Source: Business Insider Africa
Fintech VC funding hit a fresh quarterly record of $22.8 billion in the first three months of 2021, according to CB Insights data . While mega-rounds helped propel overall funding, new cash was spread across 614 deals.
Insider has been tracking the next wave of hot new startups that are blending finance and tech.
Check out these pitch decks to see how fintech founders are selling their vision and nabbing big bucks in the process. You’ll see new financial tech geared at freelancers, fresh twists on digital banking, and innovation aimed at streamlining customer onboarding.
About a decade ago, politician Stacey Abrams and entrepreneur Lara Hodgson were forced to fold their startup because of a kink in the supply chain – but not in the traditional sense.
Nourish, which made spill-proof bottled water for children, had grown quickly from selling to small retailers to national ones. And while that may sound like a feather in the small business’ cap, there was a hang-up.
“It was taking longer and longer to get paid, and as you can imagine, you deliver the product and then you wait and you wait, but meanwhile you have to pay your employees and you have to pay your vendors,” Hodgson told Insider. “Waiting to get paid was constraining our ability to grow.”
While it’s not unusual for small businesses to grapple with working capital issues, the dust was still settling from the Great Recession . Abrams and Hodgson couldn’t secure a line of credit or use financing tools like factoring to solve their problem.
The two entrepreneurs were forced to close Nourish in 2012, but along the way they recognized a disconnect in the system.
“Why are we the ones borrowing money, when in fact we’re the lender here because every time you send an invoice to a customer, you’ve essentially extended a free loan to that customer by letting them pay later,” Hodgson said. “And the only reason why we were going to need to possibly borrow money was because we had just given ours away for free to Whole Foods,” she added.
Insurance goes digital
Fintechs looking to transform how insurance policies are underwritten, issued, and experienced by customers have grown as new technology driven by digital trends and artificial intelligence shape the market.
And while verticals like auto, homeowner’s, and renter’s insurance have seen their fair share of innovation from forward-thinking fintechs, one company has taken on the massive life-insurance market.
Founded in 2017, Ladder uses a tech-driven approach to offer life insurance with a digital, end-to-end service that it says is more flexible, faster, and cost-effective than incumbent players.
Life, annuity, and accident and health insurance within the US comprise a big chunk of the broader market. In 2020, premiums written on those policies totaled some $767 billion , compared to $144 billion for auto policies and $97 billion for homeowner’s insurance .
Here’s the 12-page deck that Ladder, a startup disrupting the ‘crown jewel’ of the insurance market, used to nab $100 million
Embedded payments for SMBs
Branded cards have long been a way for merchants with the appropriate bank relationships to create additional revenue and build customer loyalty.
The rise of embedded payments , or the ability to shop and pay in a seamless experience within a single app, has broadened the number of companies looking to launch branded cards.
Highnote is a startup that helps small to mid-sized merchants roll out their own debit and pre-paid digital cards.
The fintech emerged from stealth on Tuesday to announce it raised $54 million in seed and Series A funding.
An alternative auto lender
An alternative auto lender that caters to thin- and no-credit Hispanic borrowers is planning a national expansion after scoring a $90 million investment from BlackRock-managed funds.
Tricolor is a Dallas-based auto lender that is a community development financial institution. It uses a proprietary artificial-intelligence engine that decisions each customer based on more than 100 data points, such as proof of income.
Half of Tricolor’s customers have a FICO score, and less than 12% have scores above 650, yet the average customer has lived in the US for 15 years, according to the deck.
A 2017 survey by the Federal Deposit Insurance Corporation found 31.5% of Hispanic households had no mainstream credit compared to 14.4% of white households.
“For decades, the deck has been stacked against low income or credit invisible Hispanics in the United States when it comes to the purchase and financing of a used vehicle,” Daniel Chu, founder and CEO of Tricolor, said in a statement announcing the raise.
A new way to access credit
Kristy Kim knows first-hand the challenge of obtaining credit in the US without an established credit history.
Kim, who came to the US from South Korea, couldn’t initially get access to credit despite having a job in investment banking after graduating college.
“I was in my early twenties, I had a good income, my job was in investment banking but I could not get approved for anything,” Kim told Insider. “Many young professionals like me, we deserve an opportunity to be considered but just because we didn’t have a Fico, we weren’t given a chance to even apply,” she added.
Kim started TomoCredit in 2018 to help others like herself gain access to consumer credit. TomoCredit spent three years building an internal algorithm to underwrite customers based on cash flow, rather than a credit score.
