Fintech

strategyeyedigitalmedia.com

Insight Report:

The Future of Fintech November 2014

Insight Report: The Future of Fintech

strategyeyedigitalmedia.com 2

The Future of Fintech

Fintech as a sector is coming of age. Venture capital investment is higher than ever, the infrastructure and

hardware is becoming more prevalent and adoption levels, both among companies and consumers are finally

gaining traction. Why is this? There are a number of factors making it a conducive climate for fintech. First of all

theres a genuine desire for innovation. The financial crisis did irreparable damage to the image of banks and

traditional finance institutions. People want a change. The issue is the speed of change. Unlike other tech sectors,

disruptive startups focusing on fintech wont gain the trust of consumers or enterprises overnight. Although it

almost appears as if fintech has suddenly exploded in 2014, its actually proved a gradual process to arrive at this

tipping point. Alongside this genuine desire is a world well placed to embrace fintech in terms of devices and

infrastructure. Its not just the continuing growth in smartphones across the globe, theres also the development

of digital wallets and the evolution of mobile point-of-sale systems. Of course some challenges still remain. User

adoption is not where many fintech companies would like it to be yet and regulation remains a barrier to change,

but the disruption of a centuries-old industry is now well under way and will only continue in the coming years.

Key Trends

1. Brand Venture Capital Investment On The Rise 5

2. Conducive Climate for Innovation 6

3. Potential For Profits 7

4. Regulatory Challenges 9

Top 50 Fintech Investments In 2014 12



Top 50 Investments In Fintech 2014



Key Trends



1. Brand Venture Capital Investment On The Rise

Venture capital investment in Fintech has steadily grown over the past five years. In 2010 some USD520m was

invested in fintech startups across 55 deals. Fast-forward to 2014 and that investment total has increased

more than fivefold. StrategyEye data shows approximately USD2.8m invested across 216 deals to date and

there will still be more investments before the year is out. Its this level of investment that has partly helped

see 2014 dubbed as a watershed year for fintech.

Whats notable about these deals is the size of the investments being put in. There were four investments of

more than USD100m - in credit marketplace Credit Karma, mobile payments pioneer Square, online payments

firm Stripe and Chinese peer-to-peer lender Renrendai. Drilling down into the types of areas being funding,

there is still plenty of investor appetite for startups addressing payments, lending services, money transfers

and crypto currencies.

Payments (including bitcoin startups) accounted for around a third of all investment in fintech this year so far

coming in at just over USD1bn for 76 deals. Apart from the USD150m put into Square there were also high-

profile investments in Stripe with a total of USD150m this year and USD80m for Powa. Bitcoin helped power

payments investment as investors continue to grow more bullish with their bets on crypto currencies. Some

USD287m was invested across 36 deals, almost six times more than the USD49m tracked across 11 deals in

2013. There were notable USD30m-plus rounds in the likes of Blockchain and Bitpay and there were 12 deals

of USD10m or more. These bitcoin investments are mainly in the US, but bitcoin startups based in China, South

Korea and Argentina all also received investment.



Of the USD2.8bn of venture capital investment in fintech, the US accounted for approximately two thirds of it

with USD1.8bn across 122 deals. But although still in the USs shadow the European fintech scene saw a

dramatic increase in fintech funding during 2014, with USD569m invested across 46 deals in the region. Thats

a 324% increase from the USD134m taken in 134 deals in 2013. The UK is the key investment territory in

Europe with UK fintech companies raising a combined USD345m so far this year across 22 separate rounds.

That figure is equivalent to 60% of all European fintech funding and the regions two largest deals e-

commerce payment service Powas USD80m haul and Funding Circles USD65m round both went to

companies based in London. Other key countries in Europe are Germany and Sweden. Both are known for the

increasingly active tech communities growing around their respective capital cities. German companies raised

just shy of USD99m across eight deals this year with credit rating Kreditechs the largest, while in Sweden

mobile card reader iZettle was the stand-out investment. In the Asian market USD330m was invested in 34

deals with India and China the most active regions, seeing nine and eight rounds each this year.

Unsurprisingly, with the amount of interest in the space, new fintech-focused investment funds are emerging

with the likes of Santander launching a USD100m fund and Oak Investment Partners unveiling a USD500m

fund for fintech and health. Index Ventures, which is a London-based VC backer of TransferWise, youth-

focused banking app Osper and credit risk data startup Credit Benchmark, closed a new USD550m fund in June

and while Balderton Capital and Londons online investment management company Nutmeg secured

USD305m in April to invest in the space.

