February 10, 2016
As FinTech is firing up operations across industries, tech companies have started feeling the urge to get involved in order to take advantage of the innovation wave and maintain relevance. There's no need to even mention that tech companies have a direct interest in FinTech as the last one has the potential to significantly cut costs and optimize operations. While traditional players in the financial industry are expected to get their hands into FinTech, big tech companies are usually not very vocal when it comes to revealing their FinTech affairs.
Since other tech companies are not looking to actively share their activities, we have taken it in our stride to demonstrate that soon banks will soon have another open competition which will be fierce.
One of the interesting examples is Google. Obviously, Android Pay is the first thing that comes to mind. However, let's focus on the FinTech ventures that Google got involved in through Google Ventures, which has been profiled as one of the hottest FinTech investors in the US.
Google Ventures is Google's investment arm through which it is discovering startups across industries to invest into. Google Ventures was recently rebranded as GV and its colorful Google-style logo was transformed into a modern black-and-white one. We don’t usually hear much of Google’s activities in FinTech if it’s not about Android Pay, but GV has an interesting portfolio worth paying attention to if you are looking to score an investment from the tech giant.
In total, GV has invested in 245 ventures, out of which the biggest part of the investments was made into consumer service companies – 43% of the portfolio. Enterprise solutions are GV's second biggest interest field with 29% of the startups funded by the VC operating in that segment. Out of all the startups GV got its hands into, FinTech is of a particular interest. About 13% of the companies are FinTech ventures distributed unevenly between FinTech segments.
GV has an interesting range of FinTech startups in its portfolio that focus on authentication, security, banking APIs, cryptocurrency, lending, payments and more. HealthTech is also represented in the portfolio by Oscar and other interesting players. GV doesn’t seem to be particularly generous when it comes to blockchain as there is just Ripple Labs in the portfolio that works with the technology. Lending and payments, on the contrary, are represented at a higher quantity.
Mix of single companies working with authentication, blockchain. Bitcoin and others represent the largest stake – 25%. Interestingly, FinTech startups providing analytics represented the biggest chunk – about 19% of the FinTech portfolio. Security- and savings-focused (shopping, funds management, PFM, etc.) startups make up 13% of the FinTech portfolio each.
Here are the some of the FinTech companies represented in GV’s portfolio:
Corduro offers a range of payment services for Internet, mobile and traditional retail transactions.
Rally is a social fundraising tool that makes it easier to raise money by harnessing the power of storytelling.
Ripple Labs is a company committed to minimizing the costs of payments. The company created the Ripple Protocol, an open payment protocol that enables free, instant payments across the globe in any currency – including dollars, yen, euros, bitcoins and even loyalty points.
Plaid is a modern API for banking data that allows developers to programmatically interact with banks and credit cards.
Robinhood is your stock market companion. With Robinhood, users can monitor investor sentiment and learn from the wisdom of the crowd.
Gusto reimagines payroll, benefits, HR and personal finance by automating the most complicated, impersonal business tasks and making them simple and delightful.
OnDeck is using technology to make the borrowing process simple, fast and transparent for small-business owners nationwide.
Puddle creates a new way to access credit with a crowdsourced online lending platform.
ThinkNear helps local merchants increase profitability with a yield management solution. The product requires no hardware, takes under five minutes to setup, and runs in the background, continuously getting smarter about which discounts and channels to use to keep merchants as busy as possible at all times.
LedgerX has applied for registration as a swap execution facility and a derivatives clearing organization and intends to list option contracts for digital currency such as bitcoin.
Kensho provides market research intelligence software to financial professionals.
LendUp is a better alternative to payday loans. LendUp loans are exclusively offered online and on your mobile device so they are convenient, fast and easy to use.
Upstart is an online lending platform that goes beyond the FICO score to finance people based on signals of their potential, including schools attended, area of study, academic performance and work history. Their proprietary underwriting model identifies high-quality borrowers despite limited credit and employment experience.
Shape Security is developing a new class of Web security products to dramatically alter the economics of Web hacking.
Jet is a members-only online shopping club that brings customers the lowest prices by unbundling the retail costs that drive up prices.
Duo Security makes multifactor authentication radically easy to deploy, use and manage by leveraging mobile phones for transaction verification to help make the Internet more secure.
Digit automates saving money by learning your spending habits and transferring a small amount to savings every week.
InVenture is a mobile technology company that provides credit scoring and accounting tools to more than 4 billion people across the globe that currently lack a formal financial identity.
Abacus is a simple way to manage business expenses. Managers save money with increased control and employees get paid back right away.
PayRange is a simple mobile payment solution for machines of all types, including vending machines, parking meters, transit kiosks, laundromats and more.
ThreatStream is a threat intelligence platform that uses data science to help organizations defend against cyberattacks.
Some companies from GV’s portfolio have been acquired and others went IPO, which demonstrates the expertise and vision the VC has when it comes to investments. According to the segmentation of the FinTech portfolio, GV has a keen interest in payments/lending- and analytics-focused startups. However, to encourage diversity, the CEO of GV said, I’ve asked our team to ignore precedents and the pressure to do what is expected. We simply aim to find the best ways to help our companies succeed.