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Post on 12-Dec-2015




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This is CB Insigh's brief on FinTech startups ecosystem landscape


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    Research Brief Page

    Bitcoin Startup Investment Continues to Hit New Records


    Disaggregation of a Bank Startups Raise Nearly $600M in the Last Year


    Corporate Investment Activity into Payments Tech is Slowing


    10 UK Fin Tech Startups to Watch


    Intuit Has Become One of Techs Most Active Acquirers


    Payments Tech Investment Report


    Where Is the Smart VC Money Going in Fin Tech?


    Unlike MasterCard & Visa, American Express Looks Far Beyond

    Payments for Venture Investments


    Mobile PoS Upstarts See Increased Investment Interest

    The Boom in Global Fin Tech Investment Fin Tech Grabs $3B in 2013

    P2P Lending Startups Take More Than Twice As Much VC

    Funding As Crowfunding Platforms




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    Bitcoin startup investments now total over $400M in aggregate

    funding. Q4'14 is already at record deal and funding levels (and

    there is more than a month to go).

    Bitcoin prices have fallen below $400 but that hasnt stopped investors from plowing dollars into emerging digital currency companies ranging from

    bitcoin wallets to data providers to block chain APIs.

    According to CB Insights data, investments in the bitcoin space hit an all-

    time quarterly high of over $107M already in Q4 2014 and there is still

    more than a month to go in the quarter. Deal activity in the space has also

    hit new highs in Q4 as well. The funding activity has been boosted by a

    handful of notable deals including Blockstream which raised $21M from

    investors including Reid Hoffman, Khosla Ventures and Real Ventures. Last

    month saw bitcoin wallet Blockchain and bitcoin mining firm BitFury Group

    raise $30.5M and $20M, respectively. The deal sizes within the bitcoin space

    are definitely stepping up in size.

    In total, bitcoin startup investments now total over $400M in aggregate

    funding. Its a far cry from Q2 2013, when total funding was under $25M and there were more investors than investor-backed startups in the bitcoin


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    Bitcoin startup funding vs. close price

    Most interestingly, the rise in bitcoin startup investments has come as the

    price of bitcoin has dropped drastically since hitting record highs in

    November 2013. Using bitcoin close price data from Bitstamp, we analyzed

    aggregate funding to bitcoin startups vs. BTC close price since July 2010.

    The contrast is notable. Since September, bitcoin prices have steadily dipped

    below $400 while funding to the space continues to accumulate.

    Top Bitcoin startup funding rounds

    The top 10 rounds to startups in the bitcoin ecosystem to date are listed below. Interestingly, Xapo and BitFury appear twice on the list due to

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    tranched Series A deals. The largest single funding round in the space goes

    to Blockchains $30.5M round led by Lightspeed Venture Partners and Wicklow Capital. BitPays $30M round from Index Ventures, AME Cloud Ventures, Felicis Ventures and Founders Fund among others came in a close


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    At the start of the year, Union Square Ventures took a look at

    'Disaggregation of a Bank' startups. Three quarters later, those

    companies have raised hundreds of millions in VC funding.

    In January, Alexander Pease of Union Square Ventures released a

    presentation titled Disaggregation of a Bank, highlighting a host of internet-enabled Fin Tech startups aiming to disrupt traditional financial services like

    high net-worth wealth management, lending and merchant banking.

    Obviously, there are many more tech startups focused on these areas of big

    banks than Pease highlights, but nevertheless, we thought it would be

    interesting to use CB Insights data to crunch the numbers behind his original

    list of 31 bank busting startups. They provide a snapshot into what is

    happening within the broader fin tech industry.

    Nearly $600M invested in the last 4 quarters

    Over the last four quarters, the bank disaggregation startups raised $590M

    across 21 deals. Of note, startups on the list have raised $469M after Pease published his analysis on January 7. Each of the last four quarters have seen

    $100M+ invested, with Q214 seeing the highest amount driven by large rounds to lending firms Prosper Marketplace and Lending Club.