2. Conducive Climate for Innovation

Alongside the dedicated venture capital funds are a number of accelerators looking to foster talent in what is

potentially an incredibly lucrative sector. The fact is that the financial sector is ripe for disruption. And banks

know they need to adapt. There is a growing understanding among the established order that they need to

partner with, learn from and probably acquire disruptive startups to avoid losing out on future opportunities

or at worst finding areas of their business redundant. Santander has proved itself progressive in launching a

dedicated fintech fund, while Barclays is supporting early-stage startups through its TechStars-powered

accelerator space.

London is a leading light in fintech currently and a good example of where the old order is connecting with the

new. Startupbootcamp is a Europe-wide series of accelerator programs and its significant it chose London to

set up its fintech operation. Level 39, meanwhile, is Europes largest startup accelerator space, and sits in the

very heart of the citys Canary Wharf financial district. Level 39s location is symbolic of the ties that the UKs

emerging fintech ecosystem has to Londons centuries old finance sector, which is supporting tech startups,



not only through partnerships and accelerator programs like that of Barclays, but also in talent as it seeks to

innovate centuries-old infrastructure.

Theres also a fundamental shift in the next generation of high earners. Where once graduates headed into the

city many now are looking to become tech entrepreneurs. As Sherry Coutu from Silicon Valley Comes To The

UK (SVC2UK) says: "In fintech you have floods of people coming out of financial services who have considerable

talents that can be used. These people can be brought into the entrepreneurial companies and find that the

impact they have is a hundred fold what it was when they were working for a conventional company. As a

career option, moving from a traditional financial services company to a fintech startup is very attractive.

3. Potential for Profits

Although fintech has matured as its gathered momentum over the past five years, its still at a point where it is

early adopters (both in the form of consumers and companies) that are embracing alternative finance be it

payments, transfers, lending and more. There is a sense that to take the next step forward it needs to really

capture the attention of the mainstream. Yes, there are some notable milestones being passed. In April this

year TransferWise claimed it had facilitated GBP1bn (USD1.67bn) in transferred funds, having managed to

strike a chord with enough disgruntled consumers that identified with its aggressive anti-bank marketing

campaign. Its move into TV advertising is a further push into the mainstream as it paves the way for its next

phase of growth. Its aiming the service at ex-pats, freelancers, UK pensioners that have retired abroad and

small-to-medium-sized businesses. Funding Circle is another relatively high-profile fintech player, claiming

http://digitalmedia.strategyeye.com/2014/05/30/interview_we_are_trying_to_change_the_focus_from_startups_to/http://digitalmedia.strategyeye.com/2014/05/30/interview_we_are_trying_to_change_the_focus_from_startups_to/http://digitalmedia.strategyeye.com/2014/04/15/boost_for_london_fin-tech_as_transferwise_hits_gbp1bn_milest/



some impressive figures. It says it now lends around GBP30m (USD47m) per month. Of the total its lent since

launch, GBP190m (USD298m) of the total of GBP390m (USD611m) came in the first six months of 2014. On the

payments side, the massive hype around Apple Pay has helped propelled digital payments further into the

public eye even if it making an actual impact still appears some years away. However, 1m credit card

activations in 72 hours after launch suggests the company could prove to be the catalyst the near-field-

communications (NFC) payments space needs.

But despite the feel-good factor and sense of optimism surrounding fintech, its worth noting that the majority

of companies are not talking up revenues or profitability yet. Again, its because fintech is still at a relatively

nascent stage.

As the scene continues to develop and companies begin to mature we will begin to see more substantial

revenues generated by firms. After all, the money floating around the financial world is massive and greater

adoption will give startups a bigger slice of that, MMC Ventures investment manager Simon Menashy says.

In fintech there is still quite a lot of hope money being invested. We haven't really seen that many fintech

companies make much of an impact yet as a proportion of their respective markets. The numbers in financial

services are just so huge, especially when you look at any numbers to do with banks or credit card spend or

invoicing.

In the mobile payments space especially, generating profits is no simple task. Mobile payments pioneer Square

is a good example. With razor-thin margins and high fees paid to credit card companies like MasterCard and

Visa, a payments company is yet to prove it can make a profitable business out of mobile payments.

http://digitalmedia.strategyeye.com/2014/07/15/interview_theres_real_bottleneck_when_seed_funded_companies_/



Reportedly, Square handled USD20bn in payments last year, pulled in revenues of USD550m, but made a

USD100m loss. This may change this year when it is estimated to handle USD30bn, but scaling up in mobile

payments is not cheap. This is why PayPal will be so interesting to watch in mobile payments, particularly as it

should be more nimble once it is spun out of parent company eBay. It has the scale and will now be looking to

its next phase of growth. Its no secret PayPal has proved eBays cash cow for some time and the relationship

came into sharper focus than ever during the firms earnings for last quarter, when PayPals revenues came in

at USD1.9bn accounting for nearly half eBay's overall turnover in the quarter. Transaction growth on PayPals

platform climbed 29% year on year in Q3 more than double eBays 13% revenue growth.

