According to a recent story in Forbes , FinTech start-ups have more than quadrupled in the last 3 years, bringing the total number of U.S companies in the sector to over 8,000. No less an authority than Jamie Dimon, the…
According to a recent story in Forbes , FinTech start-ups have more than quadrupled in the last 3 years, bringing the total number of U.S companies in the sector to over 8,000. No less an authority than Jamie Dimon, the CEO of JPMorgan, acknowledged the growing relevance of FinTech start-ups in the banking industry when he sounded a cautionary note in his letter to shareholders earlier this year – “Silicon Valley is coming!”
While the financial markets have started out this fall facing a mounting wall of worries, with the Federal Reserve Bank sending mixed signals about the prospects of a rate hike, and equity markets around the world undergoing more sharp volatility, FinTech remains one relatively bright spot in the financial sector. A number of published reports suggest that financial technology continues to attract substantial new investment, with a large number of innovators poised to make big waves and post stellar results.
For the most part, investment in the financial sector has focused on consumer-facing opportunities, including start-ups that provide consumers with personalized financial advice such as FutureAdvisor, which was recently snapped up by BlackRock, the giant investment management firm. Betterment, another pioneer in this space, provides what are referred to as robo-advisory services, effectively using technology to leverage the insights of a relatively small team of certified financial advisors in serving more than 100,000 retail clients with more than $2.5 billion of assets under management. In a move that could vastly expand its market footprint, Betterment has recently announced its intention to expand into the fertile grounds of offering its robo-advisory services to 401(k) plan sponsors and participants.
Equity fundraising is another FinTech category that has been the source of considerable activity. This has been made possible by recent revisions to the U.S. securities laws that have opened the door to the development of crowd-sourced funding platforms, such as CircleUp and SeedInvest, which enable entrepreneurs to publicly advertise to online communities, which consist of retail investors, in order to attract capital for seed investment and early stage equity rounds. Just this summer there was further amendment to the SEC’s regulations, which greatly expands the potential addressable retail audience for this kind of activity to include both accredited and unaccredited investors. So while most of these equity-funding platforms are still at a relatively early stage themselves with limited retail investor networks in place, it is hoped that more growth and success will be achieved with the influx of unaccredited investors.
Our interest in the success of these FinTech companies is not just academic: Aurigin (formerly BankerBay) itself is a product of this trend. We likewise see the financial world is ripe for transformational change through the more intelligent use of technology and the delivery of informational services online and via mobile devices. Of course, our focus is on the B2B side of the market, which up until now has been the target of far less development activity. But as the deal flow and community on Aurigin continue to grow by leaps and bounds, we see clear evidence of the growing acceptance of using our platform technology as a key resource for deal sourcing both for institutional investors and the broader corporate marketplace. If you’re not already a member, sign up today for a trial to find out why.