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We asked some of the top VCs to pitch us on up-and-coming fintechs with one big catch. Here are the 12 they came up with.
We asked some of the top VCs to pitch us on up-and-coming fintechs with one big catch. Here are the 12 they came up with.
Dan DeFrancesco,Madeline ShiApr 15, 2019, 20:07 IST
Rachel Carpenter, Intrinio founder and CEOIntrinio
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We ask some of the top venture investors to recommend up-and-coming US-based fintechs with one catch: They couldn't suggest companies in their own portfolios.
We got a wide range of answers, but one common theme was startups that cater to the underserved or unbanked.
Talk to any venture investor long enough and it's likely they'll eventually pitch you on a startup in their portfolio. It's natural for them to want to push companies they're financially tied to and have already thrown their support behind.
So when Business Insider reached out to some of the top venture capital firms to get their recommendations on the hottest up-and-coming US-based fintechs, there was one one caveat: They couldn't have invested in them.
More than a half dozen VC agreed to participate. Their responses included a wide range of fintechs, but one consistent theme across many of the startups was their focus on the underserved and unbanked.
Fintechs see the opportunity in using innovative technology to assist those who have been largely overlooked, or taken advantage of, by traditional financial players.
What it does: Propel takes on the $70 billion food stamp program that touches 45 million Americans. The mobile application allows users to better manage their food stamps and stay within their budgets when food shopping.
Why it's hot: "Both a good thing for the world, and an extremely fast-growing company," said Mark Goldberg, a partner at Index Ventures. "Game-changer for people who need it."
Ribbon
Startup: Ribbon
Cited by: Sapphire Ventures
Total raised: $225 million
What it does: Ribbon tackles the home-buying experience, giving customers the ability to buy a house while they are still securing a mortgage or selling their own home. The startup, which is headquartered in New York and Charlotte, will reserve the home you want by making an all-cash offer on the house.
Why it's hot: "There is a lot of traditional mortgage lenders that are very restricted in what they can and can't do. Those lenders are only doing what Fannie and Freddie will underwrite," said Paul Levin, managing director at Sapphire Ventures. "Any of these alternative lending or any transactions involving any bit of non-standardness can really be problematic, and Ribbon has come in and basically created a financing option where one didn't exist before."
Nova Credit
Startup: Nova Credit
Cited by: Bain Capital Ventures
Total raised: $20 million
What it does: Nova Credit looks to help immigrants transfer their credit history from their country of origin. The startup, which originated as a graduate research project at Stanford University in 2015, works with credit databases around the world to offer lenders access to pertinent information they need when reviewing a customer.
Why it's hot: "Outstanding founding team, riding the secular trend of globalization and leveraging technology to make the world a smaller and more fair place," said Matt Harris, a partner at Bain Capital Ventures.
Landed
Startup: Landed
Cited by: Bain Capital Ventures
Total raised: $11.5 million
What it does: Landed helps professionals buy houses in expensive cities they work in, such as San Francisco, Denver, Los Angeles, and Seattle. Founded in 2015, Landed's initial focus is to work with teachers so they can afford to buy houses near the schools where they teach — very challenging in hot housing markets.
Why it's hot: "Provides a co-investment model for residential real estate, in effect splitting a down payment with a home buyer or allowing them to extract equity (vs. take on debt)," said Bain Capital Ventures' Harris. "It's part of a set of companies providing fluidity and liquidity to this asset class."
Intrinio
Startup: Intrinio
Cited by: DRW
Total raised: $2.6 million
What it does: Intrinio offers a la carte access to financial data for developers and analysts looking for an alternative option to traditional data providers' expensive bundled data sets.
Why it's hot: Basic users don't want to pay for more data than they need, and specialized users are underserved by one-size-fits-all platforms," said Kimberly Trautmann, head of DRW Venture Capital. "Intrinio is interesting because they are providing tools for startups and enterprises building a new generation of financial technology applications."
DailyPay
Startup: DailyPay
Cited by: Edison Partners
Total raised: $22.8 million
What it does: DailyPay gives employees early access to wages they've already earned. Workers no longer have to wait until payday to receive money they might need immediately. In doing so, customers have greater financial security and are more likely to stay with their company for longer, thereby reducing turnover for the employer.