4. Regulatory Challenges

Although changing consumer and company perceptions about what technology can do for their finances

remains the biggest single challenge in this space, the regulatory environment and attitudes represent a barrier

many fintech startups are struggling with. The appetite for change may be global, but not every territory is as

relaxed as each other. The UK is keen to take advantage of this by being progressive in terms of regulation.

There is fierce international competition for this growing industry. And you need the right support from

government to win this global race you need the best investment environment, the right tax system, the

appropriate regulatory rules, the best infrastructure, and a government that gets out there in the world and sells

your products and services, says UK Chancellor of the Exchequer George Osborne. I want the UK the lead the

world in developing Fin Tech. Thats my ambition short and sweet.



This is an admirable stance, and as the CEO of UK fintech trade body Innovate Finance Claire Cockerton says the

UKs recent success in fintech is down to a positive policy and regulatory environment. For instance, unlike in

the US, in the UK retail equity crowdfunding is significantly less regulated. But the issue for truly ambitious

fintech companies is that to succeed they need to scale on a global level. An international presence, for

example, is necessary for money-transfer services as they need to work across borders. And this involves

regulatory challenges that vary from region to region.



Top 50 Fintech Investments in 2014



1. Credit Karma - USD160m creditkarma.com

Credit Karma offers a free online credit score tracker and credit marketplace where users

can sign up to receive daily emails about changes in their credit reports. Credit Karma also

offers its users advice on how to improve their credit score, as well recommending credit

cards to them. Its financial product marketplace covers a variety of loans and insurance

products. The firm secured US85m in a Series C investment round back in March that was

led by Google Capital and USD75m in a subsequent Series D from Susquehanna Growth

Equity, Tiger Global Management and Google Capital.

2. Square - USD150m squareup.com

@Square

Hugely hyped, Square pioneered the plug-in mobile card reader device, a dongle that lets

merchants accept payments on smartphones and tablets. Founded by Twitter co-founder

Jack Dorsey, the five-year old company will reportedly turn over USD30bn in payments

this year and is valued at USD6bn after its latest investment round, which came from the

Government of Singapore and may indicate the firms international expansion plans.

Facing increasing competition in its core business, the company has diversified into

powering storefronts with Square Market, micro loans, and P2P money transfers

recently partnering with Snapchat to power payments on the mobile messaging service.

3. Stripe - USD150m stripe.com

@stripe

Founded by two brothers from Ireland, Silicon Valley-based Stripe aims to make it easy for

businesses to accept and manage payments online. The Y-Combinator graduate was

named as one of just six launch partners for Apple Pay and is garnering a lot of interest in

the fintech industry with its mission to reshape the way money moves around online. It

also powers Twitter and Facebooks new Buy buttons. Backed by PayPal founders Elon

Musk and Peter Thiel, the five-year-old company claims it is already handling billions of

dollars in payments annually. It accepts 139 currencies, plus credit cards and alternative

payment methods like bitcoin and recently inked a landmark deal with Alipay. It is valued

at an estimated USD3.5bn after raising USD80m and USD70m in two investments this

year.



4. Renrendai - USD130m renrendai.com

China-based Renrendai is an online peer-to-peer lending service for financial services such

as loans, debts and investment and raised USD130m in January. The returns on loans are

between 10% and 18%, which is higher than the 3.25% offered by one- year turn deposits

by banks. P2P lending platforms are attracting investors attention, with several

companies like Dianrong and Youli receiving huge capital injections last year. But at the

same time more than 70 P2P sites were closed, which illustrates how precarious this space

is. Some of the biggest customers for lenders like Renrendai are startups. These cash-

strapped companies often find it difficult to get loans from large state-run Chinese banks,

which are more likely to lend to other state-owned enterprises.

5. Wealthfront - USD99m wealthfront.com @Wealthfront

Palo Alto-based Wealthfront provides automated wealth management software and

passed a milestone when it claimed to have USD1bn of assets under management this

June. Wealthfront raised USD35m in April and followed it up with a USD66m investment

round in October. The firm says its wealth management software is aimed at US

millennials, a group it expects to have a net worth of USD7 trillion by 2018. Wealthfronts

startup competitors include Personal Capital, SigFig and Betterment. It also face

competitions from financial giant Charles Schwab & Co., which recently rolled out its own

automated wealth management solution.

6. Social Finance - USD80m sofi.com @SoFi

Social Finance is a P2P lending marketplace that focuses on addressing the student loan

market. It raised USD80m this year in a Series C funding round. The way it works is that

the SoFi platform directly connects student borrowers with investors, bypassing the

banks. Since launching in 2011, San Francisco-based SoFi claims that it has financed

USD450m in loans to over 5,000 members. With over USD1 trillion in student loans

weighing down the US economy, thousands of young professionals could benefit. For

alumni lending on the network, theres an offer of roughly 5% return on investment after

fees.