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    Deal activity moves to mid-stage

    Over the last eight quarters, just over 51% of deal activity to these select

    startups came at the early-stage (seed/Series A). But YoY deal growth is

    clearly moving to the mid-stage as highlighted by the visualization below.

    Among the bank disaggregation startups that have raised mid-stage funding

    in the last year are Coinbase, Auxmoney, CircleUp and TransferWise, the

    UK-based money transfer startup rumored to be raising new funds from Sequoia Capital at a valuation near $1B.

    Taking on banks requires capital (lots of it)

    Among the list of startups, Square has raised the highest amount of capital at

    over $490M, with its latest $150M raise coming from Singapores Sovereign Wealth Fund GIC in October. Six of the startups have raised over $100M

    including Lending Club, Funding Circle, Stripe and Prosper. Payday loan

    company Wonga is also among those startups but is reportedly in trouble

    over its lending practices. Another 7 of the companies have raised over

    $30M including Dwolla, BitPay and C2FO. All of the startups on the list that

    have raised over $30M are below:

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    Top Investors

    Perhaps not surprisingly, Union Square Ventures which is where Pease works, was invested in the highest number of companies (9) on the list

    including Coinbase, SigFig and Funding Circle. A list of VC investors, outside

    of USV, who have invested in four or more of the bank disaggregation

    companies since 2009 is below.

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    After hitting a five-year high in 2013, payments tech deal activity

    involving corporations is leveling out in 2014. A mix of tech, telco

    and financial firms including Intel, MasterCard, Citi and Motorola

    are some of the most active investors.

    Over the past five years, private payments tech companies have drawn

    massive investment to the tune of over $5B in the last five years. Interestingly, however, corporate investment into the sector is seeing a pull


    After hitting a five-year high in 2013, payments tech deal activity involving

    corporations is on pace for its lowest year since 2009 according to CB

    Insights data. This report takes an in-depth look at corporate investments

    into the payments tech space. Specifically, it looks at financing, stage,

    geography trends into payments. All of the corporate investment data

    analyzed is available as part of the CB Insights venture capital database.

    2014 is a slower deal year

    Since 2009, corporate investors have participated in over 140 deals totaling

    $1.83B to payments tech companies. While deal activity looks to be down in

    2014, corporations have invested in some notable deals including mobile

    payments and marketing vendor Mozidos $185M financing (MasterCard) and iZettles $61M Series C (Intel Capital, SEB Venture Capital).

    Corporate funding participation in payments tech peaked in 2012 with mega

    deals including American Express $125M minority investment into China-based Lianlian Pay and Squares $200M Series D from corporates including Citi Ventures and Starbucks. Square subsequently took investment from

    Singapores sovereign wealth fund.

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    Mid-stage takes 44% of corporate payments tech deals

    Corporates typically jump into payments tech companies at the mid-stage,

    with 44% of corporate investments coming at the Series B or Series C stage

    since 2009. Some mid-stage corporate investments in 2014 include mobile

    payments operator SumUps $13M Series C (Groupon, BBVA), payments processing app Flint Mobiles $9.4M Series C (Verizon Ventures) and B2B payments business TraxPays $15M Series B (Software AG, Commerzbank). Early-stage payments deals have taken 27% of corporate investments over

    the period.

    The chart below highlights the distribution of corporate deals by stage within

    payments tech.

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    California tops NY for corporate payments tech deals by over 4x

    Peeling back the US payments tech deals, we see California has taken 56% of

    corporate investments since 2009 followed by New York and Massachusetts

    which take 12% and 11% of deals, respectively. Other states seeing

    corporate payments tech deals over the period include Texas, George and


    Corporations investing in payments do nearly 30% of their deals outside the USA.

    The most active corporates in payments tech

    Intel Capital tops the list of investors by unique portfolio company

    investments in the payments tech space since 2009 including iZettle,

    Fortumo and mFoundry (acquired by FIS). A mix of payments strategics

    including Visa, Citi, MasterCard and AmEx are making investments as are

    tech corporations including Motorola Solutions VC and Qualcomm

    Ventures. The diversity of the investors in the space underscores the

    increasingly messy space that payments has become with everyone from

    tech to telco to payments giants all attacking it.

    A list


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