Latest trends in Fintech and their fundraising

Focus on the evolution of finance and their VC investments

Hello everyone!

To continue this series on the trendiest startup sectors, I’m going to talk about Fintechs today! 💳

83% of French people are not familiar with Fintechs according to a report drawn by the firm Deloitte. This is really the hidden side of the Iceberg ❄️. Finance is undergoing major changes thanks to the development of these startups. Indeed, new technologies make it possible to simplify and accelerate banking operations, thus making the solutions of traditional banks obsolete. This is no bad thing, because in truth it forces these banks to innovate and therefore adapt their services to keep their customers, i.e. you and me. For us, it’s a win-win situation. 😉

Among the top startups, Fintechs are in a very good shape : 8 of them are in the Next 40 while 17 are in the FT120. The Fintech sector is the most represented and as a consequence the sector that raise the most funds.

More precisely, according to the Fintechs report by Exton Consulting and New Alpha Asset Management, Fintechs represent 13% of French Tech fundraising in 2019, with an average growth of about 50% per year over the last 3 years. At the investment level, 81 fundraising campaigns have been carried out for an amount of €630 million. The number of deals in excess of €10 million has increased significantly, as has the involvement of international investors in major deals.

⚠️ DISCLAIMER ⚠️ : Given the large number of Fintechs, I won’t be able to cover all their categories in a single article: Neobanking, Paytechs, Alternative Finance, Marketplace, Investment, Risk Management, Regtechs… I have to make choices!
→ But don’t worry : If you want to have a detailed mapping of the Fintechs in France, click here!

The sections will be wide enough to talk about a maximum of startups with different solutions: B2B services, Blockchain-Cryptocurrencies, Democratization of investment and Impact investing will be part of the section. 📈

Let’s get started right away, because time is money !💵

1) B2B Services

The Fintechs are invading B2B because nowadays banks and insurers trust them. And we know why. Startups constitute an excellent investment or buyout opportunity, especially when certain technologies or services are essential to the survival of banks/insurers. This is why entrepreneurs focus on their needs so that some of them can make a nice big EXIT. 💰
Moreover, Fintechs allow banking players to remain at the forefront of innovation and therefore continue to acquire new customers.
However, the target of Fintechs is not only banking institutions. The services offered are sometimes adapted to other forms of companies and even startups in other sectors!

Let’s analyse together some of the solutions proposed to improve the life of companies :

Pipe (Los Angeles) : Founders of fast-growing SaaS start-ups must always ask themselves how they will finance their growth. Will they grow on the revenue they generate or will they exchange some of the ownership of their company for capital from investors? Founders typically opt for the latter, because accepting VC financing at the outset allows them to grow faster. However, they gradually dilute themselves in the distribution of capital. Pipe addresses this problem with a platform that provides non-dilutive financing to SaaS companies in the form of an instant cash advance.
→ The startup raised $6 million in a seed round led by Craft Ventures, with participation from Fika Ventures, MaC Ventures, Naval Ravikant, WorkLife Ventures and The Weekend Fund.

Ubble (Paris) : The startup is a SaaS software company specializing in highly secure online identity verification. The solution uses AI to verify the identity of users using identity documents or facial recognition. 100% digital and based on automated processes, the solution can be integrated regardless of the medium: web desktop, mobile web, Android or iOS apps, tablets, etc.
→ A great leap forward, especially since their British competitor Onfido has raised 50 million dollars and uses a screenshot solution, which is less reliable than a video to verify the user’s identity. ⏰

Lemonway (FT 120) : This startup is a pan-European payment institution dedicated to marketplaces, crowdfunding platforms, e-commerce sites and other companies looking for a KYC/AML payment process, portfolio management and regulatory framework. Its payment solution is recognized and used by more than 1,400 websites in Europe, including 200 EU funding platforms. Since December 2012, the company has opened 5 million electronic wallets to end users.
→ Lemonway has self-financed its growth since its creation in 2007 and subsequently raised €35 million from three venture capital funds: Breega Capital and Speedinvest in July 2018, and ToscaFund in October 2019 for a final round of €25 million.

2) Blockchain & Cryptocurrencies

Your moneybox has transformed: it’s no longer a porcelain pig, it’s a computer screen. And physical money has been replaced by digital assets created out of nothing.💨

This change was made possible thanks to Blockchain, a transparent, secure information storage and transmission technology that operates without a central control body. In fact, more than half of the Fintechs using this technology are developing their activities around cryptocurrencies such as storage, distribution, portfolio management or trading. Other companies allow smart contracts to be issued for industry-specific uses such as transactional record keeping.

Let’s have a look at some examples :

Definer (Minneapolis) : Founded in 2018, DeFiner is a true peer-to-peer network for digital savings, loans and asset payments. Whether you are a lender looking for a return on investment or a borrower in need of funds, DeFiner offers you maximum flexibility to set your own rates and terms. In addition, all loans are fully guaranteed and secured by the Blockchain. This means less cost, less time, less complications and promises more attractive loan rates! What’s more, the service is open 24 hours a day, 7 days a week.
→ In March 2020, DeFiner raised $250.000 in Pre-Seed and joined Nex Cubed’s Fintech Accelerator program. Most recently, it joined Abu Dhabi’s Tech Stars 2020 Accelerator.

