FintechOS raises $14M help banks launch products as fast as FinTech Startups

Over the last few years, we’ve seen the rise of FinTech startups like N26 and Monzo to challenge the incumbents with new products like challenger banks. But what if the big banks wanted to compete in that game themselves? This is the aim of FintechOS a Romanian startup that actually aims to help incumbents compete in this brave new, competitive, world.

FintechOS allows banks and insurance companies to act and react faster than the new upstarts on the scene with plug and play products. 

It’s announcing today that it has secured $14 million (£10.7 million) in a Series A investment led by the Digital East Fund of Earlybird Venture Capital and OTB Ventures, with participation from existing investors Gapminder Ventures and Launchub.

The additional capital will be used to continue the growth and expansion across Europe, and to expand into South East Asia and the US.

FintechOS’s technology platform lets traditional banks and insurance companies adapt to rapidly changing customer expectations, and match the speed and flexibility of Fintech startups with personalized products and services, in weeks rather than months or years.

The banks and insurance companies can then launch multi-cloud SaaS deployments, transitioning to the cloud and on-premises deployments, working alongside the existing technology infrastructure. It now has existing partnerships with Microsoft, EY, Deloitte, Publicis Sapient and CapGemini allow deployment in multiple markets.

Started in 2017 by serial entrepreneurs Teodor Blidarus and Sergiu Negut, the company now has customers in more than 20 countries across three continents.

Teo Blidarus, CEO and Co-Founder of FintechOS, commented: “Our disruptive approach is customer, not technology-driven. We created FintechOS to transform the financial industry, empowering banks and insurance companies to act and react faster than fintech startups,
to create a smarter, slicker customer experience.”

Dan Lupu, Partner at Earlybird, said: “FintechOS is a pioneer in a booming market, with a vision to transform the way financial institutions react to market and regulatory changes. We are proud to become part of a journey that will shape the future of financial services.”

FintechOS raises $14M help banks launch products as fast as FinTech Startups

Over the last few years, we’ve seen the rise of FinTech startups like N26 and Monzo to challenge the incumbents with new products like challenger banks. But what if the big banks wanted to compete in that game themselves? This is the aim of FintechOS a Romanian startup that actually aims to help incumbents compete in this brave new, competitive, world.

FintechOS allows banks and insurance companies to act and react faster than the new upstarts on the scene with plug and play products. 

It’s announcing today that it has secured $14 million (£10.7 million) in a Series A investment led by the Digital East Fund of Earlybird Venture Capital and OTB Ventures, with participation from existing investors Gapminder Ventures and Launchub.

The additional capital will be used to continue the growth and expansion across Europe, and to expand into South East Asia and the US.

FintechOS’s technology platform lets traditional banks and insurance companies adapt to rapidly changing customer expectations, and match the speed and flexibility of Fintech startups with personalized products and services, in weeks rather than months or years.

The banks and insurance companies can then launch multi-cloud SaaS deployments, transitioning to the cloud and on-premises deployments, working alongside the existing technology infrastructure. It now has existing partnerships with Microsoft, EY, Deloitte, Publicis Sapient and CapGemini allow deployment in multiple markets.

Started in 2017 by serial entrepreneurs Teodor Blidarus and Sergiu Negut, the company now has customers in more than 20 countries across three continents.

Teo Blidarus, CEO and Co-Founder of FintechOS, commented: “Our disruptive approach is customer, not technology-driven. We created FintechOS to transform the financial industry, empowering banks and insurance companies to act and react faster than fintech startups,
to create a smarter, slicker customer experience.”

Dan Lupu, Partner at Earlybird, said: “FintechOS is a pioneer in a booming market, with a vision to transform the way financial institutions react to market and regulatory changes. We are proud to become part of a journey that will shape the future of financial services.”

A look at Latin America’s emerging fintech trends

Although the 2008 global financial crisis sparked the fintech movement, in Latin America, the rise of ecommerce was responsible for the first wave of fintech startups.

Because digital payments were key to enabling the growth of ecommerce, investors funded companies like Braspag, PagSeguro, PayU, Mercado Pago and Moip in the early 2000s to take advantage of this opportunity.