7. Powa Technologies - USD80m powa.com @PowaTechLtd

Londons Powa Technologies is a mobile payments and e-commerce platform that

customises the payment experience both online and in store. The hardware and software

platform allows users to buy items with the Powa tag by taking a picture of an

advertisement in print or online, or through audio watermarks embedded in TV and radio

broadcasts. Powa is estimated to have a valuation of around USD2.7bn. The company

received a huge USD76m investment back in August 2013 and then followed this up with a

USD80m investment this year.

8. On Deck - USD77m ondeck.com

@OnDeckCapital

Another company aiming to shake up the way small businesses access finance is On Deck.

Picking up USD77m in a Series E round in March this year, the firm filed for an IPO earlier

this month. The New York-based company makes loans of up to a quarter of a million

dollars from backers including Google Ventures and Peter Thiel. Launched in 2007, the

firm says it has handled more than USD1.7bn in loans across 700 industries to date.

Following Lending Clubs IPO in the summer, the growing number of exits in this space

highlights the growing maturity of the digital lending space.

9. AvantCredit - USD75m avantcredit.com

@AvantCredit

AvantCredit is an online lender that uses its own technology to asset its clients. Unlike

many startups AvantCredit lends money from its own capital rather than facilitating peer

to peer transactions. The firm targets mid-prime borrowers with loans of up to USD20,000

for between one and four years. AvantCredit secured USD75m in a Series C funding round

led by Tiger Global Management. In addition Victory Park Capital and Jefferies Group have

each provided USD200m in credit



10. Funding Circle - USD65m fundingcircle.com

@FundingCircle

Londons Funding Circle is playing a key role in disrupting access to finance for small-to-

medium businesses in the UK. Already operating in the US, the P2P loans marketplace firm

picked up USD65m this year to explore new markets. Founded in 2010, the company has

seen remarkable growth this year, with its latest figures touting more than USD600m in

loans handled on its platform, with nearly half of that coming in the first six months of

2014 alone. So far 5,500 businesses have borrowed and 33,000 active investors are

registered on the platform. The firm inked a milestone deal with Santander this year that

will see the bank refer candidates that do not meet its criteria for loans. This deal could

become a blueprint for legislation making referrals to alternative financing services

mandatory.

11. iZettle - USD61m izettle.com

@iZettle

Leading Europes push into mobile payments is Swedens iZettle. The firm, which lets

merchants accept payments via a mobile card reader, raised a total of USD61m in VC

funding this year as it prepares for the next stage of growth. The firm recently launched in

the Netherlands to expand its footprint in Europe and has also made the jump into Latin

America, with launches in Mexico and Brazil both of which are touted for big growth

over the next few years. The company claims it handled more than EUR648m (USD813m)

in payments last year. iZettle is just one of a number of hot tech businesses to emerge

from Stockholms highly-touted startup scene.

12. Rong360 - USD60m rong360.com

Rong360 is looking to capitalise on the booming, but fragmented online lending industry

with its search and comparison tool. Users can compare peer to peer loans, mortgages,

credit cards and other products from more than 10,000 financial institutions. Rong360

offers localised sites for 100 cities across China and its backers include Sequoia Capital,

KPCB and Pavilion Capital. The site is on track to provide more than RMB1 trillion

(USD161bn) this year and earns a commission on each transaction from both the lender

and borrower.



13. Personal Capital - USD50m personalcapital.com

@PersonalCapital

Personal Capital offers an automated wealth management solution, with a free-to-use

money management tool, alongside premium advice and investment services. The firm is

going after wealthy customers and offers a private service for families with more than

USD1m in investment assets. Personal Capital raised USD50m in late October shortly after

one of its rivals, Wealthfront, raised USD66m.

14. Kabbage - USD50m kabbage.com

@KabbageInc

Atlantas Kabbage aims to provide alternative financing to small and medium-sized

businesses. Founded in 2009, it operates an automated loans platform offering financing

to both online and offline businesses. Distinguishing itself from other players in the space,

e-commerce businesses makeup the main part of its business, with this sector historically

having difficulty in securing loans from banks to fund expenditure on things like inventory.

As e-commerce continues to boom, the firm is well-positioned to benefit from increased

spending. Kabbage is well-backed and has raised nearly half a billion in venture and debt

financing to date, adding a USD50m raise in May this year. The company pulls in data from

services including PayPal, Safe and Square to measure how creditworthy applications are.

