From banking to blockchain to insurance and real estate, here's where smart money VCs are investing in fintech.
In 2016, there were 836 investments to VC-backed fintech startups, just shy of 2015’s record 848 investments. Top VC investors in the category participated in 187 deals worth approximately $5.97B from 2015-2016.
Though overall investment pace slowed down in 2016, smart money VCs are still finding new opportunities in the space beyond traditional fintech areas such as personal insurance, payments, and alternative lending. One way to help separate signal from noise is to follow where smart VC investors are placing bets on emerging business models and technologies.
We used the CB Insights database to identify trends among smart money investors and categorized these investments from 2015-2016. Some of these emerging categories include blockchain, point-of-sale credit, and alternatives for institutional investors.
This brief includes:
For more on how we selected our 24 “smart money VCs,” please see the explanation and full smart money list at the bottom of this post.
Fintech deals by stage
Taking a look at deals by stage, early-stage deals (seed/angel and Series A) accounted for 38% of the 187 investments made by smart money VCs into fintech companies between 2015-2016. This trend suggests smart money investors are still finding new opportunities in the category.
Early-stage market map
Diving into these early-stage deals, we identified distinct fintech startups that received seed or Series A funding from a smart money investor between 2015-2016 and categorized them in our market map below.
Click on the map to enlarge. This map is not meant to be exhaustive of companies in the space.
Market map categories
Accounting / Bookkeeping: This category includes startups that offer an alternative or solution to traditional accounting and bookkeeping services. This includes tax accounting, recordkeeping, capitalization table tracking, and expense management. Early-stage startups in this category include Verato, a data scrubbing platform that unifies customer records across disparate financial services databases, and Canopy Tax an online platform to manage and report taxes. Verato raised a $12.5M Series A that included Bessemer Venture Partners and Canopy Tax raised an $8M Series A that included NEA.
Alternative Lending: This is not a new category within fintech but new companies continue to crop up globally. The tech startups in this category include marketplaces for consumer borrowers to connect with willing lenders and online lending platforms that facilitate direct or crowdfunded loans. This includes student loan platform Earnest, which raised a $17M Series A that included First Round Capital and Andreessen Horowitz and mobile lending platform Blispay, which raised a $12.75M seed investment that included NEA.
Bitcoin / Blockchain: Companies like Blockstream and Axoni are developing blockchain technologies to advance the use of digital currency in the financial services industries. Some of the use cases include making payment processing faster and more secure, storing sensitive information, and executing trading. Blockstream raised a $55M Series A that included Khosla Ventures and Axoni raised an $18M Series A that included Andreessen Horowitz.
Hedge Funds / Alternative Data: This is a smaller emerging category within fintech and is made up of companies that are leveraging alternative data, artificial intelligence (AI), and machine learning to make enhanced investment decisions. This includes Numerai, a hedge fund that leverages AI to make investment predictions, and Polychain Capital, a hedge fund that specializes in the trading of blockchain-based assets. Numerai raised a $6M Series A that included First Round Capital and Union Square Ventures and Polychain Capital raised a $10M Series A that included Andreessen Horowitz and Union Square Ventures.
Insurance Tech: Broadly, this category includes companies across peer-to-peer (P2P), life/annuity, healthcare, auto, mobile insurance, and even drones. This includes healthcare provider Bright Health, which raised an $80M Series A that included NEA and Bessemer Venture Partners, and competitor healthcare provider Clover Health, which raised a $13M Series A that included First Round Capital. One unique deal in the category is a $2.7M seed investment made by Social Capital to Verifly, an on-demand drone insurance provider for recreational and commercial flights.
Payment Tech / PoS Credit: This category includes companies developing new credit models that utilize sources of alternative data, alternative financing services, and point-of-sale products and services, including card readers, stands, and digital storefronts. This includes alternative purchase financing platform Bread, which raised a $14.3M Series A that included Bessemer Venture Partners and mobile credit scoring provider Branch International, which raised a $9M Series A that included Andreessen Horowitz.
Personal Finance / Wealth Management: The startups in this category provide services to individuals tracking their personal finances. Even, a personal bookkeeping and expense management platform that lets users create and balance a budget, raised seed VC funding with participation from Khosla Ventures, and Digit, a data analytics software company that analyzes consumer spending relative to income and expense history, raised a $11.3M Series A that included General Catalyst Partners.
