Fintech Results 2016: Blockchain and InsurTech
1.Blockchain.. the buzziest word in the whole Tech/FinTech/VC space in 2016. While from a technological point of view, blockchain is definitely one of the most exciting and ambitious initiatives across all industries, from the business side it’s still at very early stage (so called “prove-of-conept” stage for the whole industry)
- Despite a lot of noise around blockchain industry, there are not to so many investment deals in this area as it was expected a year ago: blockchain accounts today to only 2% of the whole FinTech market
- However growth dynamics is positive: 18% YoY in 2016, meaning that the market is growing faster than FinTech in general:
in 2016 — $542M invested; in 2015 — $458M; in 2014 — $344M
- Market is getting mature and we see first companies which were able to raise Series B investments and above: the market consists of <800 blockchain companies, 34% (~250) have received any type of funding, 19% of those (~50) have reached round A, 16% of which (~10) have reached Series B;
- There is a decreasing tendency towards launching new blockchain
companies and this number has dropped by 25% in 2016:
2016 – only 169 new blockchain companies launched; while in 2015 — 221 and 2014 — 233 companies was created - However there is an increase in number of investment deals —20% YoY growth :
in 2016–119 deals; in 2015–99 deals; in 2014–54 deals; - Average deal sizes and tickets to equity grew in 2016; companies that reach later stage rounds receive huge equity investments
Regarding exits in blockchain, it’s now too early days to expect many notable acquisitions, however few M&A deals already happened. Mainly, blockchain startups are acquired to get an access to their technology and getting the smart team on board of a big organization, so exit multiples are not so high as if these companies had significant financial and operational traction
- US is still the leader in the blockchain market with 40% of the global volume
- However Asia, following the fintech trend, started to rapidly grow in the blockchain space as well, apparently mainly driven by Japan, not China yet. One third of global blockchain investments fall into Asia
- Payments, trading, remittances and wallets are the largest segments of the blockchain market
2. InsurTech is relatively new industry however it’s developing quite fast becoming one of the most growing vertical in the FinTech space.
First of all, don’t pay big attention to the 34% drop of InsurTech market in 2016, it actually grew up by 25% considering the number of deals. 2015 showed abnormal raise of InsurTech market mainly driven by Chinese large and extra-large deals, including $1B USD invested into world’s largest insurtech startup Zhong An.
- Today the market consists of ~1400 insurtech companies, however the launching tendency is decreasing: while in 2015 almost 300 companies
were launched, in 2016 we see a 40% decrease of this number (~180 new startups) - In 2015, the pike was mainly because of a largest in insurtech history Chinese deal — Zhong An, that made almost 40% of the whole year’s funding amount
- However the number of investment deals continue to stadely grow and 2016 showed 25% Y0Y increase
in 2014–54 deals;
in 2015–125 deals;
in 2016–157 deals.
- US is still a dominant insurtech market, with almost 50% of
all investments came to US companies - India is surprisingly catching up the Insurance trend; while suddenly China was very silent in 2016, especially considering insurtech boom there in 2015
- Most of IPOs are still at their core are classic insurers, that dive into the transformation
- The largest deal was done by Oscar (US) — it raised $400M in a financing round led by Fidelity Investments, which valued company at $2.7B (#2 insurtech unicorn after ZhongAn)
- in 2017 we expect to see several interesting M&A deals made by largest traditional insurance companies. In comparison with banks, they became really active in innovations, trying to work and cooperate with insurtech startups at the beginning of their growth, that is why investments and acquisitions from them is just a matter of time
Read also:
“FinTech Results 2016: Banks and Regulators”
“FinTech Results 2016 in Asia: China became the new Leader in the FinTech worldwide”
“FinTech Results 2016: Banks and Regulators”
P.s. If you are interested in FinTech/BlockChain/InsurTech, please take a look at our semi-annual research “Money of the Future” (download at http://fintech-research.com/) and feel free to contact us directly.
Partner and Investment Director at Life.SREDA
