High 5! The five fintech stories we’re following this week
- debt rounds becoming the new large fundraises
- where VCs are investing now
1. TIAA acquires MyVest Another large financial services firm has acquired a roboadvisor. TIAA acquired MyVest last week, providing customers the option of using a roboadvisor for investment and retirement account management. With the acquisition, TIAA joins the ranks of other financial services firms with robos, including Vanguard, Schwab, Fidelity, and Blackrock. Although MyVest has provided B2B services to TIAA since 2009, the acquisition clouds the future of MyVest. Will MyVest become an exclusive product to TIAA customers, or will TIAA allow MyVest to service other financial firms? Regardless, offering a roboadvisor as part of an investment platform may become required for financial institutions. It appears roboadvisory is looking more and more like a single channel, not a standalone business. 2. JP Morgan launches fintech residency program JP Morgan CEO Jamie Dimon has never been shy talking about fintech and banking in general. After last week's news, he'll have many more opportunities for quotes. JP Morgan announced a residency program for fintech startups last week. Other banks, like Citi and Barclays, invest in companies, launch accelerators, or have internal fintech teams. With this new program, JPM is doing things a bit different by bringing fintech companies into its offices for six months. Selected fintech firms will have the chance to work side by side with the largest US bank and have the chance to co-develop products with in-house tech teams. 3. Rise of the social trader Fintech startups are returning to Communication 101 with social trading platforms, enabling users to follow the real-time trading activities of other investors and mimicking these trades in their own portfolio without leaving the platform. Wall Street needs all the help it can get in securing millennial investors – a March 2016 Harris poll commissioned by investing app Stash showed that nearly 80% of US millennials aren’t invested in the stock market. Part of the problem is that investing is sometimes baffling – 75% of the women surveyed found investing confusing, though millennial men weren’t far behind, with a considerable 60% bamboozled by investing. Social trading platforms are positioned to fill the investing information gap when it comes to millennials. 4. Debt financing is the new equity round After months of reading about hefty equity rounds, financing trends in fintech may be changing. Klarna, a leading European payments upstart, said last week that it had raised 300 million crowns (it’s based in Sweden). But, perhaps a sign of the changing tide in startup land, instead of a big splashy equity financing, this one was done as debt. For fintech firms, using straight debt is generally a new phenomenon. Up and coming financial technology firms have a variety of financing options and straight debt may prove to be a smart financial move. 5. VC investments in fintech: Q2 summary The end of the second quarter of 2016 is upon us and it’s time to review the portfolio moves of some of the top venture capital investors in fintech. By following the money flow, we can find insight into trends and perhaps get a view into what types of companies are being financed with growth capital for the future.We looked at 40 VCs that, in aggregate, made $1.3 billion worth of fintech investments in over the past three months, and identified a few trends that we feel are the most important.