Payment is still the most relevant segment, with successful cases like Stone and PagSeguro, but after the financial crisis, we started to see the rise of financial technology in lending and neobanking, generating impressive cases like Nubank, Neon, Creditas, Credijusto and Ualá.

As the ecosystem evolves and expands, let’s take a closer look at emerging trends in Latin America that might give us a hint about where to expect its next fintech unicorns.

Financial services for the gig economy

Latin America has seen explosive growth in ride-hailing and food delivery platforms such as Uber, Didi, Rappi and iFood, creating a totally new market opportunity — many gig economy workers can’t access basic financial services such as bank accounts, personal loans and insurance. Even those who have access often struggle with financial products that that don’t suit their needs because they were designed for full-time workers.

Spotting this opportunity, Uber Money launched at Money 2020, focusing on providing drivers with financial services. As 50% of the population in Latin America is unbanked where Uber has more than 1 million drivers, the region is definitely a ripe market. Cabify is going even farther by spinning off Lana, its company that provides financial services, so it can expand its market beyond Cabify drivers to include other gig economy professionals.

Although established players in this sector have a clear advantage, they aren’t the only ones looking to explore this opportunity; Brazilian YC alumni Zippi is offering personal loans to ride-hailing drivers based on their driving earnings. As the gig economy tends to keep growing in the region, I believe we will start to see more solutions for those professionals.

Rethinking insurance

As the banking world has been shaken by fintechs, insurance companies are growing aware that high regulatory barriers won’t protect their industry from disruption.

Insurance penetration in Latin America has been historically low compared to developed markets — 3.1%, compared to 8% — but the insurance market is growing well and tends to close this gap. Adding this to bad services and complex products that insurances provide, insurtech has an immense opportunity to grow.

Because purchasing insurance is historically a complicated and painful experience, the first insurtechs in the region focused on providing a better experience by digitizing the process and using online channels to acquire customers. Those insurtechs worked together with the insurance companies and operating as online broker, but now, we’re starting to see startups providing new insurance products, as well as traditional insurances in different models.

Some are partnering with insurance companies while others are competing directly with them; Think Seg and Miituo partnered with larger players to provide a pay-as-you-go model for car insurance, while Mango Life and Kakau are offering a better purchasing experience. On the other end, Crabi and Pier are rethinking the insurance model from the ground up.

As insurtechs emerge as a potential threat, incumbents are more willing to work with startups that can improve their services to enable them to compete on better grounds, which is exactly what companies such as Bdeo, Lisa, and HelloZum are doing.

Although penetrating the insurance industry is more complicated than other financial services due to high regulatory demands and steep initial operating costs, insurtechs fueled by VC investment will without any doubt try to do it. And, if we’ve learned anything from other fintech segments, it’s that entrepreneurs will find ways to overcome initial challenges.

Brazil’s new fintech startup Cora raised $10 million on the strength of its founding team

It didn’t take much for the founders of Cora, Brazil’s newest startup to tackle some aspect of the broken financial services industry in the country, to raise their first $10 million.

Igor Senra and Leo Mendes had worked together before — founding their first online payments company, MOIP, in 2005. That company sold to WireCard in 2016 and after three years the founders were able to strike out again.

They built their initial business servicing the small and medium sized businesses that make up roughly two-thirds of the Brazilian economy and represent some trillion dollars worth of transactions. But at WireCard, they increasingly were told to approach larger customers that didn’t have the same kind of demand for their services, according to Mendes.

So they built Cora — a technology enabled lender to the small and medium-sized businesses that they knew sowell.

The round was led by Kaszek Ventures, one of Latin America’s largest and most successful investment funds, with participation from Ribbit Capital — one of the most influential early-stage fintech investment firms globally.

“We created Cora to pursue our life purpose, which is to solve the financial problems faced by small and medium businesses. These businesses produce 67% of the Brazilian GDP but are totally underserved by the traditional banks”, said Senra, the company’s chief executive, in a statement.

The company is currently operating in closed beta and plans to launch its first product, a free SME-only mobile account in the first half of 2020, according to the statement. Cora will later release a portfolio of payments, credit related products, and financial management tools that are currently being developed.