An IRA for alternatives
Fintech startup Rocket Dollar, which helps users invest their individual retirement account (IRA) dollars into alternative assets, just raised $8 million for its Series A round, the company announced on Thursday.
Park West Asset Management led the round, with participation from investors including Hyphen Capital , which focuses on backing Asian American entrepreneurs, and crypto exchange Kraken’s venture arm.
Co-founded in 2018 by CEO Henry Yoshida, CTO Rick Dude, and VP of marketing Thomas Young, Rocket Dollar now has over $350 million in assets under management on its platform. Yoshida sold his first startup, a roboadvisor called Honest Dollar, to Goldman Sachs’ investment management division for an estimated $20 million .
Yoshida told Insider that while ultra-high net worth investors have been investing self-directed retirement account dollars into alternative assets like real estate, private equity, and cryptocurrency, average investors have not historically been able to access the same opportunities to invest IRA dollars in alternative assets through traditional platforms.
Connecting startups and investors
Blair Silverberg is no stranger to fundraising.
For six years, Silverberg was a venture capitalist at Draper Fisher Jurvetson and Private Credit Investments making bets on startups.
“I was meeting with thousands of founders in person each year, watching them one at a time go through this friction where they’re meeting a ton of investors, and the investors are all asking the same questions,” Silverberg told Insider.
He switched gears about three years ago, moving to the opposite side of the metaphorical table, to start Hum Capital, which uses artificial intelligence to match investors with startups looking to fundraise.
On August 31, the New York-based fintech announced its $9 million Series A. The round was led by Future Ventures with participation from Webb Investment Network, Wavemaker Partners, and Partech.
Payments infrastructure for fintechs
Three years ago, Patricia Montesi realized there was a disconnect in the payments world.
“A lot of new economy companies or fintech companies were looking to mesh up a lot of payment modalities that they weren’t able to,” Montesi, CEO and co-founder of Qolo, told Insider.
Integrating various payment capabilities often meant tapping several different providers that had specializations in one product or service, she added, like debit card issuance or cross-border payments.
“The way people were getting around that was that they were creating this spider web of fintech,” she said, adding that “at the end of it all, they had this mess of suppliers and integrations and bank accounts.”
The 20-year payments veteran rounded up a group of three other co-founders – who together had more than a century of combined industry experience – to start Qolo, a business-to-business fintech that sought out to bundle back-end payment rails for other fintechs.
Here’s the 11-slide pitch deck a startup that provides payments infrastructure for other fintechs used to raise a $15 million Series A
Software for managing freelancers
The way people work has fundamentally changed over the past year, with more flexibility and many workers opting to freelance to maintain their work-from-home lifestyles.
But managing a freelance or contractor workforce is often an administrative headache for employers. Worksome is a startup looking to eliminate all the extra work required for employers to adapt to more flexible working norms.
Worksome started as a freelancer marketplace automating the process of matching qualified workers with the right jobs. But the team ultimately pivoted to a full suite of workforce management software, automating administrative burdens required to hire, pay, and account for contract workers.
In May, Worksome closed a $13 million Series A backed by European angel investor Tommy Ahlers and Danish firm Lind & Risr.
Personal finance is only a text away
The COVID-19 pandemic has underscored the growing preference of mobile banking as customers get comfortable managing their finances online.
The financial app Albert has seen a similar jump in activity. Currently counting more than six million members, deposits in Albert’s savings offering doubled from the start of the pandemic in March 2020 to May of this year, from $350 million to $700 million, according to new numbers released by the company.
Founded in 2015, Albert offers automated budgeting and savings tools alongside guided investment portfolios. It’s looked to differentiate itself through personalized features, like the ability for customers to text human financial experts.
Budgeting and saving features are free on Albert. But for more tailored financial advice, customers pay a subscription fee that’s a pay-what-you-can model, between $4 and $14 a month.
And Albert’s now banking on a new tool to bring together its investing, savings, and budgeting tools.
Rethinking debt collection
For lenders, debt collection is largely automated. But for people who owe money on their credit cards, it can be a confusing and stressful process.
Relief is looking to change that. Its app automates the credit-card debt collection process for users, negotiating with lenders and collectors to settle outstanding balances on their behalf. The fintech just launched and closed a $2 million seed round led by Collaborative Ventures.
