Fintech Roundup Newsletter: Issue 6
A summary of the fintech space from Gauss Ventures
Welcome to our sixth fintech roundup newsletter, where we share the latest industry highlights. (Read our previous issue here.) For this special issue, we’re reviewing the year gone by.
Looking back on 2020, the pandemic has undoubtedly been challenging, yet we believe the fintech sector has shown a surprising resilience — we saw record-breaking funding rounds, IPOs and profitability (for example, Transferwise, Azimo, Starling Bank and Wirex have all made money).
We’ve been honoured to play our role in not only funding but also exploring and sharing insights on the sector.
At the start of the year, Daniel Gusev wrote about ‘Apple CarKey — and the private underwriting for the property market’. He explored how Apple CarKey will have implications much larger than the ability to store one car key inside one (i)phone. It will impact private insurance, pushing players to study sharing of keys digitally and developing a liability model to cover the use-case.
Over summer, Dr Ruth Wandhöfer made the long list for ComputerWeekly’s Most Influential Women in UK Tech. She was also one of the first appointed to the advisory board of RTGS Global, the world’s first cross border liquidity network.
She spoke to Sifted on the 18 companies that are set to thrive in the post-pandemic world (namely FX hedging and payments, like Ebury; regtechs, like Apiax; and digital core financial platforms, like Nucoro). And as part of The Fintech Times focus this September on Women in Fintech, she shared her top five female-led UK fintech innovations to watch for in the coming months. These are Goldex, Darktrace, Inbotiqa, WorldRemit and Starling Bank.
Ruth spoke on a panel at the October Women in Payments ASEAN Symposium that explored “The Future of Cross Border Payments in ASEAN”. She was also interviewed by CNBC on the topic of how ‘Britain’s fintech industry braces for a no-deal Brexit as transition deadline looms’.
Over autumn, Ruth was one of the judges for The Fintech Times 2020 ‘Rising Women in Crypto Power List’, as part of Wirex’s inaugural ‘Women in Crypto’ campaign. She reflected on ‘the ‘Hidden Women of Crypto’ in an opinion piece that celebrates diversity in digital assets.
Most recently, she was quoted in Tearsheet about how banks may need to get greener to stay relevant in the future. “Fintech’s digitally native approach is already far more aligned with elements of the E in ESG, just looking at the move from paper to electronic,” she said.
In October, Daniel Gusev commented on the Crowdcube and Seedrs merger: “Lately, crowdfunding [has become] a great amplification engine for companies seeking additional funding, yet very often the rounds announced to great success by companies are follow-ups after major tickets from VCs.”
He also wrote in Fintech Direct about the Wirecard investment scandal and how VCs should perform due diligence on companies: “There must be transparency and a reality check in respect to what is truly achievable and beneficial to industry and consumers.”
Recently, The Sunday Times published a special section on The Future of Fintech. In Educating customers is good for business, Nikita Tchesnokov said: “A new, financially literate generation is quickly realising they have been historically overcharged for banking products and are starting to shift their loyalty and custom to these new transparent providers.”
In industry analysis, McKinsey warned the fintech sector is set for an “existential crisis” as funding sources fade in the aftermath of COVID-19. The pandemic shrunk the runway for many fintechs which are still not profitable and the consultancy suggested they will need to adjust accordingly.
Still, in the United States, the market value of big fintech companies rose to $1 trillion, eclipsing that of the largest banks. Specifically, the market caps of payment stocks such as Visa and MasterCard overtook the value of Wall Street’s biggest banks. Square, Visa, PayPal and MasterCard became cumulatively worth $1.07 trillion, while the “big six” banks (JPMorgan, Bank of America, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs) became altogether worth less than $900 billion.
A PwC report “Time for trust: The trillion-dollar reason to rethink blockchain” looked at how the technology is being used and the potential global impact. A top finding was that blockchain innovation could possibly help worldwide GDP by $1.76 trillion over the following decade.
Also quoted in the report was Dr. Ruth Wandhöfer, who stated: “Blockchain will be at the core of digital trade finance, delivering benefits of automation efficiency, transparency, provenance, immutable records and ultimately trust. With the ability to reduce fraud, lower costs and improve the network, blockchain will enable credibility and support continued, growing international trade. This will also help businesses to achieve their ESG ambitions.”
Our portfolio company Coinfirm was named as one of the 10 of the most promising European blockchain startups to watch. Coinfirm aims to act as a foundation for the safe adoption of blockchain by all actors in the economy, including traditional financial institutions, governments, regulators as well as ordinary citizens.
One of our favourite snippets from the year was from Coinfirm co-founder and CEO Pawel Kuskowski, who quoted David Bowie in City A.M. where he wrote about ‘Being in the right place to do something exciting’ in the Crypto AM Founders Series:
“If you feel safe in the area you’re working in, you’re not working in the right area. Always go a little out of your depth. And when you don’t feel that your feet are quite touching the bottom, you’re just about in the right place to do something exciting.”
Speaking of exciting things — our portfolio company Zilch (a buy-now-pay-later startup) recently received $30 million in a Series B funding round: this is only months after they announced their first funding round of $10 million. While traditional buy-now-pay-later products are integrated on the merchant side and essentially become an added payment method, Zilch connects to the user’s bank account through open banking protocols.
We’re also excited about our portfolio company’s Bettr’s product-launch in Q1 2021 — to celebrate there is a campaign called #WeDeserveBettr. This refers to Bettr’s mission around creating a new culture of money. Bettr CEO and Founder Tobie van Zyl shared it on Linkedin here.
All in all, it has been a rollercoaster of a year that is not over yet. Here at Gauss, we’re looking forward to sharing more news and analysis from the fintech sector with you in 2021.
We’re predicting the rise of the digital asset capital markets, an increased emphasis on cybersecurity and data privacy, digitisation of the trade finance value chain and the consolidation of the fintech space… keep following us here for our updates as the next year unfolds.
Follow us on Twitter for even more fintech updates.