“So far, large financial institutions have mainly built products that focus either on individuals or on large corporate clients and have totally ignored small and medium sized enterprises, who are the most relevant creators of value in our economies,” said Mendes in a statement. “We want to offer a high-quality, customer-centric suite of financial products that address the specific underserved needs of our clients’ businesses.”

China Roundup: Alibaba’s Hong Kong listing and Tencent’s new fuel

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. The earnings season is here. This week, long-time archrivals in the Chinese internet battlefield — Alibaba and Tencent — made some big revelations about their future. First off, let’s look at Alibaba’s long-awaited secondary listing and annual shopping bonanza.

Forget about the number

It’s that time of year. On November 11, Alibaba announced it generated $38.4 billion worth of gross merchandise value during the annual Single’s Day shopping festival, otherwise known as Double 11. It smashed the record and grabbed local headlines again, but the event means little other than a big publicity win for the company and showcasing the art of drumming up sales.

GMV is often used interchangeably with sales in e-commerce. That’s problematic because the number takes into account all transactions, including refunded items, and it’s by no means reflective of a company’s actual revenue. There are numerous ways to juice the figure, too, as I wrote last year. Presales began days in advance, incentives were doled out to spur last-minute orders and no refunds could be processed until November 12.

Even Jiang Fan, the boss of Alibaba’s e-commerce business and the youngest among Alibaba’s 38 most important decision-makers, downplayed the number: “I never worry about transaction volumes. Numbers don’t matter. What’s most important is making Single’s Day fun and turning it into a real festival.”

Indeed, Alibaba put together another year of what’s equivalent to the Super Bowl halftime show. Taylor Swift and other international big names graced the stage as the evening gala was live-streamed and watched by millions across the globe.

Returning home

Alibaba is going ahead with its secondary listing in Hong Kong on the heels of reports that it could delay the sale due to ongoing political unrest in the city-state. The company is cash-rich, but listing closer to its customers can potentially ease some of the pressure arising from a new era of volatile U.S.-China relationships.

Alibaba is issuing 500 million new shares with an additional over-allotment option of 75 million shares for international underwriters, it said in a company blog. Reports have put the size of its offering between $10 billion and $15 billion, down from the earlier rumored $20 billion.

The giant has long expressed it intends to come home. In 2014, the e-commerce behemoth missed out on Hong Kong because the local exchange didn’t allow dual-class structures, a type of organization common in technology companies that grants different voting rights for different stocks. The giant instead went public in New York and raised the largest initial public offering in history at $25 billion.

“When Alibaba Group went public in 2014, we missed out on Hong Kong with regret. Hong Kong is one of the world’s most important financial centers. Over the last few years, there have been many encouraging reforms in Hong Kong’s capital market. During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright. We hope we can contribute, in our small way, and participate in the future of Hong Kong,” said chairman and chief executive Daniel Zhang in a statement.

Missing out on Alibaba had also been a source of remorse for the Stock Exchange of Hong Kong. Charles Li, chief executive of the HKEX, admitted that losing Alibaba to New York had compelled the bourse to reform. The HKEX has since added dual-class shares and attracted Chinese tech upstarts such as smartphone maker Xiaomi and local services platform Meituan Dianping.

Tencent’s new fuel

Content and social networks have been the major revenue drivers for Tencent since its early years, but new initiatives are starting to gain ground. In the third quarter ended September 30, Tencent’s “fintech and business services” unit, which includes its payments and cloud services, became the firm’s second-largest sales avenue trailing the long-time cash cow of value-added services, essentially virtual items sold in games and social networks.

Payments, in particular, accounted for much of the quarterly growth thanks to increased daily active consumers and number of transactions per user. That’s good news for the company, which said back in 2016 that financial services would be its new focus (in Chinese) alongside content and social. The need to diversify became more salient in recent times as Tencent faces stricter government controls over the gaming sector and intense rivalry from ByteDance, the new darling of advertisers and owner of TikTok and Douyin.

Tencent also broke out revenue for cloud services for the first time. The unit grew 80% year-on-year to rake in 4.7 billion yuan ($670 million) and received a great push as the company pivoted to serve more industrial players and enterprises. Alibaba’s cloud business still leads the Chinese market by a huge margin, with revenue topping $1.3 billion during the September quarter.

