[Fintech Brazil] A large addressable market with significant opportunities – Part I

6 April 2017

Techfoliance is super excited to launch its new serie [Fintech Brazil] with inside success stories and analysis shared by top local experts and entrepreneurs.

Brazil has been lately on top of international headlines. Political instability, corruption scandals and economic recession have been increasing the perception of risk associated to the country and shadowed (to a certain extent) positive developments that deserves to be highlighted.

Brazil has a vibrant start-up community tackling the various issues the Latin American giant faces by bringing successful business models from abroad and increasing the list of innovations “made in Brazil”.

Investments in Brazilian Fintechs amounted to USD161m in 2016, a staggering 85% growth when compared to 2015, placing Brazil among the top 10 countries worldwide by deal value.

Additionally, Brazil is the leading Fintech hub in Latin America, with over 244 Fintechs.

Leading sectors

32% of the Fintechs operate in payments, the leading sector in the ecosystem. Success cases include MercadoPago, Pagar.me and Nubank, which attracted almost USD180m in investments from Goldman Sachs and well-known international venture funds, including Peter Thiel’s Founders Fund, Sequoia Capital and Tiger Global Management. Finance management and alternative lending come second and third, with 18% and 13% of the Fintech start-ups.

Alternative lending platforms deserve special attention due to its growth and recent capacity to attract investments (e.g. Creditas (previously BankFacil) raised BRL 60m in February 2017 from the IFC, Naspers, Redpoint e.ventures and other leading VC investors, on top of BRL 25m raised previously in June 2016).

Many platforms rely on partnerships with small- to mid-sized banks that lend their balance sheet and license to ensure regulatory compliance, using the partnerships as a leverage to increase scale.

Despite the recent growth and undeniable potential, alternative lending in Brazil faces fundamental issues linked to the country’s underlying economic conditions: high interest rates (12.25% as of March 2017, down from 13% in the beginning of the year) and the availability of several high yield market instruments make it harder to develop compelling securitization mechanisms to resell loan books. Pushing higher interest rates to customers is a possible solution but decreases overall value proposition. Significantly increasing customer base and book size to capture economies of scale, increase cost effectiveness and be able to increase the reward for external investors for taking the risks seems a more viable solution, but such a large player is yet to be emerge in the market.

Fintech has a significant potential to transform the financial sector in Brazil – and Techfoliance will keep you posted about its ecosystem, entrepreneurs and innovators in the next few months.

I would like to thank Fintech ecosystem experts Denisse Cuellar and Bruno Diniz for contributing to this article.

Bruno Diniz is a partner at Innercore Solutions. Based in the main financial hub in Latin America, São Paulo, Brazil, Innercore Solutions Ltd provides Matchmaking, Consultancy and Advisory services on innovation for the Financial Services industry. Innercore Solutions Ltd also makes Events, promote Fairs, Workshops, Hackathons, onsite Trainings and Lectures about Fintech, Innovation and Digital Transformation.

Denisse is a Fintech and entrepreneurship enthusiast. She currently works at BCP Bank of Peru building relationships with Fintech and startup ecosystems in Latin America. Graduated from NEOMA Business School and MBA from University of Chicago, she used to be a consultant and strategist in the Financial Services industry and the Fintech sector. She is a blogger and writes for some publications about the Fintech market in Latin America.

Key take-aways from Fintech Revolution 2017

Xavier Gomez

4 April 2017

Techfoliance was at Fintech Revolution 2017 that took place in Paris last 28^th of March. Here are the key take-aways from panel discussions and keynotes from top experts and entrepreneurs.

France’s Fintech scene is exploding and opportunities in the sector are unparalleled compared to any other industries. What a great satisfaction to see so much enthusiasm in “a country that often underestimates its tech potential” as stated by Paul Graham, founder of Y Combinator.

Entering the age of reason

Among participants, established actors such as LearnVest (Alexa Von Tobel), Prosper (Ron Suber) and Younited Credit (Geoffroy Guigou) shared their vision on the state of the Fintech industry.

Discussions showed that after few years of activity financial technologies were clearly here to stay. In addition, business models are yet to be consolidated for many companies and relations with traditional actors are getting stronger and stronger.

Co-opetition is becoming the standard in the banking industry. The budget allocated by banks like BNP Paribas or BPCE speaks for itself, with more than EUR 3 billion set to be invested to drive digital transformation and collaborate with fintech start-ups.

Think Europe

Michel Sapin, the Minister of Economy, said in a keynote:

“The revolution can not continue without European harmonization”

He also promised to transpose the Directive on payments (PSD2) “before the limits set by the EU”. France is at the forefront of the Fintech sector in Europe, leveraging on a solid local ecosystem with successful companies in various verticals.

