As part of our 2017 roundup, we're looking back on predictions we made of the US startups to watch this year. Were we right?
What we thought then: The fintech sector has been growing at an exponential rate in the past few years. Global investment in the fintech industry currently stands at a staggering $49.7bn per year, with the majority being invested in companies located in the U.S, UK, Europe, China and India. Investment in fintech companies has tripled in the past few years, with investments in 2012 recorded at only $12bn.
There are also 1,362 fintech companies in 54 countries globally. The U.S, UK, Ireland and Germany are leading the way with the most fintech companies and start-ups in the world. Fintech companies around the world have also received over of $25bn in funding to date.
What we think now: Cryptocurrency and retail payments have been the driving force to sort the moderate growth from meteoric growth fintechs.
Here is our pick of the top 5 performers:
Total equity funding to date: Then $93.6m. Now Undisclosed (two Venture Rounds in April and June 2017)
Where they were then: Ripple offers real-time payments for financial firms around the world. The company’s purpose is to enable low exchange rates that enable banks and financial institutions around the world to directly transact with each other without the need for a central correspondent. Last year, the blockchain start-up company raised $55m in a Series B funding round.
Where they are now: Ripple spoke to bobsguide very recently and the excitement in its Head of UK Strategic Accounts’ voice was undeniable. Its stock has shot up, in line with other cryptocurrencies this year. XRP, the Ripple cryptocurrency as a tradeable proxy for the company, has seen meteoric growth in price. In fact, as of this morning at time of writing, XRP has already grown +33%.
Whatever happens to the bitcoin bubble, XRP looks set to continue with steady growth as Ripple, the company, look set to battle SWIFT with much faster payments and an improved liquidity function. The Ripple conference, Swell, held across Toronto from Sibos 2017, was a firm gauntlet in the correspondent banking landscape.
Total equity funding to date: Then $117m Now $225m
Where they were then: Coinbase is an online platform that allows merchants, consumers and traders to transact with digital currencies. Based in San Francisco, the company allows users to create their own bitcoin wallets and start buying or selling various cryptocurrencies as they would normally with a digital trading platform. The platform allows trading of digital assets with currencies in 32 countries.
Coinbase allows users to connect their accounts with their bank accounts. The digital asset exchange company has surpassed 6 million users worldwide.
Where they are now: Possibly the largest online platform to trade cryptocurrencies. As the middlemen of the cryptocurrency boom, Coinbase has enjoyed a hectic and busy 2017. Now with over 10 million users trading $50bn, Coinbase offers trading on Bitcoin, Bitcoin Cash, ether and Litecoin. At times throughout 2017, Coinbase struggled to cope with a massive increase in demand, but necessity makes for improvement and they’ll hope to continue into 2018 with much of the same momentum.
Total equity funding to date: Then $440m. Now valued at $9.2bn.
Where they were then: Probably the most famous company on the list, fintech unicorn Stripe is an American technology company that operates in over 25 countries. The creative thinking behind the company is to expand internet commerce by making it easier to process payments and transactions and manage an online business.
Digital banking has become a quintessential area of the fintech sector where companies are creating products that allow businesses to easily transactions online. Stripe works with companies ranging from start-ups to corporate businesses and provide a set of unified APIs and tools that allow payments to be managed online.
James Allgrove, UK Growth at Stripe spoke exclusively to bobsguide:
"Stripe exists to advance the state of the art in developer tools and support innovative businesses. This year, we're investing in software products that help technology businesses scale faster and help the next generation of start-ups get off the ground.”
“This includes advances in machine-learning powered fraud detection with our Radar product, which learns from Stripe's massive behaviour network of hundred of thousands of businesses to help our users fight fraud without reducing conversion. We're also excited to see how entirely new kinds of internet businesses scale internationally on Stripe Connect, our product built for marketplaces and platforms like Kickstarter and Shopify. Our users are scaling and innovating faster because of the way these software products work together, so this is a natural focus for us."
Where they are now: Leading the pack in Forbes’ Cloud 100 list, big hitter Stripe has had a fantastic 2017 in terms of growth. In July, Stripe launched its global support for Alipay and WeChat Pay. Now a fully fledged fintech, Stripe’s future looks bright with positive investment rounds from the Silicon Valley elite and strong demand for accessible APIs from merchants. Digital payments does not look like slowing down either; there’s little doubt Stripe is going to be a major player for the long haul.
Total equity funding to date: Then $67m. Now valued at c. $500m.
Where they were then: Kensho is a data analytics and machine intelligence company. With a specialised focus around AI, Kensho’s machine learning systems filter through data and market information, searching for correlations between real world fluctuations to evaluate whether the movement would have an impact on assets.
Kensho was founded in 2013 by Daniel Nadler, a PHD candidate at Harvard University. The company secured its first seed investor, partnering with Google Ventures, and has since been backed by key Wall Street banks such as JPMorgan Chase, Goldman Sachs, Morgan Stanley and Citigroup.
Where they are now: Following a £50m Series B round led by S&P Global, Kensho is now valued at $500m. S&P Global was joined by Wall Street’s Big 6 in the funding round, suggesting serious interest in introducing AI into mainstream investment. Where does the company go now? What better to feed superb analytics than greater and richer data? This is exactly what S&P have planned. Expect more data partnerships for 2018.
Total equity funding to date: Then $238m. Now $1.5bn.
Where they were then: Another fintech giant, Kabbage is a financial technology and data company that has created an online automated system to lend money for small businesses and consumers.
Kabbage’s aim is to simplify the online application form for lending and borrowing money to become solely automated, with businesses and consumers using their own data to submit an application and receive an immediate decision to access funds on the spot.
Where they are now: With a host of awards in 2017, Kabbage has had a busy year in the small business lending industry. Kabbage is becoming the quickest growing provider of small business loans in the industry with $4bn extended to 130,000 small businesses to date. More importantly still, Kabbage has grown its live data connections to 1.5 million which can be processed by its AI technology to better screen loans. Kabbage hasn’t just confined its lending to the US, but has extended to France and Italy this year with their international network of bank partnerships including Santander UK and ING.
*Funding statistics provided by Crunchbase
For the original list of 10, click here.