Real Estate Investing: This category includes companies that provide investment vehicles in the real estate market. This includes alternatives to a traditional real estate investment fund or investment trust (REIT) such as investment platform Cadre, with an $18.3M Series A that included Founders Fund, Khosla Ventures, and General Catalyst Partners. The category also includes platforms to unlock real estate equity, such as Point Digital Finance, which allows owners to sell fractions of the equity in their home to investors to pay off debts. Point Digital Finance raised a $8.4M Series A that included Andreessen Horowitz.
|Company||Smart Money Investors||Category|
|Canopy Tax||New Enterprise Associates||Accounting / Bookkeeping|
|CBANC Network||Floodgate||Accounting / Bookkeeping|
|eShares||Spark Capital, Union Square Ventures||Accounting / Bookkeeping|
|Seed||General Catalyst Partners||Accounting / Bookkeeping|
|TravelBank||New Enterprise Associates, Accel Partners||Accounting / Bookkeeping|
|Verato||Bessemer Venture Partners||Accounting / Bookkeeping|
|Blispay||New Enterprise Associates||Alternative Lending|
|Bond Street Marketplace||Spark Capital||Alternative Lending|
|Earnest||First Round Capital, Andreessen Horowitz||Alternative Lending|
|Open Collective||General Catalyst Partners||Alternative Lending|
|Puddle||Andreessen Horowitz||Alternative Lending|
|ABRA||First Round Capital||Bitcoin / Blockchain|
|Align Commerce||Kleiner Perkins Caufield & Byers||Bitcoin / Blockchain|
|Axoni||Andreessen Horowitz||Bitcoin / Blockchain|
|BlockCypher||New Enterprise Associates||Bitcoin / Blockchain|
|Blockstream||Khosla Ventures||Bitcoin / Blockchain|
|Colu||Spark Capital||Bitcoin / Blockchain|
|Gem||First Round Capital||Bitcoin / Blockchain|
|Numerai||Union Square Ventures, First Round Capital||Hedge Funds / Alternative Data|
|Polychain Capital||Union Square Ventures, Andreessen Horowitz||Hedge Funds / Alternative Data|
|Second Measure||Bessemer Venture Partners||Hedge Funds / Alternative Data|
|Bright Health||New Enterprise Associates, Bessemer Venture Partners||Insurance Tech|
|Clover Health||First Round Capital||Insurance Tech|
|CoverWallet||Union Square Ventures, Index Ventures||Insurance Tech|
|Cyence||New Enterprise Associates||Insurance Tech|
|Hibob||Bessemer Venture Partners||Insurance Tech|
|Indio||New Enterprise Associates||Insurance Tech|
|Insurance Zebra||Floodgate||Insurance Tech|
|Jetty||Social Capital||Insurance Tech|
|Ladder Financial||Lightspeed Venture Partners||Insurance Tech|
|Lumity||True Ventures, Social Capital||Insurance Tech|
|Shift Technology||Accel Partners||Insurance Tech|
|SimplyInsured||Bessemer Venture Partners||Insurance Tech|
|Verifly||Social Capital||Insurance Tech|
|Zendrive||First Round Capital||Insurance Tech|
|AccessPay||True Ventures||Payment Tech / PoS Credit|
|Branch International||Andreessen Horowitz||Payment Tech / PoS Credit|
|Bread||Bessemer Venture Partners||Payment Tech / PoS Credit|
|Final||Kleiner Perkins Caufield & Byers||Payment Tech / PoS Credit|
|Payable||General Catalyst Partners, Redpoint Ventures||Payment Tech / PoS Credit|
|PayJoy||Union Square Ventures||Payment Tech / PoS Credit|
|Returnly||Index Ventures||Payment Tech / PoS Credit|
|Revolut||Index Ventures||Payment Tech / PoS Credit|
|Tesorio||Floodgate||Payment Tech / PoS Credit|
|Verse||Spark Capital||Payment Tech / PoS Credit|
|Zero||New Enterprise Associates||Payment Tech / PoS Credit|
|Albert||Bessemer Venture Partners||Personal Finance / Wealth Management|
|Cheddar Up||Foundry Group||Personal Finance / Wealth Management|
|Digit||General Catalyst Partners||Personal Finance / Wealth Management|
|Even||Khosla Ventures||Personal Finance / Wealth Management|
|Guideline||New Enterprise Associates||Personal Finance / Wealth Management|
|Pariti Technologies||Index Ventures||Personal Finance / Wealth Management|
|Penny App||Social Capital||Personal Finance / Wealth Management|
|Cadre||Founders Fund, General Catalyst Partners, Khosla Ventures||Real Estate Investing|
|Castle||Khosla Ventures||Real Estate Investing|
|Point Digital Finance||Andreessen Horowitz||Real Estate Investing|
|Property Partner||Index Ventures||Real Estate Investing|
|RealtyShares||General Catalyst Partners||Real Estate Investing|
|Roofstock||Khosla Ventures||Real Estate Investing|
Note: To analyze smart money trends, we looked at the activity of 24 top VC firms, selected according to portfolio valuations and investment outcomes. Some of the investors are linked to relevant research briefs. Here’s our full list of 24 smart money investors:
- Sequoia Capital
- Benchmark Capital
- Accel Partners
- Greylock Partners
- Andreessen Horowitz
- Union Square Ventures
- First Round Capital
- Bessemer Venture Partners
- Kleiner Perkins Caufield & Byers
- New Enterprise Associates
- Founders Fund
- Lightspeed Venture Partners
- Foundry Group
- Index Ventures
- Khosla Ventures
- Social Capital
- Emergence Capital Partners
- True Ventures
- Floodgate Fund
- General Catalyst Partners
- Spark Capital
- Battery Ventures
- Redpoint Ventures
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