14. Addepar - USD50m addepar.com

@Addepar

Addepar is a cloud-based wealth management platform. It is designed to connect all

financial data onto a single cloud-based repository, meaning clients can track the

performance of many types of asset classes in one place. The company charges customers

different rates based on the complexity of their portfolio. Addepar is close to Palantir

Technologies, the data-gathering startup that counts the CIA among its clients. Joe

Lonsdale co-founded both companies and early Palantir employees helped create

Addepars algorithms. Now the software maker has raised a Series B of USD50m in a

round that saw a former Microsoft exec and a former PayPal operating chief join

Addepars board. Interestingly, Addepar was named after a Latin phrase in Ovids

Metamorphoses that means add a little to a little and youll have a great amount.



16. Affirm - USD45m affirm.com

Max Levchin is the co-founder and former CTO of PayPal so probably didnt have much

trouble convincing investors to hand over USD45m for Affirm, his latest take on the digital

finance space. Affirm integrates with e-commerce sites to offer instant loans to people

purchasing items on the site. The company assesses the risk of loans using personal data

including information from social networks, as well as the amount being borrowed.

17. Intacct - USD45m intacct.com

@Intacct

Intacct is a cloud-based financial management platform that received USD45m in equity

and debt financing earlier this year. Intaccts online platform is aimed at accountants and

allows businesses to manage its revenue, contracts and inventory needs. The company

has grown rapidly and makes life a lot easier for companies.

18. Kreditech - USD40m kreditech.com

@Kreditech

Germany-based Kreditech uses big data and complex machine-learning algorithms to

make more sustainable credit decisions. The company has raised USD40m in a Series B

funding round this year, which is one of the largest ever for a German financial services

technology company and one of the largest rounds in the country this year. The

companys real-time, credit-scoring service generates a credit score for a consumer, which

it then sells on to retailers. It uses data based on sources such as social networks and e-

commerce records and means it should be able to move quickly into emerging markets.

Investors have recently valued the company at USD200m.



19. WorldRemit - USD40m worldremit.com

@WorldRemit

Its been a big year for investment in UK-based international money transfer technologies.

London-based WorldRemit picked up one of the biggest rounds and indeed one of

Europes bigger Series A rounds - in this space in March, with Accel putting USD40m into

the company. Founded in 2009, the service is aimed at migrant workers to let them easily

send money they earn home to their families. The firm has inked deals with international

banks, mobile operators, transfer networks like M-PESA and local money transfer services.

At the time of its funding it said it was enabling 1.3m in annual remittance transactions. It

is expected to quadruple its employee base to 200 this year.

20. Xueqiu - USD40m xueqiu.com

Chinas Xueqiu, which translates as snowball, acts as a social network and information

provider for investors in China. Users can look up information on companies, bonds,

trusts, bitcoin and more on its site. Investors can also follow and talk to each other.

Xueqiu is working on building a broker system that would enable users to buy and sell

stock on its platform. It investors include Renren, Morningside Capital and Sequoia

Capital.

21. Xapo - USD40m xapo.com

@xapo

Xapo believe that bitcoins success will be based on whether people will trust bitcoins

stability and the industrys security. Thats why its built an entirely new bitcoin storage

experience. The company offers two distinct products, an easy access wallet and vault.

The companys storage vault is designed to provide long-term storage for large deposits

like hedge funds, venture capital funds and sovereign wealth funds. Whilst targeting big

clients is ambitious, it could well pay off as institutions become more educated in bitcoin

and digital currencies become more widely accepted. The company raised a total of

USD40m this year in two different rounds with Greylock Partners, Index Ventures, Paypal

co-founder Max Levchin and Yahoo! co-founder Jerry Yang among its investors. Its one of

the most highly-funded bitcoin startups around.



22. BitFury - USD40m bitfury.org

@BitFuryGroup

BitFury claims to be the largest producer of semiconductors, servers and

datacentre solutions for the bitcoin and cryptocurrency industry. Its also one of

the largest miners of bitcoin with computing centres spreading across Finland to

Iceland and Georgia. The company has pulled in two batches of USD20m this year -

the first in May and the second in October.

The company says it closed the second round, which saw many return investors

including Google Maps founder Lars Rasmussen, in less than a week, which is

testament to investors' trust in its business model and capabilities.

23. Motif Investing - USD35m motifinvesting.com

@MotifInvesting

Motif Investing is one of several wealth management startups to raise impressive amounts

of money recently. However, unlike its peers Motif Investing tries to differentiate itself by

partnering with investment advisers, rather than purely using software tools. Users can

create their own fund from 30 stocks or choose from more than 100 pre-made funds.

Motif Investing charges users a USD9.95 commission for each mini-portfolio. The firms

advisers include former SEC chairman Arthur levitt Jr. and its backers include Goldman

Sachs, JPMorgan Chase and Balderton capital.

