Start-up profiles: Infrastructure, insurance, data, payments

CRYPTO INFRASTRUCTURE – FIREBLOCKS (US, SINGAPORE)

As a digital assets infrastructure provider for financial institutions, US and Singapore-based Fireblocks offers a kind of microcosm of how the industry is adopting blockchain.

First and foremost, the trend is utterly global. The company’s client base stretches from the most progressively regulated jurisdictions such as Singapore and Germany to relative crypto backwaters in the Caribbean and Africa. It’s also a story of virality; there were three customers two years ago versus more than 500 today.

Importantly, this customer base is a mix of crypto-native and traditional institutions, including banks, exchanges, market makers, lending desks, and hedge funds. Fireblocks believes that straddling these two worlds keeps it on the cutting edge of blockchain innovation but also attuned to the practical needs – and advantages – of legacy systems.

“We’re constantly engaging at that frontier level and building technology to support that, and that trickles down to banks and other financial institutions when they are ready to engage and get into the space,” says Stephen Richardson, a vice president and head of product strategy and business solutions at Fireblocks. “Our platform allows organizations to turn on and off a lot of different product-services as they feel ready or as they feel the market adoption is there.”

Core operations involve providing custody services, including safeguarding digital assets from malicious actors, and workflow optimizations. The latter encompasses the issuance of assets, the transfer and settlement of assets, connectivity between participants in the Fireblocks ecosystem, and the streamlining of lending and trading.

This is not an outsourcing service – the idea is to help clients build up their own internal systems at their own speed. Much of the thinking here is that blockchain is such a rapidly evolving space, that in-house capacities are needed to be proactive rather than reactive to changes in the market. PayPal demonstrated this logic in March when it acquired Curv, arguably Fireblocks’ closest analogue, for an estimated $200 million.

Last month, Fireblocks raised a $310 million Series D round at a $2 billion valuation, bringing total funds raised since inception in 2019 to $489 million. The investment was co-led by Sequoia Capital, Stripes, Spark Capital, Coatue, DRW VC, and SCB10X, the corporate VC arm of Thailand’s Siam Commercial Bank.

“We have the leading-class infrastructure technology, and they [Siam Commercial Bank] bring expertise from a banking and product perspective. They also have a very strong customer base to offer digital asset services, and they’re working with the regulator to make sure they’re successful in whatever endeavors they prioritize,” Richardson says.

“Our view is to be there as an infrastructure provider to them and an advisor on market entries and what are the right places where they can take advantage. Over next year, it will be interesting in how they launch their broader digital assets businesses.”

 

INSURANCE – POLICYBAZAAR (INDIA)

Before PolicyBazaar was established in 2008, India’s insurance industry was dominated by automotive and investment products, but that wasn’t what the public needed. The company duly focused on health insurance and within 10 years was estimated to have taken 50% of the online market share for the overall industry.

Much has been made of the use of technology in this story, with policy aggregator tools simplifying the buying process for a customer base unaccustomed to such products. But Yashish Dahiya,
PolicyBazaar’s co-founder and CEO, observes that the insurance industry has never lacked access to technology; what it lacked was engagement with end-users.

“The company that understands the customer will take the bulk of the revenue, not the insurance company. The important thing is access to customers and what data we can capture,” Dahiya says. “After that, insurance technology is quite basic. Comparing and finding the right product, doing a bit of voice analytics and AI, doing some fine-pricing – that’s not rocket science.”

PolicyBazaar’s game plan for integrating technology into the Indian insurance landscape was to use it first as a means of education. But in the end, this was not a particularly digital affair, with the company investing upward of $200 million in prime-time TV, newspapers, and 20,000 manhours in PR. “In insurance, the best outcome is that the buyer never uses the product,” Dahiya explains. “It takes a lot to educate a country to do that.”

Private equity and venture capital helped make this happen, with more than $600 million invested in the company from the likes of Tiger Global Management, Intel Capital, and True North since 2011. Last year, SoftBank Vision Fund acquired a 15% stake at valuation around $1.5 billion. The company filed for a domestic IPO this month with a view to raising INR60.2 billion ($812 million).

PolicyBazaar’s key legacy as a technical innovator is likely to be in consumer empowerment and the gradual disintermediation of the industry. The idea is that insurance is a seller-centric industry, where eager distributors effectively encourage buyers to seal a deal by stretching the truth. This translates into poor product-customer matching and a costly, bogged down claims process.

“If there is data transparency at the very beginning, then the need for post-purchase, pre-claim investigation will be much reduced,” Dahiya says. “That is where the industry is headed – automated and auto- adjudicated claims, data coming directly from the consumer, validation through third parties, and the consumer having a clear interest so the insurance company cannot deny their claims later.”

 

DATA SERVICES – RONG360 (CHINA)

China's Rong360, as its name suggests, aims to offer a 360-degree spectrum of services to Chinese financial institutions.