Also worth your attention…

Luckin Coffee, the Chinese startup that began as a Starbucks challenger, is starting to look more like a convenient store chain with delivery capacities as it continues to increase store density (a combination of seated cafes, pickup stands and delivery kitchens) and widen product offerings to include a growing snack selection. Though bottom-line loss continued in the quarter, store-level operating profit swung to $26.1 million from a loss in the prior-year quarter. 30 million customers have purchased from Luckin, marking an increase of 413.4% from 6 million a year ago.

Minecraft is on the brink of 300 million registered users in China, its local publisher Netease announced at an event this week. That’s a lot of players, but not totally unreasonable given the game is free-to-play in the country with in-game purchases, so users can easily own multiple accounts. Outside China, the game has sold over 180 million paid copies, according to gaming analyst Daniel Ahmed from Niko Partners.

Xiaomi founder Lei Jun is returning a huge favor by backing a long-time friend. Xpeng Motors, the Chinese electric vehicle startup financed by Alibaba and Foxconn, has received $400 million in capital from a group of backers who weren’t identified except Xiaomi, which became its strategic investor. The marriage would allow Xpeng cars to tap Xiaomi’s growing ecosystem of smart devices, but the relationship dates further back. Lei was an early investor in UCWeb, a browser company founded by He and acquired by Alibaba in 2014. A day after Xiaomi’s began trading in Hong Kong in mid-2018, He wrote on his WeChat feed that he had bought $100 million worth of Xiaomi shares (in Chinese) in support of his old friend.

Eigen nabs $37M to help banks and others parse huge documents using natural language and ‘small data’

One of the bigger trends in enterprise software has been the emergence of startups building tools to make the benefits of artificial intelligence technology more accessible to non-tech companies. Today, one that has built a platform to apply power of machine learning and natural language processing to massive documents of unstructured data has closed a round of funding as it finds strong demand for its approach.

Eigen Technologies, a London-based startup whose machine learning engine helps banks and other businesses that need to extract information and insights from large and complex documents like contracts, is today announcing that it has raised $37 million in funding, a Series B that values the company at around $150 million – $180 million.

The round was led by Lakestar and Dawn Capital, with Temasek and Goldman Sachs Growth Equity (which co-led its Series A) also participating. Eigen has now raised $55 million in total.

Eigen today is working primarily in the financial sector — its offices are smack in the middle of The City, London’s financial center — but the plan is to use the funding to continue expanding the scope of the platform to cover other verticals such as insurance and healthcare, two other big areas that deal in large, wordy documentation that is often inconsistent in how its presented, full of essential fine print, and is typically a strain on an organisation’s resources to be handled correctly, and is often a disaster if it is not.

The focus up to now on banks and other financial businesses has had a lot of traction. It says its customer base now includes 25% of the world’s G-SIB institutions (that is, the world’s biggest banks), along with others who work closely with them like Allen & Overy and Deloitte. Since June 2018 (when it closed its Series A round), Eigen has seen recurring revenues grow sixfold with headcount — mostly data scientists and engineers — double. While Eigen doesn’t disclose specific financials, you can the growth direction that contributed to the company’s valuation.

The basic idea behind Eigen is that it focuses what co-founder and CEO Lewis Liu describes as “small data”. The company has devised a way to “teach” an AI to read a specific kind of document — say, a loan contract — by looking at a couple of examples and training on these. The whole process is relatively easy to do for a non-technical person: you figure out what you want to look for and analyse, find the examples using basic search in two or three documents, and create the template which can then be used across hundreds or thousands of the same kind of documents (in this case, a loan contract).

Eigen’s work is notable for two reasons. First, typically machine learning and training and AI requires hundreds, thousands, tens of thousands of examples to “teach” a system before it can make decisions that you hope will mimic those of a human. Eigen requires a couple of examples (hence the “small data” approach).

Second, an industry like finance has many pieces of sensitive data (either because its personal data, or because it’s proprietary to a company and its business), and so there is an ongoing issue of working with AI companies that want to “anonymise” and ingest that data. Companies simply don’t want to do that. Eigen’s system essentially only works on what a company provides, and that stays with the company.

