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All The Fintech - Oct 2nd, 2017

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A (brief) foray into my exposure to digital currencies:  It seems as though digital currencies are co
 
October 2 · Issue #3 · View online
All The Fintech
A (brief) foray into my exposure to digital currencies: 
It seems as though digital currencies are continuing to dominate FinTech news, so I thought it’d be fun to recap where my views on the topic are shaped from and provide a little bit of a history.
When I started following bitcoin as part of my job at JPMorgan several years ago, I remember giving lectures to senior executives and briefing entire divisions as an analyst on what does “money” really means. These were the days when the bank was taking a bit of a heavy handed approach towards virtual currencies, which was a huge risky unknown from a KYC, AML, etc perspective. Back in 2014, my explanation divided Bitcoin into two parts - a payment system protocol (Bitcoin) and a digital currency (bitcoin). The positioning was that prospects for bitcoin as a currency appeared limited, while the future of the Bitcoin protocol had potential to be revolutionary (soon to be termed blockchain tech). The initial signal came from investors, with $74MM invested by VC’s across 40 bitcoin-related deals in 2013 (e.g. Circle’s 9M series A, Coinbase’s $25M series B, Ripple’s $6.5M seed, etc) so there was something interesting there.
As the bank became a bit more sophisticated (or at least, aware) of what bitcoin was, the easy narrative was “bitcoin scary, blockchain potentially revolutionary”, especially after Mt Gox (the largest exchange at the time) collapsed. There was a ton of buzz around who was caught holding the bag as the correspondent bank behind Mizuho Bank (we took a look at JPMorgan).Thus began the trend of one news article after another declaring that bitcoin was dead (bitcoin obituaries). Yet one year later in 2015, it seemed as though every bank was starting to explore blockchain technology and there were more partnerships around bitcoin acceptance (overstock, dell, etc).
Nonetheless, it seemed that the “hype” around bitcoin had settled down a bit in mainstream tech media + banks. The adoption curve was still several years out as a universal payment mechanism, and most of the adoption seemed to be with darknet markets (such as Silk Road) or speculative investors. Then along came the DAO, Ethereum, and ICOs. I actually believe that Mastercoin was one of the first to launch with an ICO in 2013 (someone correct me if I’m wrong there), but Ethereum sticks out in 2014 on having a pretty successful ICO (around ~18MM in bitcoin), although it then lost millions once bitcoin crashed that year. 
For me, the first inkling of mainstream attention that I noticed came around in 2016 with The DAO, which was trying to build a decentralized venture capital firm atop of Ethereum. It raised over $160 MM in its ICO and then preceded to get hacked for $50 MM (and set off a chain of events that led to a controversial hard fork of Ethereum which is why we have Ethereum Classic vs Ethereum). 
Since then, the number of ICO’s has skyrocketed (just look at the upcoming ICOs) and for the first time in a while, I am 100% comfortable on saying we’re in an ICO bubble, but more specifically a bubble on un-regulated ICOs. The fact that companies are raising hundreds of millions of dollars pre product market fit from retail investors is a bit…terrifying. There are also a ton of investors making $$$ by just participating and adding their name to the pre-sale at a discount and selling after the pop, which seems a bit manipulative to me. It’s only a matter of time before regulators step in (and as evidenced below, they’re starting to) and it’ll be interesting to see where this all goes. Meanwhile, bitcoin is once again above $4000 for who knows why…and anyone that claims to know exactly why is probably making stuff up. 
That’s where the fun comes in though! I have no clue if any of these protocols, coins, etc will truly disrupt existing banking infrastructure, but it’s still an interesting thought experiment to question, probe, and identify real pain points with the system. The last group of people that I would bet against are those that are working on these protocols - some of the smartest people I’ve ever met are all working on this sector so there’s something real here. Several years ago, I remember purchasing bitcoin with USD was a bit of a terrifying affair: before Coinbase, the easiest way to get bitcoin in the US was meeting up in person with a wad of cash and exchanging it for a semi-anonymous currency (localbitcoins is still a thing). Less than 5 years later, there are reports that Goldman is looking into a trading operation dedicated to bitcoin. Long story short, bitcoin is dead, long live bitcoin.
Woof that was a bit longer than I thought it’d be, and now on to articles…