24. E La Carte - USD35m elacarte.com

@prestotablet

Silicon Valley-based E La Carte specialises in tablets and software for restaurants through

which customers can order food, play games and pay their bills. Founded in 2008 by Rajat

Suri and Gichini Ngaruiya, the company announced plans last year to roll out 100,000 units

of its product, the Presto tablet, nationwide, one of the largest amount of tablets to be

rolled out by an enterprise to date. The Android-based, Intel-powered wireless Presto

tablet works through integrating with a restaurants Point of Sale system and connecting it

to the tablets illuminated credit card reader.



25. Invoice2go - USD35m invoice2go.com

@Invoice2go

Invoice2go is a mobile app that allows small businesses to manage cash flow. More than a

decade after it was founded it has raised a USD35m Series A round. Invoicing is crucial to a

small business cash flow, so the company could save businesses time and help them get

paid more quickly. The company claims that it is now used by more than 100,000

businesses in more than 50 countries, with customers invoicing USD10bn annually. The

Australian-founded company is based in the US.

26. Nutmeg - USD32m nutmeg.com

@thenutmegteam

At the forefront of the London fintech scene is online investment management tool

Nutmeg. The company aims to bring long-term investment portfolio management to the

masses through an online platform that allows users to start with investments as small as

USD1,500. Disrupting the world of financial investing by making it affordable for the

masses means the company needs cash. It raised a USD32m Series B round in June. That

takes the companys total funds raised to just under USD50m. To put that in perspective,

Palo Alto-based WealthFront in the US has raised just shy of USD130m, while New Yorks

Betterment has raised USD45m.

27. Betterment - USD32m betterment.com

@Betterment

New York-based Betterment is a goals-based online investment company that offers

personalised financial advice and cloud-based investment software. Betterment aims to

disrupt financial savings by letting customers invest their savings in a selection of stock

and bond portfolios. The only fee that it charges is a tiered management fee that is a

percentage of assets in each account. The company has bagged USD32m in a Series C

funding round. The company aims to manage USD1bn by the end of the year.



28. Blockchain - USD30.5m blockchain.com

@blockchain

Blockchain picked up one of the biggest investments in a bitcoin startup this year with

USD30.5m coming in from backers include Lightspeed Venture Partners and Sir Richard

Branson. While bitcoin remains a niche within the payments space, this is one of the

bigger players with the company handling around 2.3m wallets at the time it picked up its

funding in October. If the size of the round doesnt necessarily mean the sector is

maturing, then it does certainly signal investor appetite and attention.

29. Freshbooks - USD30m freshbooks.com

@freshbooks

Cloud accounting startup FreshBooks helps small-and-medium-sized businesses manage

their time and expenses, send branded invoices and collect online payments by credit card

or PayPal. The mobile app can be downloaded and used for free by FreshBook clients and

being able to create and submit an estimate on the fly is ideal and saves a lot of valuable

time. The company also has an API that allows third-party developers and app makers to

create invoicing workflows that integrate with its back-end system. The Toronto-based

company has paying customers in more than 130 countries worldwide. The only concern

being theres lots of similar startups out there, so competition is a worry.

30. BitPay - USD30m bitpay.com

@bitpay

Operating as a software-as-a-service company, BitPay allows merchants, from corner

shops to enterprises to accept payments in the crypto currency and claims to have 30,000

clients using the service. While the majority of its business is in larger enterprise-scale

transactions, bitcoin is creeping onto ever more point-of-scale locations. The startup has

just raised USD30m and brings the three year old startups value to USD140m.



31. TransferWise - USD25m transferwise.com

@TransferWise

TransferWise is the poster child of Londons buzzing fintech industry right now. The firm

aims to provide consumers with fairer rates on transferring money and has run a heavy

marketing campaign around the tube stations and billboards of the city taking to the

streets to protest hidden fees. The firm has garnered the attention of high-profile backers,

with backers in its USD25m round of funding earlier this year including Sir Richard Branson

and Peter Thiel. If latest rumours are to be believed, the Silicon Roundabout firm is in talks

to close a USD50m from Sequoia at USD1bn valuation.

32. Payoneer - USD25m payoneer.com

@payoneer

New York-based Payoneers payment platform links companies to professionals and

owners of small businesses from over 200 countries, with its focus on strengthening cross-

border business payments. The service works through re-loadable prepaid MasterCard

debit cards, as an alternative to wire transfer services, often used to provide payments to

remote populations. The company boasts a four-year revenue compound annual growth

rate of more than 65%. Payoneer was founded in 2005 and is headquartered in the US

with overseas R&D offices in Tel Aviv, Israel.