Why it's hot in 2019: "We believe they’re pioneering what we call 'Future of Income', where an individual’s financial wellness can be improved by having more control and say over income they have already earned, but income that was historically held in what be likened to an 'escrow' by their employers," said Jennifer Lee, vice president at Edison Partners. "Options and flexibility, along with on-demand payment, will be the norm to meet the on-demand workforce needs."
Ladder
Startup: Ladder
Cited by: Matrix Partners
Total raised: $54 million
What it does: Ladder offers life insurance via an online application, streamlining what can sometimes be a long and cumbersome process that includes paperwork, in-person medical exams and phone interviews. Customers also have the ability to increase or decrease their coverage at anypoint, akin to moving up and down a ladder, hence the name.
Why it's hot in 2019: Insurtech is one of the hottest areas of fintech venture investors are interested in investing in. Ladder is quickly emerging as a leader in the space thanks to its innovative technology and approach to what can sometimes be a lengthy process for users.
Guideline
Startup: Guideline
Cited by: Bain Capital Ventures
Total raised: $59 million
What it does: Guideline has 401k offerings for small businesses, charging a flat-rate per participant to the employer, as opposed to the traditional asset-based fees. To date, the California-based startup has 6,750 plans in place.
Why it's hot in 2019: "Combining the trend of leveraging novel technology to make offerings historically only available to large companies accessible to small businesses with a consumer tech-inspired design aesthetic," said Bain Capital Ventures' Harris.
Hippo
Startup: Hippo
Cited by: Index Ventures
Total raised: $109 million
What it does: Founded in 2015, Hippo focuses on home insurance. Its goal is to provide a more modern approach — that includes coverage of things like electronics and appliances — while still remaining simpler and cheaper than traditional plans.
Why it's hot in 2019: "New home insurance startup that is quietly building a phenomenal product in a large category without a tech winner," said Index Venture's Goldberg. "It's a truly 10x experience (I just went through it) versus incumbents, with a streamlined/modern question flow and easy ability to bind online."
Earnin
Startup: Earnin
Cited by: Sapphire Ventures
Total raised: $190 million
What it does: Earnin allows people to access money they've earned instantly, instead of having to wait for your paycheck. No fees are charged, as users have the option to support the service through tipping.
Why it's hot in 2019: "There's some other companies in this space, but they are doing it through the employer channel," said Sapphire Ventures's Levin. "Earnin, to me, is the largest, and maybe the most disruptive, of all them just given they are going directly to consumers and kind of have this interesting only-pay-what-you-feel-comfortable-is approach, which I think is pretty interesting and innovative."
Tala
Startup: Tala
Cited by: Sequoia Capital
Total raised: $105 million
What it does: Tala offers loans to people in underbanked countries, such as Kenya, Tanzania, Mexico, the Philippines, and India despite their lack of credit history. The Los Angeles-based startup collects nontraditional data from customers' smartphones to create a credit score.
Why it's hot in 2019: "It is a surprisingly under-the-radar company despite how well it’s doing. Tala's founder and CEO Shivani Siroya has a really interesting personal story. She used to work at the UN Population Fund, realized that 2 billion people in developing countries were being underserved by financial institutions, rolled up her sleeves to learn to code, and created Tala," said Jess Lee, partner at Sequoia Capital. "She’s been heads-down since then, has grown her company to 500 people across 6 offices, is one of only a few female founders to have raised over $100M."
Qwil
Startup: Qwil
Cited by: Edison Partners
Total raised: $10 million (equity), $100 million (debt financing)
What it does: Qwil works with freelancers and their clients to ease the payment process. Johnny Reinsch, Qwil's CEO, founded the company in 2015 when he was working as a contractor and almost defaulted on his mortgage because he hadn't received payment for jobs he'd done.
Why it's hot: "Streamlining decades-old payment and payroll system to become that 'Future of Income' isn’t the easiest thing to do, but these companies are enjoying significant momentum by understanding how to partner effectively with different players in the ecosystem," said Edison Partners' Lee. "There’s still more to do of course, but lots of exciting recent developments with the company make me very excited about Qwil’s future potential."