Eigen was founded in 2014 by Dr. Lewis Z. Liu (CEO) and Jonathan Feuer (a managing partner at CVC Capital technologies who is the company’s chairman), but its earliest origins go back 15 years earlier, when Liu — a first-generation immigrant who grew up in the US — was working as a “data entry monkey” (his words) at a tire manufacturing plant in New Jersey, where he lived, ahead of starting university at Harvard.

A natural computing whizz who found himself building his own games when his parents refused to buy him a games console, he figured out that the many pages of printouts that he was reading and re-entering into a different computing system could be sped up with a computer program linking up the two. “I put myself out of a job,” he joked.

His educational life epitomises the kind of lateral thinking that often produces the most interesting ideas. Liu went on to Harvard to study not computer science, but physics and art. Doing a double major required working on a thesis that merged the two disciplines together, and Liu built “electrodynamic equations that composed graphical structures on the fly” — basically generating art using algorithms — which he then turned into a “Turing test” to see if people could detect pixelated actual work with that of his program. Distil this, and Liu was still thinking about patterns in analog material that could be re-created using math.

Then came years at McKinsey in London (how he arrived on these shores) during the financial crisis where the results of people either intentionally or mistakenly overlooking crucial text-based data produced stark and catastrophic results. “I would say the problem that we eventually started to solve for at Eigen became for tangible,” Liu said.

Then came a physics PhD at Oxford where Liu worked on X-ray lasers that could be used to bring down the complexity and cost of making microchips, cancer treatments and other applications.

While Eigen doesn’t actually use lasers, some of the mathematical equations that Liu came up with for these have also become a part of Eigen’s approach.

“The whole idea [for my PhD] was, ‘how do we make this cheeper and more scalable?'” he said. “We built a new class of X-ray laser apparatus, and we realised the same equations could be used in pattern matching algorithms, specifically around sequential patterns. And out of that, and my existing corporate relationships, that’s how Eigen started.”

Five years on, Eigen has added a lot more into the platform beyond what came from Liu’s original ideas. There are more data scientists and engineers building the engine around the basic idea, and customising it to work with more sectors beyond finance. 

There are a number of AI companies building tools for non-technical business end-users, and one of the areas that comes close to what Eigen is doing is robotic process automation, or RPA. Liu notes that while this is an important area, it’s more about reading forms more readily and providing insights to those. The focus of Eigen in more on unstructured data, and the ability to parse it quickly and securely using just a few samples.

Liu points to companies like IBM (with Watson) as general competitors, while startups like Luminance is another taking a similar approach to Eigen by addressing the issue of parsing unstructured data in a specific sector (in its case, currently, the legal profession).

Stephen Nundy, a partner and the CTO of Lakestar, said that he first came into contact with Eigen when he was at Goldman Sachs, where he was a managing director overseeing technology, and the bank engaged it for work.

“To see what these guys can deliver, it’s to be applauded,” he said. “They’re just picking out names and addresses. We’re talking deep, semantic understanding. Other vendors are trying to be everything to everybody, but Eigen has found market fit in financial services use cases, and it stands up against the competition. You can see when a winner is breaking away from the pack and it’s a great signal for the future.”

Google to offer checking accounts in partnership with banks starting next year

Google is the latest big tech company to make a move into banking and personal financial services: The company is gearing up to offer checking accounts to consumers, as first reported by the Wall Street Journal, starting as early as next year. Google is calling the projected “Cache,” and it’ll partner with banks and credit unions to offer the checking accounts, with the banks handling all financial and compliance activities related to the accounts.

Google’s Caesar Sengupta spoke to the WSJ about the new initiative, and Sengupta made clear that Google will be seeking to put its financial institution partners much more front-and-center for its customers than other tech companies have perhaps done with their financial products. Apple works with Goldman Sachs on its Apple Card credit product, for instance, but the credit card is definitely pretend primarily as an Apple product.

So why even bother getting into this game if it’s leaving a lot of the actual banking to traditional financial institutions? Well, Google obviously stands to gain a lot of valuable information and insight on customer behavior with access to their checking account, which for many is a good picture of overall day-to-day financial life. Google says it’s also intending to offer product advantages for both consumers and banks, including things like loyalty programs, on top of the basic financial services. It’s also still considering whether or not it’ll charge service fees, per Segupta – not doing so would definitely be and advantage over most existing checking accounts available.

