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Fintech Fixes…& Fortunes
Sector FocusStrategic
Investors & Advisors
Average Initial Investment< $1 Million
$40 Million Venture Fund
Early Product-Market Fit
Dan Rosen
STRONG DEAL FLOW
DAN RAVEHVice PresidentGoogleViola Private EquityWharton MBA
Our Team
*Employees of Aduro Advisors, which provides Commerce Ventures’ back offices services
NIKHIL RAJVenture PartnerWalmartKosmixHarvard MBA
BRAUGHM RICKECFO*True VenturesAbout.meUC Davis
ANDREA FITZHENRYExecutive AssistantHighland CapitalSullivan & CoglianoMCLA
SHELLEY RUBINOController*DeloitteKeyCorpUniv. Of Akron
PETE KIGHT
(Acquired for $4 BILLION by Fiserv)
BOARD MEMBER:
FOUNDER / CEO
EDUARDO CASTRO-WRIGHTCEO / VICE CHAIRMAN
SCOTT THOMPSONPRESIDENT / CEO
BOARD MEMBER:
SCOTT THOMPSONCEO, ShopRunnerCEO, Yahoo!*President, PayPal*
PETE KIGHTVice Chair, Fiserv*Founder & CEO, CheckFree (IPO)*
ANIL AGGARWALChairman, Money2020CEO, TxVia (Acq’d by Google)*CEO, Calrity (Acq’d)*
TOM LITLECEO, Litle & Co (Acq’d by Vantiv)*Founder, Industry Ventures*
ERIC DUNNEVP Payments, Intuit Early CFO & CTO, Intuit*
SCOTT SHAWVice Chair, Kessler GroupInvestor: Ozumo, Usushi, Aliaswire
SCOTT LOFTESNESSPartner, GlenbrookGM, First Data Merchant Services*Strategy & Int’l, Visa*
VINCE PASSIONECEO, LendKeyCOO, DealerTrack*President, AmeriTrade*
KAREN WEBSTERCEO, Market Platform DynamicsPresident, PYMNTS.com
Our Network
MIKE WALSHCEO, CyberSource(Acq’d by Visa)*Advisor, Warburg Pincus
GREG COHENPresident, iPaymentCRO & CSO, Cayan*President, Moneris*
JOHN MCDONNELLCEO BitnetVP, BD at CyberSource(Acq’d by Visa)*
EDUARDO CASTRO-WRIGHTVice Chair, WalMart*CEO, WalMart, USA*
TODD KRASNOWHighland ConsumerSVP Marketing, Staples*
*Indicates previous position
CORPORATE INVESTOR 1
•Largest issuer of prepaid debit accounts in the U.S. (75 million cards in circulation)
•$232 billion of annual payment volume•Customers include:
CORPORATE INVESTOR 2
•Leading provider of tech and processing to the financial services industry
•$5 billion in 2014 revenues•Leader in electronic bill pay and ACH processing, moving $1 Trillion each year
•Account processor for 1/3 of all U.S. FIs•Power 145 million deposit accounts and 75 million online banking users
CORPORATE INVESTOR 3
•5th largest homeowners insurer, 6th largest auto insurer
•8th largest U.S. credit card issuer, 26th
largest bank•Over 10 million members•$25 billion of net worth•Top-ranked bank in Net Promoter Score
STRONG DEAL FLOW• LOTS OF IT
• 1000+ investment opportunities since launch
• EARLY STAGE• 99% Seed or Series A
• PROPRIETARY• 65%+ of opportunities from proprietary sources
• RELEVANT• 90%+ of deal flow in FinTech & Commerce
CONFIDENTIAL
UNIQUE FUND 1 PORTFOLIO
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$35 Million
$80 Million
$141 Million
$281 Million
2013ACTUAL
2015EXPECTED
2016PLAN
2014ACTUAL
NOTE: Includes all revenues from entire active portfolio
PROMISING RESULTS
STRICTLY CONFIDENTIAL
WHAT’S GOING ON IN FINTECH?
CONFIDENTIAL
FINTECH IS EXPLODING…
…AND NOT JUST IN U.S.
...AND NOT JUST BY VCs
INCUMBENTS ARE ENGAGED
CONFIDENTIAL
...SO EXITS ARE STRONG
...FINTECH IS HOT!!
WHY?