Be prepared to new challenges

Entering the age of reason also means facing new challenges for the most established actors. For example, Betterment – a US robo-advisor that now claims more than USD 5 billion in assets under management – is facing capital allocation issues that it did not have at the beginning. The company has now so many projects that it needs to optimize the value of every dollar spent. Similarly, Younited Credit – a french peer-to-peer lending platform, is experiencing the same issues.

The risks for these actors would be to mislead priorities. Geoffroy Guigou, co-founder of Younited Credit, shared his experience with business creators:

“Think about the long term, especially in the choice of investors. We do not build a story in five years, but rather in fifteen or twenty years!”

Prosper‘s CEO Ron Suber, a San Francisco-based company in the peer-to-peer lending sector, said it took them eight years to reach a production of USD 1 billion of credits loans. It now reaches this amount every three months. The stakes are not lacking for this heavyweight that manages to secure USD 5 billion of financing from investors over the next two years.

“Connecting borrowers and investors makes it look easy until you try it”, said Ron.

In particular, it intends to develop its Lending as a Service concept, enabling banks to provide smartter loans. His long-term vision is even bigger since he aims to create the next generation of financial services stating that the banking agency will one day become obsolete. In the long term, Prosper will be a portal where individuals, students or SMEs will be able to invest in every country.

The future of banking

Many experts believe that the future will be Bank as a Service (BaaS) with taylor-made financial services supported by Artificial Intelligence (AI), Algorithm and Big Data. Tech giants like Tencent, Alibaba, Amazon or Facebook already understood that and now want to connect us all by money. See you in few years Fintech, I am very much looking for adulthood.

Mapping of the 20 most popular Fintech Start-ups in Israel

Team Europe

2 April 2017

Techfoliance is proud to introduce you its ranking of the most popular Fintech start-ups on social media in Israel.

We based our analysis on the klout score that calculates the influence of a brand on Fintech related topics. We’ve analyzed companies in all banking verticals ranging from payments to trading as well as AI and Cybersecurity.

Not surpisingly, most Israeli Fintech start-ups are headquartered outside Israel. US being the first destination among the biggest Fintech actors such as Personetics, Payoneer, Fundbox or Lemonade.

Please find below the ranking of the 20 most popular Fintech in Israel on social media:

Please keep in mind that this is not an exhaustive list. Many more Fintech are contributing directly or indirectly to the Israeli Fintech ecosystem.

Last update: 02 April 2017

Rank	Name	Sector	Twitter Followers	Klout Score
1	eToro	Social Trading	71 200	81
2	Payoneer	Payments	30 600	67
3	OurCrowd	Investment	9 000	60
4	Fundbox	Factoring	4 180	59
5	Lemonade	InsurTech	4 830	57
6	I Know First	Artificial Intelligence	30 000	54
7	Zooz	Payments	1 850	52
8	Earnix	Analytics	550	49
9	Personetics	Artificial Intelligence	3 950	48
10	Colu	Payment	1 780	48
11	Votiro	Cybersecurity	380	48
12	BlueVine	Lending	1 100	47
13	Thetaray	Cybersecurity	780	47
14	CrediFi	Lending	590	46
15	PayKey	Payments	930	44
16	Sapiens	Software	780	43
17	Leverate	Brokerage	420	43
18	Feex	Personal Finance	930	42
19	Splitit	Payments	420	41
20	Tradeo	Payment	12 400	40

#CuriosiTech – Discover the 4 Best FinTech of the week: CoinDash, Status, Bernstein and Etherisc

Team Europe

31 March 2017

Blockshow 2017, the biggest event in Blockchain in Europe, will take place in Munich next April the 6th. As a media sponsor, Techfoliance scouted 4 Fintech that are among the finalists of the Blockchain Oscar.

CoinDash

CoinDash is a social platform where the best crypto investors can further monetize their expertise, have bigger influence by being followed by other investors and become super-stars in their community

Discover here: https://www.coindash.io/

Status

Status is an open source mobile DApp browser and messenger built for Ethereum. People can exchange currency, services and ideas directly on the app to help grow the movement for decentralization.

Discover here: https://status.im/

Bernstein

Bernstein allows companies to create a trail of records of the whole innovation process on the bitcoin blockchain. Inventions, designs, proofs of use can be quickly registered and a blockchain certificate will prove ownership, existence, and integrity of any IP asset.

