An investing robo-advisor managing $15bn in assets, a challenger bank for teens, and a credit card without any fees accessible to people without a credit history - we present the 11 hottest fintech companies from NYC right now.
New York City isn’t the greatest city in the world for Jeff Bezos, but it definitely is for a vast array of fintech companies that run their operations in the Big Apple. Close proximity to one of the most important stock markets on Earth definitely makes New York City a prime location for them.
The whole financial ecosystem built around Wall Street is, on the one hand, a perfect market for B2B-oriented financial technology companies, and the greatest pool of talent on the other. That’s why most of the best fintech companies are headquartered in NYC. It’s also the reason why we decided to host our Disruption Forum event at Rise by Barclays. (click for more information).
What is a fintech company?
But first, are you familiar with the fintech world? Fintech is a combination of two words - "financial" and "technology". The fintech industry is still seen as an emerging sector, with many companies trying to improve financial services with the use of technology. The term fintech consists of startups as well as more mature companies that are disrupting or enhancing the ways of paying, insuring, or lending, be it in the B2B or B2C sector.
In the meantime, let’s take a closer look at 11 of the most interesting NYC-based fintech companies.
Let's start with one of the biggest fish in the pond. Lemonade is an insurance carrier that uses AI and behavioral economics models to come up with the best insurance offers for homeowners and renters. Unlike traditional insurers, they focus on transparency.
Lemonade inverts the insurance model. Customers pay a flat monthly fee and their money is used partly directly to cover potential claims, and partly to purchase reinsurance.
It's growing very fast. Lemonade was founded in 2015 by an experienced manager and serial entrepreneur Daniel Schreiber and Shai Winiger, who had started the Fiverr freelance marketplace.
However, Lemonade is on track to becoming their most successful venture. It has already gathered more than $470m in funding. The last series D round of $300m in April 2019 made Lemonade an official unicorn with a two billion dollar valuation.
Another insurtech company. The idea is simple, but it's all about execution. Policygenius is an online shop for all kinds of insurance - including life, long-term disability, health, renters and pet policies.
The company has already attracted almost $50m in four funding rounds. The last deal from May 2017 has set Policygenius's valuation at $120-180m. Netguru played an important role in the startup's success. Read the case study to learn more.
Read our interview with Justin Ternullo, the company's Chief Design Officer to discover how they managed to grow so fast.
Betterment is a digital wealth manager popular among millennials. It’s famous for its “robo-advisor” - an algorithm that selects investments and builds a diversified portfolio for its clients. The company was founded in 2008 and until 2017 offered only automated investment advisory.
Two years ago, Betterment branched out to human advisors and now employs 240 people. The company oversees more than $16.4bn in assets (as of April 2019). In 2018, Betterment added 100,000 customers. It gathered more than $275m in funding.
Stash has a similar backstory to Betterment - the company started off offering a mobile investing app. Their main focus was to help people invest smartly to build a safety net for retirement for a small fee of $1 per month. But the micro-investing app was just the beginning.
Now Stash is a full-blown challenger bank that offers a wholesome banking experience with cash-back debit cards, regular accounts, and quick transfers. Investors believed in the vision and supported the company with more than $184m in funding. As of March 2019, the company has been valued at $260m-$390m.
Card fraud is retailers’ worst nightmare all over the world, but the US seems to be an Eldorado for fraudsters. Forter wants to change that. The company deployed its best algorithms and human talents to join forces in order to help digitize anti-fraud processes.
Forter’s machine-learning-enabled solution analyses everything from the location and browsing history of a potential buyer to the type of device they are using to decide whether to accept an online credit card purchase or deny it as fraudulent.
In 2019, the company doubled the value of e-commerce transactions processed to a record $100 billion. The company gathered more than $100m in funding and is valued at $200m-$300m.
Petal is a very democratic credit card provider. You can get a credit card from the company without any fees and without any pre-existing credit history. The company, one of the top startups in NY, analyses one’s overall financial history before issuing credit cards.
Thanks to that, people like immigrants and low-income Americans, who often struggle to access credit cards, can have the opportunity to use Petal-issued Visas for their everyday purchases. The NY fintech gives its customers a credit line of up to $10,000.
In September 2019 Petal gathered a $300 million debt round, which added to the investment from Valar Ventures, co-founded by Peter Thiel.
MoneyLion is another challenger bank on our list. Valued at $800m as of July 2019, it's getting really close to reaching unicorn status.
It was launched in 2013 and since then has gained more than two million customers, who linked over a million accounts to the company's system. The NY fintech also originated 200,000 loans via its app.
MoneyLion, apart from offering its customers swift and mobile banking experiences, also runs a rewards program for building better financial habits: if you maintain healthy behaviors when it comes to money, you will earn different benefits.
As almost every company nowadays, this challenger bank is making good use of machine learning to provide users with a personalized financial advisory. MoneyLion has already secured $170m in funding.
If Goldman Sachs, JPMorgan, and other big Wall Street players invest over $57m in a startup, it means that the company must have something outstanding to offer to the world of finance, doesn’t it? Axoni is a blockchain firm that is building expertise in smart contracts. They're an active and renowned player on the $10 trillion credit derivative market and are trying to make it more effective and transparent.
By using the Axoni distributed ledger, the biggest financial firms are able to access payment information, calculations, and other vital trade data in real time.
9. Climb Credit
Student loans are one of the main setbacks that block millennials from fulfilling their full potential. It’s a problem of a whole generation. Climb Credit wants to solve that issue by financing meaningful and quality education. Basically, they offer student loans, but for selected courses from selected colleges and universities.
“We identify, assess, and partner with schools offering the knowledge and skills required for jobs with strong earning potential in today's economy” - that sums up how the company’s founders perceive quality education.
The company is working with 70 schools all across America and has financed the education of 6,000 students so far. Climb Credit has secured $66m in VC money and debt, which is quite understandable for a student loan company, right?
Teen banking is like teen sex - everyone talks about it, but only a handful of people are actually doing it. One of those shining examples is Current - a challenger bank that focuses solely on banking products for youngsters. Of course, it’s a mobile-only bank.
Using the Current app, you can instantly transfer money to your colleagues, save funds for whatever purpose you want, or create a direct deposit for paychecks.
Your parents can easily provide you with funding as well. Current issues a Visa debit card for payments and supports Apple Pay. Is there anything more a teen needs from a bank? In October 2019, Current collected a series B funding round of $20m, which raised the company's valuation to $80-$120m.
Titan has the ambition to put an end to stock market FOMO. How do they want to achieve that? By deploying an AI-based investment banker, at your disposal via a mobile app.
The Titan application chooses the 20 stocks perfect for your investing style by scraping top hedge fund data and cross-checking it with your personal risk profile. After deciding on what you should invest in, the Titan app automatically buys and sells securities for you.
Users can learn more about the inner workings of the financial market by reading in-app reports and analysis. Titan now manages more than $20m in assets and has added Paul Graham, Y-Combinator co-founder, as an investor.
Did we miss anyone? Let us know.
Also, check out our other fintech watch-lists: