Spotting Emerging Fintech in Y Combinator’s Latest Batch

Updated: Feb 18, 2019

Some 130 startups have pitched on a recent Y Combinator’s Winter 2016 demo day. As the legendary accelerator and its companies are widely regarded as créme de la créme of the startup ecosystem globally; I thought it would be worthwhile to look at what fintech businesses have emerged from the latest YC batch.

Paul Graham talking about Prototype Day at Y Combinator Summer 2009

Note 1: There Aren’t That Many

Screening all 130 companies (129 to be exact), I was surprised not to see that many companies that could be narrowly classified under the fintech. Certainly my categorization was rather haphazard and I have not included companies that could pass as fintech in the broader definition of the space which often includes security or accounting-related SME services startups.

That being said, I have identified 11 startups — or less than 9% of all — as fintech or insurtech companies.

Note 2: Prevalence of complex business models

B2B or B2C? None, really. I believe this classification is pretty much obsolete as the (most interesting) business models are becoming more and more complex.

Looking at the sample of YC fintech companies, most of them are based on either hybrid marketplace or multi sided models. Most of these startups rely heavily on partnerships and almost by default their products and services must simultaneously create value for a multitude of different stakeholders, partners, customers and communities.

Consider WorldCover, a peer-to-peer lending which protects farmers from natural disasters; gives investors diversified returns and direct social impact and uses satellites to monitor the rainfall and trigger payouts automatically.

Is WorldCover is primarily an agricultural risk insurance company, a tech company, a peer-to-peer lender or a social enterprise? Probably a bit of all those things; and that is pretty exciting.

Note 3: Going Local?

One of my favourite examples from the batch is a company called Landed. According to reporting by Techcrunch, “Landed helps teachers buy homes by raising debt-free down payment funds from student’s parents; parents provide money for the down payment in exchange for equity in said homes”.

The company is not only disrupting the mortgage and home ownership model (which a big feat in itself) by allowing homebuyers to accept down payment funds in exchange for part of the home’s value when they refinance or sell the property in the future.

At the same time, it is bringing together local communities such as schools, companies and affinity networks; banking partners and future homeowners.

Could we soon see a startup that will disrupt the standard debt-financed property ownership on a major scale and will we see a re-emergence of coop-like models?

Bring On The Startups!

Below are listed 11 fintech startups from YC latest demo day discussed above— the snippets appear as posted by TechCrunch here and here.

Paystack — Online payments for African businesses Paystack lets businesses accept payments via credit card, debit card, money transfer and mobile money on their websites or mobile apps.

Cover — Get insurance by taking a photo Getting insurance can be a hassle, but with Cover, you just take a photo of your car, home, pet, jewelry, speedboat or race horses.

STILT — Loans for non-US students and working professionals After coming to the U.S. as educated, legal citizens, Stilt’s founders realized how difficult it was for immigrants to get loans due to a lack of U.S. credit history. Stilt focuses on providing loans for them: $431K of loans so far, $60K of which has been paid back, with 0 percent defaults to date.

WorldCover — Crop insurance for the developing world 500 million farmers around the world are at the whimsy of the weather; if it doesn’t rain, their crops don’t grow and they don’t make money. WorldCover insures farmers in developing regions; they use satellites to measure rain fall, and pay out automatically based on the rain data.

MeterFeeder — Lets old parking meters accept credit cards: There are 4.5 million parking meters in the U.S. and 90 percent of them only accept coins. MeterFeeder lets cities cheaply upgrade to a system where citizens can pay for parking with a credit card through an app that uses GPS to tell where they are and what to charge.

LendEDU — Kayak for educational loans: LendEDU is a marketplace for student loans and student loan refinance. With one short submission, we allow our users to compare up to 12 different student loan lenders. LendEDU does NOT hurt your credit!

Landed Buying a home today is hard — particularly if you don’t have wealthy parents who can help you with that down payment. Landed helps teachers buy homes by raising debt-free downpayment funds from student’s parents; parents provide money for the down payment in exchange for equity in said homes. They also work with companies and affinity networks.

Truebill — Manage your subscription payments: Many people forget the subscriptions they’re paying for, and don’t know how they could save money by switching between different providers. Truebill makes it easy to manage your media, digital content, and physical good subscriptions. You connect you back account or credit card, and it shows you everything you’re paying for on a recurring basis so you can instantly cancel ones you don’t want.

Drive Motors — Online buying plugin for car dealerships Drive Motors builds a plugin that lets customers actually buy cars online from the comfort of their home, even when the physical dealership is closed. Drive Motors makes dealerships more money with no extra work, since it integrates into their existing financial and inventory software.

Emburse — Corporate cards that enforce expense policies Emburse uses cards that enforce corporate policies as well as virtual cards to use online. It can notify the user immediately and make the CFO’s life easier. It’s grown by 30% month over month. Clients include Shyp and Wealthfront.

Bonsai — Contracts and payments tools for freelancers White-collar freelancers are essentially one-person businesses that have to be their own admins, accountants, and lawyers. But they don’t know how. 50% are paid late or not all when they should be. Bonsai provides simple contract and payment tools that let freelancers sign deals with clients, and Bonsai makes sure they get paid on time.

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