Founded in 2011, the platform’s ambition was simple: to build a platform that connects financial institutions at one end with individuals and small and micro enterprises at the other. In 2012, it launched what would become China’s largest loan search engine. This was followed, over the next three years, by a smart recommendation service for credit cards and a big data risk control service. Part of the business was spun out and listed in the US as Jianpu Technology in 2017.

"I think our comprehensive technology integration ability is the best in industry,” says Daqing Ye, the company’s co-founder, chairman and CEO.

“We started in 2015 to provide banks with a comprehensive combination of technology solutions and full lifecycle services capabilities to enable banks better serve their customers, from smart digital marketing, anti-fraud, and KYC [know-your-customer] to credit risk assessments. Recently, we launched an after-loan management and loan-collection service.”

Rong 360 also aims to integrate the best-fit technologies into different scenarios. One example is a service that uses deep data backed by artificial intelligence to generate insights from marketing data, credit data, and alternative data. The company also offers a robotic process automation (RPA) solution.

In total, Rong360 has worked with nearly 1,000 financial institutions and participated in more than 100 million credit decisions and one billion marketing decisions. About 21 million credit cards have been issued on the platform via 400 million applications. Jianpu recorded revenue of RMB1.4 billion ($206 million) in 2019 and a net loss of RMB451 million.

Further expansions include an insurance brokerage offering and an overseas strategy for international business. In Indonesia, Rong360 has obtained a credit investigation license, a KYC license, and a license for internet microfinance. Currently, overseas markets account for less than 10% of the revenue, but Ye expects to build out the strategy with additional capital raising.

"China's financial technology is undoubtedly leading the world. Our innovative product solutions, our risk control management capabilities, as well as our experienced talents, are going global with the country’s Belt & Road Initiative,” he says.

Over the years, Rong360 has avoided some pitfalls. It didn't get involved in P2P lending or internet-traffic support for such business, but two competitors did and subsequently went out of business. “Chinese regulation aims to include all financial activities into comprehensive supervision. The goal is to protect the public's interests and maintain a fair and stable market environment and promote inclusive finance in the new digital era – a goal vision that is also ours,” says Ye.

Rong360 received a Series A round led by Lightspeed China Partners in 2012. Series B and C rounds closed over the next two years, led by Sequoia Capital China and Temasek Holdings, respectively. This took overall funding to $260 million. Earlier this year, Yunfeng Capital and Sailing Capital provided a Series D.

 

PAYMENTS – CLIK PAYMENT (CAMBODIA)

As the payments category of financial technology continues to bubble and splinter into a massive sector all its own, the natural instinct for start-ups looking to differentiate themselves is to carve out a niche specialization. Cambodia’s Clik Payment is going the other way.

Clik is building a highly diversified one-stop-shop, whereby individuals and consumers can make payments straight from their bank accounts and wallets – or someone else’s wallet. Micro, small and medium-sized enterprises (MSMEs) can use the app to turn personal phones into point-of-sale devices.

QR code, chip-and-pin, card, near-field communication, and facial recognition payments are also part of the suite, as are various capacities in buy-now-pay-later, biometric authentication, loyalty programs, and data analysis services.

Data may be the key word in this strategy. Clik, which has no hardware component to its model to date, describes much of its mission as putting brick-and-mortar MSMEs on an even footing with online businesses. The idea is to help micro businesses profile their customers, so they can adjust their services in a more systematic way.

“That’s going to change the perception of being payment company. Payment companies are seen as cost centers like banks or wallets, where businesses pay commissions. Now, we will become a revenue generator,” says Clik’s co-founder and CEO Matthew Tippetts. “We will become a profit center.”

Clik raised approximately $4 million last year, claiming the investment as the largest-ever seed round for a Southeast Asian fintech company. Belgian financial software provider OpenWay led the round and helped build out much of Clik’s technology.

On the strength of this partnership, about 4,000 merchants have signed up to the platform ahead of formal licensing and launch later this year. They include MSMEs as well as, Cambodia’s largest parking operator, largest restaurant group, largest pharmacy chain, second-largest convenience store, and second-largest shopping mall.

Tippetts attributes much of the early interest to his company’s loyalty programs, which aim to improve repeat purchases by favoring cashback models over discounts. Clik estimates that two-thirds of consumers with $1 in cashback will come back to spend another $10 as long as the program requires the money to be spent at the same store.

There is reason to believe that these ploys will see traction in Cambodia. Clik chose it as the perfect test market. The country is small enough to achieve scale without spending too much money (16 million people), well connected with 3G and 4G services in urban areas, and 85% of purchases are still transacted with cash.

“Cambodia has a young population that is very eager to test new technologies. If you show them something that is as easy as downloading an app, super safe, and super cheap, they’re going to use it – especially if it gets them cash back,” Tippetts says. “Our objective is to show that this works here, and then scale it up across the region. In a couple years, I would expect we’ll be in a half dozen countries.”

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• Topics
• Southeast Asia
• Greater China
• South Asia
• Financials
• Technology
• Singapore
• India
• China
• Cambodia
• Fintech
• Financial Services