Relief’s fundraising experience was a bit different to most. Its pitch deck, which it shared with one investor via Google Slides, went viral. It set out to raise a $1 million seed round, but ended up doubling that and giving some investors money back to make room for others.
Check out a 15-page pitch deck that went viral and helped a credit-card debt collection startup land a $2 million seed round
Blockchain for private-markets investing
Securitize, founded in 2017 by the tech industry veterans Carlos Domingo and Jamie Finn, is bringing blockchain technology to private-markets investing. The company raised $48 million in Series B funding on June 21 from investors including Morgan Stanley and Blockchain Capital.
Securitize helps companies crowdfund capital from individual and institutional investors by issuing their shares in the form of blockchain tokens that allow for more efficient settlement, record keeping, and compliance processes. Morgan Stanley’s Tactical Value fund, which invests in private companies, made its first blockchain-technology investment when it coled the Series B, Securitize CEO Carlos Domingo told Insider.
Here’s the 11-page pitch deck a blockchain startup looking to revolutionize private-markets investing used to nab $48 million from investors like Morgan Stanley
E-commerce focused business banking
Business banking is a hot market in fintech. And it seems investors can’t get enough.
Novo, the digital banking fintech aimed at small e-commerce businesses, raised a $40.7 million Series A led by Valar Ventures in June. Since its launch in 2018, Novo has signed up 100,000 small businesses. Beyond bank accounts, it offers expense management, a corporate card, and integrates with e-commerce infrastructure players like Shopify, Stripe, and Wise.
Founded in 2018, Novo was based in New York City, but has since moved its headquarters to Miami.
Here’s the 12-page pitch deck e-commerce banking startup Novo used to raise its $40 million Series A
Blockchain-based credit score tech
A blockchain-based fintech startup that is aiming to disrupt the traditional model of evaluating peoples’ creditworthiness recently raised $30 million in a Series B funding led by credit reporting giant TransUnion.
Four-year-old Spring Labs aims to create a private, secure data-sharing model to help credit agencies better predict the creditworthiness of people who are not in the traditional credit bureau system. The founding team of three fintech veterans met as early employees of lending startup Avant.
Existing investors GreatPoint Ventures and August Capital also joined in on the most recent round. So far Spring Labs has raised $53 million from institutional rounds.
TransUnion, a publicly-traded company with a $20 billion-plus market cap, is one of the three largest consumer credit agencies in the US. After 18 months of dialogue and six months of due diligence, TransAmerica and Spring Labs inked a deal, Spring Labs CEO and cofounder Adam Jiwan told Insider.
Here’s the 10-page pitch deck blockchain-based fintech Spring Labs used to snag $30 million from investors including credit reporting giant TransUnion
Digital banking for freelancers
Lance is a new digital bank hoping to simplify the life of those workers by offering what it calls an “active” approach to business banking.
“We found that every time we sat down with the existing tools and resources of our accountants and QuickBooks and spreadsheets, we just ended up getting tangled up in the whole experience of it,” Lance cofounder and CEO Oona Rokyta told Insider.
Lance offers subaccounts for personal salaries, withholdings, and savings to which freelancers can automatically allocate funds according to custom preset levels. It also offers an expense balance that’s connected to automated tax withholdings.
In May, Lance announced the closing of a $2.8 million seed round that saw participation from Barclays, BDMI, Great Oaks Capital, Imagination Capital, Techstars, DFJ Frontier, and others.
Here’s the 21-page pitch deck Lance, a digital bank for freelancers, used to raise a $2.8 million seed round from investors including Barclays
Digital tools for independent financial advisors
Jason Wenk started his career at Morgan Stanley in investment research over 20 years ago. Now, he’s running a company that is hoping to broaden access to financial advice for less-wealthy individuals.
The startup raised $50 million in Series B funding led by Insight Partners with participation from investors Vanguard and Venrock. The round brings the Los Angeles-based startup’s total funding to just under $67 million.
Founded in 2018, Altruist is a digital brokerage built for independent financial advisors, intended to be an “all-in-one” platform that unites custodial functions, portfolio accounting, and a client-facing portal. It allows advisors to open accounts, invest, build models, report, trade (including fractional shares), and bill clients through an interface that can advisors time by eliminating mundane operational tasks.
Altruist aims to make personalized financial advice less expensive, more efficient, and more inclusive through the platform, which is designed for registered investment advisors (RIAs), a growing segment of the wealth management industry.