33. Blockstream - USD21m blockstream.com

@Blockstream

Blockstream is a Canadian company looking to develop the underlying technology of

bitcoin side chains. Sidechains are a type of blockchain that essentially helps to validate

data through blockchains, bitcoins digital payment ledger. Fundamentally, the business

attempts to make bitcoin transactions safer, a vital step in legitimizing the digital currency.

Blockstream believes the technology could help make micro-payments easier and cut

down on fraud by reducing the need for third-party payment processors. This ambitious

plan to change payments secured it USD21m from several notable backers including

Google chairman Eric Schmidt, Yahoo co-founder Jerry Yang and LinkedIn co-founder Reid

Hoffman.



34. Swipely - USD20m swipely.com

@swipely

Based in Rhode Island, Swipely provides payments, analytics, and marketing tools to local

merchants. The software works through a point-of-sale system terminals used by

independent businesses without additional hardware. The product is used by merchants

to interact with customer spending, social media, and other data. The company was

founded in 2009 by Angus Davis, an invite-only, social shopping service that allowed users

to share information about their purchases before developing into a payment service. In

2013 Swipely had more than USD400m in sales under management, with data on more

than 875,000 consumers.

35. PayNearMe - USD20m paynearme.com

@PayNearMe

Sunnyvales PayNearMe is a cash transaction network which allows customers to pay cash

for goods bought online through making payments for online purchases in cash at 7-

Eleven, Family Dollar and ACE Cash Express stores across the United States. Through a

proprietary embedded barcode, the company claims it can support mobile, web, printed,

magnetic card and in-bill (EBPP) payments. The company, which was previously called

Kweddit, has raised a total of USD56.5m over six rounds of funding since being founded in

2009 by CEO Danny Shader with just under half of that (USD20m) arriving this year.

36. Vend - USD20m vendhq.com

@venhq

New Zealand-based Vend provides point-of-sale and retail management software with its

solution designed to offer retail managers centralised control of stores IT infrastructure

for the management of one or many locations. The platform runs with applications to

manage accounting, ecommerce, appointment scheduling and more. Since its launch in

2010 software developer Vaughan Rowsell, the company has raised USD35.7m over five

rounds and partnered with Paypal.



37. ZenPayroll - USD20m zenpayroll.com

@ZenPayroll

US-based ZenPayroll works as a payroll service to enable businesses to set up and run

payroll from any web enabled device to streamline the complicated systems of legacy

vendors like ADP and Paychex. The company offers a simpler cloud-based system that can

automate all payroll tax calculations and payments, as well as provide direct deposit to

employees. ZenPayroll, which just snapped up USD20m in its most recent round of

funding, claims it is currently processing over USD1.5bn in annual payroll for thousands of

small businesses across the United States, more than quadrupling its rate of payroll

processing since its first round of funding.

38. Taulia - USD18m taulia.com

@taulia

Taulia manages invoices and payments and through its electronic invoicing platform,

which is designed to connect to any third-party e-invoicing network it allows early

payment of invoices in exchange for discounts. The penetration of people that use

dynamic discounting is still below 5%, so the company is in early stages. The company

does face quite a lot of competition from other invoicing companies such as C2FO, Ariba

and Xign. Having raised USD18m in a Series C funding round it has some notable

customers including Coca-Cola and Hallmark.

39. Ondot Systems - USD18m ondotsystems.com

Ondots software lets users manage their payment cards (be that credit, debit or prepaid)

using their mobile phones. Features allow card holders to alter what types of merchants a

card can be used with, as well as setting location, spending and offer alert limits. That

means that parents could give their kids prepaid cards that they could only use to pay for

the bus and lunch. The California-based firm picked up USD18m and is marketing its

mobile software as a white-label solution to sell into credit card companies and banks in

which it is likely to find interested parties as traditional finance providers seek to adapt to

changing consumer habits.



40. Fundbox - USD17.5m fundbox.com

@fundbox

Lending startup Fundbox is based in San Francisco and works to improve cashflow by

taking out the wait between business invoices and customers getting paid. The service

allows small business owners to choose invoices they want paid out, and Fundbox puts the

money in their account the next day. The company loans businesses the amount for the

invoice so that the startup can continue paying its bills despite having to wait for the client

check. Fundbox received USD17.5m in its latest funding round and claims to clear tens of

thousands of invoices daily for businesses across 42 states.

41. Chrome River - USD17m chromeriver.com

@chromeriver

Los Angeles-based Chrome River works as a global provider of expense reporting and

invoice management. The service runs through a software-as-a-service platform that helps

companies through smarter expense management by integrating accounts with their

systems. Chrome River claims it has grown at compound rate of 50% per annum over the

last four years, and 45% over the last two years. The company recently snapped up

USD17m in its most recent round of funding.