Google already offers Google Pay, and its Google Wallet product has hosted some features beyond simple payments tracking, including the ability to send money between individuals. Meanwhile, rivals including Apple have also introducing payment products, and Apple of course recently expanded into the credit market with Apple Card. Facebook also introduced its own digital payment product earlier this week, and earlier this year announced its intent to build its own digital currency called ‘Libra’ along with partners.

The initial financial partners that Google is working with include Citigroup and Stanford Federal Credit Union, and their motivation per the WSJ piece appears to be seeking out and attracting younger and more digital-savvy customers who are increasingly looking to handle more of their lives through online tools. Per Sengupta’s comments, they’ll also benefit from Google’s ability to work with large sets of data and turn those into value-add products, but the Google exec also said the tech company doesn’t sue Google Pay data for advertising, nor does it share that data with advertisers. Still, convincing people to give Google access to this potentially sensitive area of their lives might be an uphill battle, especially given the current political and social climate around big tech.

PalmPay launches in Nigeria on $40M round led by China’s Transsion

Africa focused payment startup PalmPay has launched in Nigeria after raising a $40 million seed-round led by Chinese mobile-phone maker Transsion.

The investment came via Transsion’s Tecno subsidiary, with participation from China’s NetEase and Taiwanese wireless comms hardware firm Mediatek a Transsion spokesperson confirmed to TechCrunch.

PalmPay had piloted its mobile fintech offering in Nigeria since July, before going live today at a launch in Lagos.

The startup aims to become Africa’s largest financial services platform, according to a statement. 

As part of the investment, PalmPay enters a strategic partnership with mobile brands Tecno, Infinix, and Itel that includes pre-installation of the startup’s app on 20 million phones in 2020.

The UK headquartered venture — that was also founded with Chinese seed investment — offers a package of mobile based financial services, including no fee payment options, bill pay, rewards programs, and discounted airtime.

In Nigeria, PalmPay will offer 10% cashback on airtime purchases and bank transfer rates as low as 10 Naira ($.02).

In addition to Nigeria, PalmPay will use the $40 million seed funding to grow its financial services business in Ghana. The payments startup has plans to expand to additional countries in 2020, PalmPay CEO Greg Reeve told TechCrunch on a call.

PalmPay received its approval from the Nigerian Central Bank as a licensed mobile money operator in July. During its pilot phase, the payments venture registered 100,000 users and processed 1 million transactions, according to a company spokesperson.

With its payments focus, the startup enters Africa’s most promising digital sector, but also one that has become notably competitive and crowded  — particularly in the continent’s largest economy and most populous nation of Nigeria. 

By a number of estimates, Africa’s 1.2 billion people represent the largest share of the world’s unbanked and underbanked population.

An improving smartphone and mobile-connectivity profile for Africa (see GSMA) turns this scenario into an opportunity for mobile-based financial products.

That’s why hundreds of startups are descending on Africa’s fintech space, looking to offer scalable solutions for the continent’s financial needs. By stats offered WeeTracker, fintech now receives the bulk of VC capital and deal-flow to African startups.

Nigeria has multiple new digital-payments entrants — see Chippercash — and several firmly rooted later stage fintech players, such as Paga and recently confirmed unicorn Interswitch.

PalmPay CEO Greg Reeves believes the company can compete in Nigeria and across Africa based on several strategic advantages. A big one is the startup’s support from Transsion and partnership with Tecno.

Transsion Tecno Store Africa“On channel and access, we’re going to be pre-installed on all Tecno phones. Your’e gonna find us in the Tecno stores and outlets. So we get an immediate channel and leg up in any market we operate in,” said Reeve.

Tecno’s owner and PalmPay’s lead investor, Transsion, is the largest seller of smartphones in Africa and maintains a manufacturing facility in Ethiopia. The company raised nearly $400 million in a Shanghai IPO in September and plans to spend roughly $300 million of that on new R&D and manufacturing capabilities in Africa and globally.