Here’s the pitch deck for Altruist, a wealth tech challenging custodians Fidelity and Charles Schwab, that raised $50 million from Vanguard and Insight
Payments and operations support
While countless small businesses have been harmed by the pandemic, self-employment and entrepreneurship have found ways to blossom as Americans started new ventures.
Half of the US population may be freelance by 2027, according to a study commissioned by remote-work hiring platform Upwork . HoneyBook, a fintech startup that provides payment and operations support for freelancers, in May raised $155 million in funding and achieved unicorn status with its $1 billion-plus valuation.
Durable Capital Partners led the Series D funding with other new investors including renowned hedge fund Tiger Global, Battery Ventures, Zeev Ventures, and 01 Advisors. Citi Ventures, Citigroup’s startup investment arm that also backs fintech robo-advisor Betterment , participated as an existing investor in the round alongside Norwest Venture partners. The latest round brings the company’s fundraising total to $227 million to date.
Here’s the 21-page pitch deck a Citi-backed fintech for freelancers used to raise $155 million from investors like hedge fund Tiger Global
Fraud prevention for lenders and insurers
Onboarding new customers with ease is key for any financial institution or retailer. The more friction you add, the more likely consumers are to abandon the entire process.
But preventing fraud is also a priority, and that’s where Neuro-ID comes in. The startup analyzes what it calls “digital body language,” or, the way users scroll, type, and tap. Using that data, Neuro-ID can identify fraudulent users before they create an account. It’s built for banks, lenders, insurers, and e-commerce players.
“The train has left the station for digital transformation, but there’s a massive opportunity to try to replicate all those communications that we used to have when we did business in-person, all those tells that we would get verbally and non-verbally on whether or not someone was trustworthy,” Neuro-ID CEO Jack Alton told Insider.
Founded in 2014, the startup’s pitch is twofold: Neuro-ID can save companies money by identifying fraud early, and help increase user conversion by making the onboarding process more seamless.
In December Neuro-ID closed a $7 million Series A, co-led by Fin VC and TTV Capital, with participation from Canapi Ventures. With 30 employees, Neuro-ID is using the fresh funding to grow its team and create additional tools to be more self-serving for customers.
Here’s the 11-slide pitch deck a startup that analyzes consumers’ digital behavior to fight fraud used to raise a $7 million Series A
AI-powered tools to spot phony online reviews
Marketplaces like Amazon and eBay host millions of third-party sellers, and their algorithms will often boost items in search based on consumer sentiment, which is largely based on reviews. But many third-party sellers use fake reviews often bought from click farms to boost their items, some of which are counterfeit or misrepresented to consumers.
That’s where Fakespot comes in. With its Chrome extension, it warns users of sellers using potentially fake reviews to boost sales and can identify fraudulent sellers. Fakespot is currently compatible with Amazon, BestBuy, eBay, Sephora, Steam, and Walmart.
“There are promotional reviews written by humans and bot-generated reviews written by robots or review farms,” Fakespot founder and CEO Saoud Khalifah told Insider. “Our AI system has been built to detect both categories with very high accuracy.”
Fakespot’s AI learns via reviews data available on marketplace websites, and uses natural-language processing to identify if reviews are genuine. Fakespot also looks at things like whether the number of positive reviews are plausible given how long a seller has been active.
Fakespot, a startup that helps shoppers detect robot-generated reviews and phony sellers on Amazon and Shopify, used this pitch deck to nab a $4 million Series A
New twists on digital banking
Consumers are getting used to the idea of branch-less banking, a trend that startup digital-only banks like Chime , N26 , and Varo have benefited from.
The majority of these fintechs target those who are underbanked, and rely on usage of their debit cards to make money off interchange. But fellow startup HMBradley has a different business model.
“Our thesis going in was that we don’t swipe our debit cards all that often, and we don’t think the customer base that we’re focusing on does either,” Zach Bruhnke, cofounder and CEO of HMBradley, told Insider. “A lot of our customer base uses credit cards on a daily basis.”
Instead, the startup is aiming to build clientele with stable deposits. As a result, the bank is offering interest-rate tiers depending on how much a customer saves of their direct deposit.
Notably, the rate tiers are dependent on the percentage of savings, not the net amount.
“We’ll pay you more when you save more of what comes in,” Bruhnke said. “We didn’t want to segment customers by how much money they had. So it was always going to be about a percentage of income. That was really important to us.”
Source: Business Insider Africa