Zabo (Dallas) : Cryptocurrencies are becoming more and more used as an investment tool. Banks and brokerage firms have asked to provide financial services based on this new type of asset. The next generation of investors (and therefore customers for banks) would like to own cryptos as much as they would like to own stocks. Zabo gives financial services companies the tools they need to create attractive products around cryptography. The goal is to be able to best serve this new generation of customers.
→ Zabo has announced a $2.5 million fund raising. Led by Moonshots Capital, the financing round attracted several popular investors from the cryptocurrency industry such as Digital Currency Group, Blockchange Ventures, Castle Island Ventures, CoinShares, Tezos Foundation and Capital Factory.

Stratumn (Paris) : The startup has designed a software editor specialized in the traceability and simplification of intra and inter-company exchanges. Its product, entitled “Trace’’, allows real-time traceability of operational processes and company documents. Customer consent is managed in a certain and secure way thanks to the Blockchain, as is the confidentiality of the data exchanged.
→ Stratumn has already raised nearly 8 million euros since its creation and counts among its investors C. Entrepreneurs, the BNP Paribas Cardif fund, Open CNP, Otium Venture, as well as the American companies Nasdaq and Digital Currency Group.

Ledger (Next 40 🦄) : This unicorn designs and markets portfolios of cryptographic products for individuals and corporate investors. These portfolios have the appearance of a USB key and allow to store its cryptocurrencies in a rather intuitive way, while acting as an ultra-secure safe. Indeed, the Nano S Ledger, sold in more than 1.5 million copies worldwide, includes a module that independently manages access to private keys, without ever communicating them to the computer or network communicating. The startup has sites in Paris, New York, Vierzon and Hong Kong.
→ Level of financing Although the latest round of financing is relatively small compared to other series ($2.9 million by Samsung Ventures), a total of $88 million has been raised.

3) Democratization of investment

The annual interest rate for Livret A passbook savings accounts in France has been of 0.5% since 1 February 2020. Traditional banks often take bank charges for each purchase order made on the stock exchange. Not a good idea. 👎
In addition, we no longer need to call our banker or broker to understand the basics of the stock market because information on personal investment has become widely available on digital platforms (specialized sites, newsletters and fintech blogs). Fintechs have taken advantage of this to create innovation on this subject and to offer to invest in assets that were previously only accessible to people who already had substantial capital. Offers are also more categorised because everyone can find their own depending on their age, profession and therefore their income ! 🎯

Let’s take a closer look :

Mon petit placement (Lyon) : This startup allows everyone to manage a portfolio of financial assets, even with only 500 euros in savings. With a simple offer and personalised support, the startup invites young working people to enter the big league: the stock market. The stock markets can offer high returns in exchange for taking a certain amount of risk and are therefore an eldorado for making savings grow.
→ 1.5 million was raised thanks to historical investors, new business angels, the French Tech Seed fund, Bpifrance and bank loans.

Oxygen (San Francisco) : Founded in 2018, Oxygen is a new neobank challenger focused on freelancers offering them free banking and credit solutions via a mobile application. Specifically, Oxygen has developed AI models that track freelancers’ bills, project their income and offer instant credit when needed.
→ Oxygen has raised $5.5 million in financing to date and is supported by 500 start-ups, Pioneer Fund, Runa Capital and Base Ventures, among others.

Stackin’ (Los Angeles) : Created in 2017, the startup is a banking platform for young people based on message texts. It takes the form of an online messaging service that sends personalized information to subscribers based on their interests, commitments and aspirations. It also provides advice on how to encourage young users to save money, reduce debt or manage an investment.
→ Stackin’ recently completed a $12.6 million Series B led by Octopus Ventures with participation from investors Experian Ventures, Cherry Tree Investments, Dig Ventures, Mucker Capital, Unlock Venture Partners, TechStars and Wavemaker Partners. The total financing increases to $19.6 million.

PS : If you’re aiming to invest, don’t forget the advice of our dear friend Warren Buffet : ‘’Risk comes from not knowing what you’re doing’’.
Smart guy 🎓

4) Impact investing

Over time, Finance has been “de-sharkened” 🦈. Today, CSR is so important that a company listed on the stock exchange can see its share price drop radically as a result of a bad environmental action on its part. Nowadays, creating a startup non-compliant with eco-friendly principles is (really) not conceivable. In a nutshell, good luck raising funds from investors. On the other hand, if we can mix finance, respect for the environment and/or with a positive impact for a given population: Jackpot for entrepreneurs as well as for citizens and the planet. 🎰

Below are examples of Impact investing solutions :

Lita (Paris) : The startup responds to two major problems: the need to finance companies with a positive social and environmental impact and the lack of transparency/meaning of investments proposed to retailers. To do so, Lita offers the possibility to build a portfolio that is 100% responsible, 100% transparent and 100% online.
→ The startup raised 2.2 million euros in May 2018, with the participation of Phi Trust Impact Investors and Aviva, among others.

Lively (San Francisco) : Patient healthcare costs are skyrocketing every year in the United States, forcing Americans to make difficult decisions about their health and money. Unfortunately, this is not a welfare state. But no one should have to choose between personal health and financial savings. Lively addresses this problem and makes it easier to manage the rising costs of personal health with Health Savings Accounts (HSAs). This allows US citizens to save on healthcare costs today and plan for tomorrow’s costs.
→ Lively raised $27 million in Series B with Costanoa Ventures, Ally Ventures, Liquid 2 Ventures, PJC, Teamworthy Ventures, Streamlined Ventures and Y Combinator.

This second article is coming to an end ! Thank you for your reading, I hope you enjoyed it! By the way, if you know about other Fintechs, don’t hesitate to mention them in the comments below 😎

To continue the adventure, the third episode will focus on an extremely attractive subject: the Sportechs ! 💪

See you soon ! 🚀