Week 3 September: Early-Stage Fintech, Insurtech, Wealthtech and Crypto/Web 3.0 Funding in Developed Markets, Deal Highlights, Themes and Trends

Overview – While deal volume remains at subdued levels relative to this time last year, as well as on a broader basis, this week witnessed a significant pickup after August’s lull in deal value. As a result, funding that fit my criteria this week closed above US$200ml, with deal size of nearly US$10ml. This represented a significant recovery in early-stage US financing, although the UK also saw 5 deals announced across a range of different fintech themes (see table below for more details)

Wealth, Capital Markets and Asset Management Early-Stage Deals Sept 10-16th

Themes: As a single area of focus, this segment enjoyed one of its strongest funding periods and deal cycles in the last week for quite some time. When one looks across the 5 deals that were executed, the thing that struck me can be summarized as follows

A.     Investors believe that despite the negative tone in financial markets, retail investors will continue to remain active, and looking toward, directly or through brokerage channels, investing in improving their overall decision making.

B.     Alternative investing retains an area that continues to capture funding interest, both in relation to exactly what type of asset classes can be underwritten (this week diamonds) as well as what type of infrastructure can be delivered to expand access to private markets.

C.     B2B Wealthtech/Regtech businesses that provide infrastructure to support both rapidly launching wealthtech propositions, as well as serving the regulatory requirements that go with running retail platforms haven’t yet been abandoned by investors.

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1)     Composer          www.investcomposer.com/       Retail Investors

Composer allows users to build, test, and manage automated investment strategies without writing a line of code.

2)     Allocations         www.allocations.com/                VC, PE & Angels

Allocations offers a platform to create and manage SPVs in order to raise capital via private funds

3)     Diamond Standard         diamondstandard.co     HNWi and Investment Advisors

Diamond Standard is a regulator-approved fungible commodity for natural resource, with a built-in wireless chip for electronic trading.          

4)     Ruleguard          www.ruleguard.com/                   Wealth Management, Platform Provider              

A regtech provider focused on providing a platform for CASS rules automation, SMCR compliance, breach and issue management, third-party oversight, and regulatory checklists.   

5)     InvestSuite        www.investsuite.com                  Wealth Mgners, Fin Inst, Stockbrokers

InvestSuite is a global fintech providing automated investment solutions to financial institutions of all sizes.

6)     Freetrade           freetrade.io                                     Retail Investors

Freetrade is a challenger stockbroker that offers free share trading in mobile phones.     

Banking and Payments Early-Stage Deals Sept 10-16th

Themes: Payments and Banking infrastructure have retained a lot of resiliency during the fintech valuation downturn, probably because they represent access to far larger addressable markets. Of course they are also increasingly competitive arenas where one could encounter bigtech so they are acquiring a higher risk profile. In this week’s deals, the themes that caught my eye were:

A.     Investors are still prepared to look at specific segments of the market and back all in one vertical banking/payment platform designs.  There is an increasing cross reference of geography and persona in such plays.

B.     Funding for inclusive and accessibility strategies that touch are enabling wider banking and sme participation in financial service markets continues to attract attention. One sees that ventures seeking to drive down transaction costs (for cross/border, and remittance) and increase payment service options are securing funds off the back of both “social” agendas as well as support for alternative payment models

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1)     MAJORITY          www.majority.com/en/                Migrant Workers

MAJORITY develops an app-based platform that facilitates digital banking services for migrants.

2)     Acceleron Bank www.acceleronbank.com           Community Banks and Credit Unions

Acceleron Bank (In Formation) Is A Digital, Integrated FX Payment Solution That Eliminates The Need For Multiple Vendors And Connections.

3)     ModusBox         www.modusbox.com/                 SMEs & Micro Businesses

Creating a real-time payment network (RTPN) to enable an omni-channel multi-actor, instant, 24/7 electronic fund transfer service

4)     PayAll Payment Systems              payall.com         Import & Export SMEs, Community Banks

Payall’s global single shared platform is a first-ever payer detail transparency and specialized, inclusive payment orchestration for cross-border payments             

Web 3.0, Decentralized Finance and Crypto Early-Stage Deals Sept 10-16th

Themes: In the Crypto world, it was what I would describe as a more balanced week of activity. There were deals that were squarely in the DEFI space executed, along with transactions that continue to aim at both broadening accessibility and improving the scalability and cost related to blockchain infrastructure. In particular, I noted

A.     Decentralized Finance is continuing to evolve concepts in traditional financial market areas to fit them into the Defi world to serve wallet holders, and institutional investors. In most of these cases, the platform design needs to accommodate both different types of structures as well as different types of value mechanism.