Top news IMO💯
Goldman Sachs supposedly looking into a trading operation dedicated to bitcoin and other virtual currencies, as contrasted to JPMorgan’s Jamie Dimon saying he’d fire any trader that trades bitcoin. Bitcoin, blockchain, and ICOs are back to dominating FinTech news and raises.
Goldman Sachs Explores a New World: Trading Bitcoin
Cryptocurrency 🤑
SEC Accuses 2 ICOs Including REcoin and DRC of Fraud
How Ethereum Founder Vitalik Buterin Wants to Revolutionize the ICO
Chaos and hackers stalk investors on cryptocurrency exchanges
Dubai Will Issue First Ever State Cryptocurrency
Bitcoin Exchange BTCC Brings Chinese Trading to a Close
China's bitcoin market alive and well as traders defy crackdown
Lending 🤝
The Equifax Hack Has the Hallmarks of State-Sponsored Pros
SoFi's CEO hiatus stalls its big-time banking ambitions
Payments 💳
Whole Foods says taprooms, restaurants hacked
Square Strikes Payment-Processing Deal With Eventbrite
Wealth Management 💰
Investors can now make trades on Yahoo Finance
Insurance 🔒
Clearcover, a more strategic car insurance startup, lands big Lightbank investment
Fundraising 💵
Shenzhen Suishou Technology, a Chinese personal finance management platform, has raised $200 million in Series C funding led by KKR. (link)
Chime, a San Francisco-based mobile banking startup, has raised $18 million in Series B funding. Cathay Innovation led the round, and was joined by Northwestern Mutual Future Ventures, Omidyar Network and return backers Crosslink Capital, Aspect Ventures, Forerunner Ventures and Homebrew (link)
Kyriba, a San Diego, Calif.-based cloud treasury and financial management platform, raised $45 million in funding. Sumeru Equity Partners led the round, and was joined by investors including Bpifrance, Iris Capital, Daher Capital, and HSBC. (link)
Stockpile, a Palo Alto, Calif.-based brokerage pioneering fractional share stock investing, raised $30 million in Series B funding. Eight Roads Ventures led the round, and was joined by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others. (link)
Onfido, a five-year-old, London-based company that makes identity verification software, has raised $30 million in new funding led by Crane Venture Partners, with participation from Microsoft Ventures and Salesforce Ventures. (link)
Lively, a health savings account startup, has raised $4.2 million in VC funding from Transmedia Capital, Streamlined Ventures, Y Combinator, SV Angel and Kevin Durant. (link)
Koho, a Vancouver-based personal financial services platform, has raised C$8 million in VC funding from Portag3 Ventures. (link)
Vestwell, a New York-based digital retirement platform, has raised $8 million in Series A funding. F-Prime Capital Partners led the round, and was joined by Primary Venture Partners, FinTech Collective, and Commerce Ventures. 
Boost Insurance, a New York City-based insurance platform, raised $3 million in funding. Norwest Venture Partners led the round, and was joined by investors including IA Capital Group, Greycroft Partners, State National Companies and Nephila. (link)
Beehive, a Dubai-based P2P lending platform, has raised $5 million in Series A funding from the Riyad TAQNIA Fund and the Mohammed Bin Rashid Fund. 
Dwell, a U.K.-based online mortgage broker that has now rebranded to Burrow, raised $1.2 million (£900,000) in seed funding led by Passion Capital.
Thailand-based fintech startup Omise raises $20M from Krungsri; the firm is developing Omise Go, it’s own cryptocurrency platform; raised $65M to date (link)
Product of the Week 🚀
IPOs & Exits 💸
Hexindai, a Beijing-based consumer lending platform, has filed for an $80 million IPO. It plans to trade under ticker symbol HX, with Network 1 Financial Securities as sole underwriter. The company reports around $8.6 million of net income on $23 million of revenue for its most recent fiscal year.
Morgan Stanley (NYSE: MS) has agreed to acquire Mesa West Capital, a Los Angeles-based real estate credit platform with $5 billion in AUM, for an undisclosed amount. (link)
Random 🔖
Morning Agenda: Masayoshi Son Warns of the Singularity
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