As per some estimates, global FinTech investments will more than double by 2018. The number of accelerator programs, FinTech labs and incubators has also been increasing. The main aim of these platforms is to provide the right resources to entrepreneurs who are aspiring to convert their ideas into reality. Each of these platforms provides the startups with a specific time frame, committed membership, mentorship, and sometimes, capital & development efforts, making the startup concept ready for the market. Each of these formats is different and to know more, Large FinTech companies are looking for a fresh perspective by partnering with the best and brightest startups. In the continual pursuit of new ways to better serve their clients, banks are looking to test new initiatives as well as foster innovation. The growing interest in startups (all-time high) and the success of several companies initially based out of FinTech accelerators, labs and incubators means that we will be seeing much more of this in the coming years. Reputation will be important and rightly so."
We bring to you a list of few such platforms and successful FinTech companies which have got a boost with the help of these platforms.
The Silicon Valley business accelerator is a “global innovation platform” that started as an incubator in Mountain View, CA. The program has accelerated more than 250 + portfolio companies like PayPal, Dropbox, Lending Club, CreditSesame, Mobibucks, Zoosk, Trulioo and many others.
The two major companies which were a part of the Plug & Play Tech Center during the initial years are:
- Lending Club: Most of us are aware of the success of Lending Club. Since its inception in 2006, the P2P lending platform has facilitated over $5 billion in loans. The company has come a long way since its entry to Plug and Play in 2007. When CEO and Founder Renaud Laplanche started the company in 2006, he had a clear vision of a more efficient alternative to the traditional system of loan trading. Lending Club was initially launched as one of Facebook’s first apps, and since then has grown from a “disruptive idea to an industry leader.” During its initial period of growth, the company focused on securing borrowers of high-credit-quality, ensuring year after year of positive returns. Through Plug and Play, the company was introduced to Norwest Venture Partners who provided them with their initial round of funding which was then led by a $12-million series B led by Morgenthaler in 2009 and a $25-million series C led by Foundation Capital in 2010. The lending company went public in December 2014.
- PayPal: One of the world’s largest Internet payment companies, PayPal moved $228 billion in 26 currencies in 2014 across more than 190 countries, generating total revenue of $7.9 billion. The company got separated from eBay and went public as an individual company in July 2015. Plug and Play invested more than $100,000 in PayPal's very first funding round which proved to be a wildly successful investment.
At the FinTech Innovation Lab, early and growth-stage companies are given the platform they need to develop, trial and prove their proposition alongside the world’s leading banks. This 12-week mentorship program runs in New York as well as in London and Hong Kong. Some of the companies which got recognized through this program are:
- BillGuard: The personal finance tracking application that enables users to protect & control credit and identity in real-time from their mobile devices was recently acquired by Proper. Downloaded over a million and a half times since release, BillGuard’s five-star rated mobile apps have won almost every industry award in their category, including being named one of the “Top Banking Innovations of All Time” by Online Banking Report. The company was founded in 2010 and initially it faced problems as it needed the slow-moving banks to sign on as clients. The company then joined the FinTech Innovation Labs accelerator program which counts high-level executives from 12 top financial institutions as mentors, granting the startups unprecedented access to CTOs and CIOs from Goldman Sachs and American Express. The company was backed by some of the world’s top venture investors, including Bessemer Venture Partners, Khosla Ventures, Peter Thiel’s Founders Fund, Eric Schmidt’s Innovation Endeavors, IA Ventures and SV Angel.
- Kasisto: The company was founded in 2013 with the vision of helping consumers in everyday customer interactions through intelligent conversations on any device. The company started by enabling financial institutions to add virtual personal assistants to their mobile and tablet offerings. The company’s product leverages deep speech, natural language and artificial intelligence technologies from SRI International, the birthplace of the Internet, computer mouse, electronic banking and Siri. Earlier, Kasisto was recognized as a participant in the highly selective 2014 FinTech Innovation Lab.
Since its establishment in 2005, Y-Combinator has funded over 800 startups. It’s a community of 1,600 founders. Y Combinator provides seed funding for startups. Y Combinator has a novel approach to seed funding of funding startups in batches. There are two each year, one from January through March and one from June through August. Multiple startups are funded during each cycle.
- LendUp: LendUp is a Y Combinator-incubated payday loan company. The company aims to redefine payday lending by making the loan experience for the millions of unbanked Americans more fair and transparent. The company raised $50 million in credit debt facility from Victory Park Capital. With the recent funding, the company has so far raised a total of $64 million in four rounds from 17 investors including Google Ventures, Data Collective, QED Investors, etc. LendUp’s difference of payday lending lies in its transparency, up-front pricing and its LendUp Ladder. The LendUp Ladder allows customers to earn their way to an annual percentage rate (APR) as low as 29% over time as they repay their LendUp loans on time and complete credit education courses at the LendUp website. A Y Combinator company, LendUp offers its service to customers in 16 states in the United States.
- GoCardless: Y Combinator startup GoCardless is also called the Stripe or Square equivalent of Europe. UK-based payment firm GoCardless works with businesses to accept direct debit payments and solve their late payment woes affecting cash flows. Founded in 2011 by Matt Robinson, Tom Blomfield and Hiroki Takeuchi, GoCardless aims to make payment collection simpler for businesses through collecting direct debits online. The company is focused on direct transfers and helping merchants skip around the system used by American Express, Visa, MasterCard and others. The company was initially funded by Y Combinator in 2011.
Large FinTech companies are looking for a fresh perspective by partnering with the best and brightest startups. In the continual pursuit of new ways to better serve their clients, banks are looking to test new initiatives as well as foster innovation. The growing interest in startups (all-time high) and the success of several companies initially based out of FinTech accelerators, labs and incubators means that we will be seeing much more of this in the coming years. Reputation will be important and rightly so.