B.     Investors remain prepared to support the evolutionary building blocks of the Web 3.0 landscape, looking toward propositions that provide wider developer accessibility, and have the traction to prove it. This extends across tokens and NFTs.

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1)     Synquote           www.synquote.com                     Options Traders

Synquote is a defi trading platform that offers clear option prices for digital assets.           

2)     Infinity Exchange             www.infinity.exchange Traders, Inst. Investors, Yield Farmers

Infinity Exchange is a new platform that provides institutional grade capital efficiency in decentralised finance.

3)     Aptos   aptoslabs.com                                                                 Start-ups & Developers

Aptos is a web3 startup that builds a scalable Layer 1 blockchain.              

4)     Arpeggi arpeggi.io                                                                           Musical Creators             

Arpeggi is the first and only blockchain/NFT platform for music creators to publish and share music

Consumer and SME Fintech Early-Stage Deals Sept 10-16th

Themes: There are always a variety of deals each week that have a broader fintech agenda. Normally these are aimed at supporting SME in terms of their financing and administrative needs, though on this occasion we have also seen consumer solutions gain funding. My analysis suggests support for:

A.     New fundings that are specifically tackling digitization themes that have perhaps not been often offered to consumers as a broader service, as opposed to a point of sales situation.

B.     Interest in market segments that are facing significant local barriers to addressing their financial needs, even as they operate as individual with great mobility (and associated wealth/income)

C.     With the right level of traction beyond it, automation platform designs for SME that also come with access to professional service support are still able to raise funds though clearly this is a crowded space. Large local markets continue to support expansion though at some point (probably from next year) consolidation via M&A may start to emerge

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1)     Masref www.masref.ch                                                Lebanese Consumers

We are a Swiss fintech that makes safe and secure saving accounts accessible to everyone, everywhere

2)     CANDIS candis.io                                                             SMEs    

CANDIS is Berlin-based company that offers an intelligent platform for automated invoicing & accounting

3)     Kafene www.kafene.com                                          Consumers using Leasing

Kafene is a digital web and app-based lease to own platform that underwrites, approves, and enables payment in less than 5 minutes.

4)     Claimer www.claimer.com                                         SMEs, Start-ups (R&D credit recovery)

Claimer makes it simple to submit credit claims for money used for R&D.               

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Workplace Fintech Early Stage Deals Sept 10-16th

Themes: I segregated two deals this week from the broader fintech arena because they continue to demonstrate that funding for companies that are exclusively focused on the employer/employee relationship in large enough markets can also continue to raise funding. The themes that were prominent in this week’s deal flow were

A.     Funding investors continue to support a broad set of themes that have to do with financial wellness and programs that help to deliver it. There are different ways that this is being offered to employers, with one group of companies looking at the problem as a financial products and educational challenge, while another set are attacking it from a cash flow, personal financial management perspective. Both got some attention stateside this week.

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1)     Rosaly  www.rosaly.com                                           Employers, salary advance

Rosaly provides employers with capability to manage automated advance payment enabling PFM assistance for employees

2)     SavvyFi savvyfi.co/                                                        Employers, Financial wellness

SavvyFi facilitates students and employees by providing student loans, employee benefits, savings, and financial services.

Insurtech Early-Stage Deals Sept 10-16th

Themes: Insurance is not an area that I do a lot of work in personally these days, but there are also a number of transactions that occur in this very large segment as investors do not think the industry has advanced far enough or fast enough in relation to overall digitization, and also because it is a market segment that has a complex value chain for delivering and maintaining its retail and commercial product suite. This was underscored by this week’s funding, in which I noted:

A.     Machine Learning and AI solutions continue to be used by companies that are building use cases in relation to both faster and more accurate underwriting.  Models and Technology around risk management are being distributed both directly to commercial insurers as well as brokers.

B.     Rules systems are also increasingly forming part of the client service and claims management infrastructure via digital solutions that dynamically connect client service to end customers. Insurers continue to invest heavily in creating better quality client care as an actual differentiator and as way of combating distribution via marketplaces

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1)     Planck  planckdata.com                                                Commercial Insurers

Planck is an AI data platform for commercial insurers, creating instant, and accurate underwriting insights.

2)     Stubben Edge   www.stubbenedge.com                Insurance Brokers

Stubben Edge is a technology-based financial services group that enables intermediaries & clients to make easy decisions about their risks.          

ProNavigator    pronavigator.ai                                               Insurance Company (Client Engagement)

Sage from ProNavigator is the all-in-one knowledge management system that's made for insurance.