42. Circle - USD17m circle.com

@circlebits

Circle is bitcoin startup gaining traction having just secured USD17m from venture capital

investors to help fund its new service aimed at ordinary consumers. The Treasury

Department has asked the company to join its Bank Secrecy Act Advisory Group as its first

virtual currency participant. Investors clearly see this as a very significant global market

and Circles consumer platform will allow users to deposit traditional currency in an

account that will then converted to bitcoins for a transaction fee. Once the account is

established, users can send and receive bitcoin payments for free.



43. QFPay - USD16.5m qfpay.com

@qfpay

Beijing-based QFPay offers a device for taking e-payments using a smartphone. The

companys main product, which is called QPOS, looks a bit like a mini calculator and it

connects wirelessly to Android tablets or phones or iPhone etc. It claims to have more

than 110,000 businesses using it, which is pretty impressive. QFPay has pulled in

USD16.5m in a Series B funding round, which it will nee to compete in a crowded space.

Theres Lakala and iBoxPay both of whom have similar products, and of course there is

Alipay and WeChat who are both pushing consumers into mobile payments via their own

e-payment platforms.

44. Adyen - USD16m adyen.com

@Adyen

Adyen from Amsterdam provides a single platform to accept payments anywhere in the

world through any sales channel. Over 3,500 businesses use the Adyen payment platform,

including high-profile names such as Airbnb, Booking.com, Spotify, KLM, Indiegogo and

SoundCloud. 2013 saw it process USD14bn through its global platform, a year on year

growth of 40%. Aside from enabling payments, it also provides analytics and risk

management services to customers as part of the same fee.

45. Auxmoney - USD16m auxmoney.com

@auxmoney

Germany-based Auxmoney offers a peer-to-peer lending marketplace with 20,000 loans

worth EUR100m (USD124.3m) flowing through its platform. Its got a strict risk

management system that excludes about 80% of potential borrowers, with the remaining

20% then divided into a further five groups - with each offered a different interest rate.

Lenders can get a 6% return, which with interest rates hovering near is an attractive

proposition.



46. InstaMed - USD15m instamed.com

@InstaMed

InstaMed has taken a bit of a niche when it comes to payments and focuses on healthcare.

The company processes billions of dollars and information on its integrated network,

connecting hospitals, practices and payers with millions of patients. The company has

raised USD15m in new capital and more than 90% of InstaMeds existing investors

participated. Impressively, the company reaches one third of the US healthcare market.

47. TraxPay - USD15m traxpay.com

@traxpay

Frankfurt-based Traxpay offers up a platform that facilitates around the clock business-to-

business payments and transaction in real time. Its akin to a PayPal for the B2B world. The

company hauled in USD15m this year, which was an oversubscribed Series B round.

Significantly ,the company has teamed up with MasterCard in a four-year deal. In other

words its new strategic partner will enable it to scale. Its not yet profitable or disclosing

any revenue for the time being. But according to Boston Consulting the opportunity that

Traxpay is tapping into is worth some USD377 trillion.

48. Earnest - USD15m meetearnest.com

@MeetEarnest

Earnest is a lending startup that looks at earning potential rather than credit score. The

startup looks at a users current job, education history and bank balance, with each person

assessed by an algorithm and a team of people. Earnest targets college graduates and

young people who have high earning potential. Its loan range from USD1,000 to

USD10,000 and are for one year at a flat 6% interest rate. Earnests backers include

Andreessen Horowitz, First Round Capital and Atlas Venture.



49. Future Advisor - USD15m futureadvisor.com

@FutureAdvisor

FutureAdvisor is an online financial advisor designed to help people get the most out of

their investment portfolios. The company offers a free platform for unlimited investment

advice, but also offers premium plans, with a flat annual fee of USD49-USD195 that allows

clients to schedule personalised video consultations with financial advisors. The San

Francisco company has raised USD15m in a Series B funding round. Its going to need it as

it faces stiff competition from the likes of Betterment and WealthFront.

50. WePay - USD15m wepay.com

@wepaystatus

Although the consumer-facing side of payments tends to garner more attention, investors

also see a huge amount of potential in the back end of operations. This is where WePay

comes in, a firm that facilitates payments for the growing number of crowdfunding sites,

marketplaces and other online businesses. Starting out life as a group payments service,

the Y-Combinator-backed company raised USD15m in Series C at the beginning of the year

in a series C round. The firms backers include angels such as Mac Levchin, as well as high-

profile institutional backers like Ignition Partners, Highland Capital Partners and August

Capital.



Contact

Editor: Tom OMeara

Authors: Tom OMeara, Sarah Gill, Ben Graham, Irene Ramsay, Rory Grieve, Lou Boyd

Email: [email protected]

Head office: 40 Craven Street, London, WC2 5NG

Phone: +44 20 7930 4158

mailto:[email protected]

Documents

Fintech