Nova Scotia and others.
Valued at roughly $4.5 billion, SoFi got its start refinancing student loans but gradually has been adding other services to its members.
SoFi is best known as an online lender targeting so-called HENRYs (high earners, not rich yet) with student loan refinancing and other financial services. Rather than looking strictly at FICO scores as a measure of credit-worthiness, SoFi also considers factors like income and cash flows as it evaluates potential members.
Back in 2017, SoFi has raised $500 million in equity led my Silver Lake. Other investors in the round included SoftBank and GPI Capital.
Valued at nearly $2 billion, Avant is the online marketplace for consumer loans.
According to the company’s founders, the FinTech unicorn is trying to build a transformative company that could be a $50 billion to $100 billion business someday, by becoming the preeminent provider of credit to small and middle-income consumers.
In 2015, the company has raised $325 million from leading investor General Atlantic. Other participants included Balyasny Asset Management and existing shareholders Tiger Global Management, August Capital, RRE Ventures and DFJ Growth.
Valued at $2.5 billion, Confluent is the commercial company built on top of the open-source Apache Kafka project.
Confluent and Kafka have developed a streaming data technology that processes massive amounts of information in real time, something that comes in handy in today’s data-intensive environment. The base streaming database technology was developed at LinkedIn as a means of moving massive amounts of messages. The company decided to open-source that technology in 2011, and Confluent launched as the commercial arm in 2014.
The latest funding round was in January 2019, where $125 million was raised in Series D led by Sequoia Capital, with participation from Index Ventures and Benchmark, which also participated in previous rounds.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...