In addition to Transsion’s support and network, Reeves names PalmPay’s partnership with Visa . “We signed a strategic alliance with Visa so now I can deliver Visa products on top of my wallet, link my wallet to Visa products and give access to someone who’s completely unbanked to the whole of the Visa network,” he said.

Another strategic advantage PalmPay may have as a newcomer in Africa’s fintech space is Reeve’s leadership experience. He comes to the CEO position after serving as Vodaphone’s global head of M-Pesa — one of the world’s most recognized mobile-money products. Reeve was also a GM for Millicom‘s fintech products across Africa and Latin America.

“I’ve had my fingers in mobile financial services for the last 10 years,” he said.

Reeve confirmed that PalmPay has local teams (and is hiring) in Nigeria and Ghana.

With the company’s launch and $40 million raise — which is potentially the largest seed-round for an Africa focused startup in 2019 — PalmPay’s bid to gain digital payment market share is on.

The Transsion led investment also serves as a big bold marker for China’s pivot to African tech in 2019. It follows several big moves by Chinese actors in the continent’s digital space.

These include Opera’s $50 million investment in multiple online verticals in Nigeria and a major investment by Chinese investors in trucking logistics startup Lori Systems this week.

Where top VCs are investing in fintech

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.

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’s 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 roboadvisor services. 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 years. We have been picking spots where we think we have an unfair competitive advantage.

Our fintech portfolio is also more global than other sectors we invest in. This is because there are opportunities to achieve billion dollar outcomes in fintech, even in countries that are much smaller than the United States. 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?

Startups Weekly: Understanding Uber’s latest fintech play

Hello and welcome back to Startups Weekly, a weekend newsletter that dives into the week’s noteworthy startups and venture capital news. Before I jump into today’s topic, let’s catch up a bit. Last week, I wrote about how SoftBank is screwing up. Before that, I noted All Raise’s expansion, Uber the TV show and the unicorn from down under.

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Uber Head of Payments Peter Hazlehurst addresses the audience during an Uber products launch event in San Francisco, California, on September 26, 2019. (Photo by Philip Pacheco / AFP) (Photo credit should read PHILIP PACHECO/AFP/Getty Images)

The sheer number of startup players moving into banking services is staggering,” writes my Crunchbase News friends in a piece titled “Why Is Every Startup A Bank These Days.”

I’ve been asking myself the same question this year, as financial services business like Brex, Chime, Robinhood, Wealthfront, Betterment and more raise big rounds to build upstart digital banks. North of $13 billion venture capital dollars have been invested in U.S. fintech companies so far in 2019, up from $12 billion invested in 2018.

This week, one of the largest companies to ever emerge from the Silicon Valley tech ecosystem, Uber, introduced its team focused on developing new financial products and technologies. In a vacuum, a multibillion-dollar public company with more than 22,000 employees launching one new team is not big news. Considering investment and innovation in fintech this year, Uber’s now well-documented struggles to reach profitability and the company’s hiring efforts in New York, a hotbed for financial aficionados, the “Uber Money” team could indicate much larger fintech ambitions for the ride-hailing giant.

As it stands, the Uber Money team will be focused on developing real-time earnings for drivers accessed through the Uber debit account and debit card, which will itself see new features, like 3% or more cash back on gas. Uber Wallet, a digital wallet where drivers can more easily track their earnings, will launch in the coming weeks too, writes Peter Hazlehurst, the head of Uber Money.

This is hardly Uber’s first major foray into financial services. The company’s greatest feature has always been its frictionless payments capabilities that encourage riders and eaters to make purchases without thinking. Uber’s even launched its own consumer credit card to get riders cash back on rides. It’s no secret the company has larger goals in the fintech sphere, and with 100 million “monthly active platform consumers” via Uber, Uber Eats and more, a dedicated path toward new and better financial products may not only lead to happier, more loyal drivers but a company that’s actually, one day, able to post a profit.


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Meet me in Berlin

The TechCrunch team is heading to Berlin again this year for our annual event, TechCrunch Disrupt Berlin, which brings together entrepreneurs and investors from across the globe. We announced the agenda this week, with leading founders including Away’s Jen Rubio and UiPath’s Daniel Dines. Take a look at the full agenda.

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