Discover here: https://www.bernstein.io/

Etherisc

Etherisc’s mission is to build decentralized insurance applications, making the purchase and sale of insurance more efficient, enable lower operational costs, provide greater transparency into the industry of insurance compared to traditional operations, and democratize access to reinsurance investments.

Discover here: https://etherisc.com/

About Blockshow Europe 2017

Techfoliance is excited to be part of Europe’s biggest show in Blockchain powered by Cointelegraph which will gather 500+ entrepreneurs, investors, corporation representatives and experts to discuss the future of finance.

[NEW] Top 10 VC funds in Fintech in Israel

Team Europe

28 March 2017

Techfoliance is proud to introduce you its first edition of the 10 most active VC funds in Fintech in Israel.

Israeli Fintech start-ups are under the radar of many foreign investors with examples of big rounds made in companies like eToro, Payoneer, Lemonade or OurCrowd.

Israeli Startups generated over $4.5 Billion in funding with over 10% of the funding that went to the growing FinTech ‎industry. As of today, there are currently over 500 FinTech startups that reside in the country.

Let’s see who are the most active VC funds in Fintech in Israel:

Please note that the ranking has been made according to data shared by VC funds or Fintech start-ups. Their portfolio may include undisclosed deals. Feel free to add more deals in the comments below:

Last update: March 30th, 2017

Rank	Name	Deals	Verticals
1	Carmel ventures	7 public deals: - Payoneer - Personetics - Actimize - Tradair - Credifi - Evercompliant - Pagaya	Artificial Intelligence Payment Lending Compliance
2	83North	6 public deals: - BlueVine - Payoneer - Ebury - iZettle - Marqeta - Wonga	Factoring Foreign Exchange Payment Lending
3	Blumberg Capital	5 public deals: - Zooz - BLender - Fundbox - Bento - Feex	Lending Payment Factoring Financial Analysis
4	LionBird	4 public deals: - Fundbox - Marqeta - Protenus - Bento	Factoring Payment InsurTech
5	Sequoia Capital Israel	4 public deals: - Personetics - Behalf - Lemonade - Traiana	Artificial Intelligence InsurTech Payment Risk Managament
6	Liberty Israel Venture Fund	3 public deals: - CrediFi - Neura - Jifiti.com	Lending InsurTech Payment
7	Singulariteam	3 public deals: - Invest.com - Zirra - Getstocks	Investment Rating
8	Lightspeed Venture Partners Israel	2 public deals: - BlueVine - Personetics	Artificial Intelligence Factoring
9	Aleph	2 public deals: - Lemonade - Colu	InsurTech Blockchain
10	Magma Venture Partners	2 public deals: - PayKey - GetGems	Bitcoin Payment

Fintech now becomes a top priority for the International Monetary Fund (IMF)

Team Europe

23 March 2017

In a recent statement, the International Monetary Fund (IMF) announced the launch of the High Level Advisory Group to deepen its understanding of Fintech issues.

Last 15th of March, the IMF announced the creation of a brand new group composed of 14 top-executives and industry pioneers in the finance and technology sector. The profiles of the members are ranging from well-known academics to entrepreneurs in blockchain as well as regulators and investors.

The new group is composed of (left to right) Jeremy Allaire (Circle), Dr. Long Chen (Ant Financial Services), Santiago Fernandez de Lis (BBVA), Robert Garrison (DTCC), Chris Larsen (Ripple), Adam Ludwin (Chain), Blythe Masters (Digital Asset), Greg Medcraft (ASIC), Professor Robert Merton (MIT Sloan), Patrick Murck (Harvard Berkman Klein Center), Marco Santori (Cooley), Alex Tapscott (Northwest Passage Ventures), Carolyn Wilkins (Bank of Canada), Bradley J. Wiskirchen (Kount).

Christine Lagarde, Managing Director of the IMF, stated in a recent article

“The widespread adoption of new technologies, such as blockchain-based systems, offers many potential benefits. But it also gives rise to new risks, including risks to financial stability.”

As part of the Fund’s mission to ensure the stability of the international monetary system, the group will assist the IMF in the “study of the economic and regulatory implications of developments in the area of Fintech”.

Beside the positive impact of Fintech on the financial industry, especially in emerging countries, the IMF is warning against financial instability that could arise if regulators fail to adapt to these new challenges.

So far, the Fund focused its researches on the implications of Cryptocurrencies and Blockchain on cross-border transactions. It published a report last year titled “Virtual Currencies and Beyond: Initial Considerations” in which it defines the concept of Virtual Currencies and Distributed Ledgers and details 6 regulatory and policy challenges for the sector.

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