CONFIDENTIAL
SHIFT TO MOBILE BANKING
50
60
70
80
90
100
110
2013 2014 2015 2016
MILLIONS OF U.S. ADULTS USING MOBILE BANKING
•72 million Americans, 18-34•85%++ own smartphones•Digital (Mobile) vs. Physical•Personalized vs. Broadcast•$1 Trillion of student debt, BUT…•Will account for $10T of lifetime purchasing power
MILLENNIALS
MILLENNIALS
MILLENNIALS
MILLENNIALS
BIG BANKS INVESTING
US Banks to spend $62B on IT in 2015
•Top 4 U.S. Banks EACH spend $7-10 billionannually on Technology
SOURCES: Celent, Information Week, Bloomberg, WSJ
NEW ENTRANTS:
12M+ users
10M+ users
CONFIDENTIAL
CONFIDENTIAL
NEW ENTRANTS:
CONFIDENTIAL
NEW ENTRANTS:
OPPORTUNITIES
CONFIDENTIAL
CONFIDENTIAL
CONFIDENTIAL
SECURITIZATION FAILED…
…ALT LENDING AROSE
PLATFORMS SCALING
$5B Market Cap, $7B in 2015 loans
$355M equity, $7B in H1 2015 loans
$1.4B equity; $400M of debt
$660M Market Cap
$240M of equity; $360M debt
CONFIDENTIAL
UNDERSERVED: 401(k)
$5 trillion of defined contribution retirement assets
• Only 5% of fiduciary advisors actively involved in 401k advice
CONFIDENTIAL
RISE OF “ROBO-ADVISORS”$130M raised, $2B+ AUM
$103M raised, $1B+ AUM
$105M raised, $2.5B+ AUM
$30M+ raised, $300B tracked
Acquired by BlackRock
PAYMENTS: GROWING
SOURCE: McKinsey
MERCHANT ACCEPTANCE
$4B mkt cap, $30B+ volume
$280M raised, $10B+ volume
$30B+ volume (Acq’d $800M)
$1B+ volume, just raised $40M
$266M raised, $25B+ volume
CONFIDENTIAL
PAYMENT FRAUD EXPLODES
SOURCE: Nilson
INVESTING IN PROTECTION
CONFIDENTIAL
BTW, B2B FINTECH IS HOT…Just raised $225MJust raised $111M
Just raised $100MJust raised $80MJust raised $50M$129M raised
CONFIDENTIAL
…AND SMBs NEED CREDIT
SOURCE: FDIC
Volume of <$250,000 Loans (U.S.)
SMB LENDING$93M of Equity, $650M of Debt$240M of equity; $360M of Debt
$660M Market CapJust raised $50M
DATA: BIG & EXPLODING
•Big Data technology market expected to reach $38 billion this year
•Financial Services is one of the largest spenders on big data technologies for Credit, Risk, Fraud Prevention, CRM, Capital Markets
BANKS NEED HELP
•By 2016, 25% of the Top 50 global banks will have launched a banking app store for customers
•Europe adopts PSD2 opening up txn data•Yodlee supports 27 million daily API calls•Aggregation supports thousands of apps servicing 10’s of millions of users
APIs & OPEN BANKING
SOURCES: Gartner, Yodlee
•Spend & invest app (think BofA’s Keep The Change)
•Built on aggregation APIs•Live 1 year•650,000 members•Mostly millennials•$25++ million of savings
CASE STUDY: ACORNS
126 Fin Tech startups targeting Millennials have raised
$2.3 Billion
MILLENNIAL BANKING
DIGITAL CURRENCY
2014: $335M OF VC FUNDINGJust raised $75MJust raised $116M
Just raised $30MRaised $40M last yearRaised $30M last yearRaised $30M last year
Just raised $50MCONFIDENTIAL
SPECULATORS EXITED
BUT LATELY, PRICE IS UP
SOURCE: CoinDesk
…STEADY USAGE GROWTH
SOURCE: Blockchain.info
INSURANCE TECHNOLOGY
Insurers will spend
$175 billion on IT spending in 2015
SOURCE: Celent
IS DRAWING VC DOLLARS
INVESTING IN FINTECH
CONFIDENTIAL
VC INVESTING 101
•Team•Market•Product•Financial
ECONOMIES OF SCALE
BANKING = ECO-SYSTEM
Questions?
Dan@CommerceVC.com+1 (415) 500-5352
@VentureDan
CONFIDENTIAL
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