By Rishi Dutta & Guo Jie Chin
New York’s fintech ecosystem continues to produce new and exciting challengers to the financial old guard.
These innovators can do incredible things like give you a digital coach to help with your personal finances, work out if you are paying higher interest rates than your peers or take the pain out of getting renters’ or health insurance.
With New York’s unrivaled concentration of traditional investing, insurance and corporate firms on their doorstep, NYC fintech startups are excelling by targeting and upgrading business models in these industries. Coupled with a fast-growing pool of talent, New York is proving to be a heavyweight contender on the global fintech landscape.
During our time at Wharton and as part of the InSITE Fellowship’s New York trek, we had the chance to meet several startups making their mark on fintech. Here are six that we think have something special in store for 2019.
Where they play: Digital Investing, Personal Finance, Banking
What they do: The Stash app generates curated investment recommendations, allows a low dollar entry threshold for investing, and provides a financial coach who gives you challenges to gamify the process of learning about your personal finances.
Users: >2 million (according to Stash’s website)
Age: 3 years and 9 months
Size: 101–250 employees
Funding: $116.3m (including a $37.5m Series D round in February 2018)
Notable investors: Union Square Ventures, Peter Thiel’s Founders Fund and Valar Ventures
Why they’re different: Stash is trying to make the consumption of financial services an enjoyable and seamless experience, whilst making it fun for people to learn about their personal finances. And it seems to be achieving its aim — Stash users are 25% more financially literate than the general US population, while its Apple and Google apps are enjoying great reviews. Stash has an incredibly detailed personal finance resource, called StashLearn. It also sincerely tries to personalize, rather than automate, the investment decision, with over 250,000 reported unique portfolio combinations available.
How they will change the scene in 2019: Stash appears to be adopting the trajectory of other trendsetters such as Venmo and Revolut by bundling services around its platform. It has launched a reservation list for its zero hidden fees Visa debit card, which will incorporate features specific to its platform, such as spending analytics, cash back and 2-days-early pay day. And this is likely just the beginning of the slew of services Stash is planning to unveil to users on its blisteringly high-growth platform in the next few months.
2) Status Money
Where they play: Personal Finance
What they do: Founded by banking industry veterans Majd Maksad and Korash Hernandez, Status Money helps people better understand their financial health. It allows users to securely and anonymously see how their financial profile compares with other people of the same age group, who live in the same location and have similar income-levels or credit scores. This allows users to understand if they are paying higher interest rates, making larger mortgage payments, or spending more on discretionary items than their peers. Users are therefore able to appreciate whether the rates they are paying for financial products are fair, and whether they need to correct their behavior. Status Money analyzes each user’s accounts and matches them with targeted offers from financial institutions — providing a win-win for users and banks.
Age: 2 years and 6 months
Size: 11–50 employees
Funding: $4m (Seed round in May 2016)
Notable investors: Altpoint Ventures
Why they’re different: While Credit Karma provides free credit scores, Status Money goes a level deeper, and provides consumers with much more detailed financial information. An independent academic study by researchers at The University of Chicago and The University of Maryland used Status Money’s data to show that peer comparisons act as a powerful motivator in changing people’s perceptions and behaviors, helping them to come up with strategies to increase their net worth. It flattens the asymmetry of information between large financial institutions and individual consumers, helping people avoid unknowingly overpaying for financial services through unfair interest rates or hidden fees.
How they will change the scene in 2019: Status Money aims to be the collaboration platform that enables everyone to share financial knowledge and intelligently manage their money. At scale, it will also provide economists and policy-makers with access to its anonymized data — enabling them to analyze financial trends in unprecedented detail and develop more effective economic policies.
Where they play: InsurTech, Renters’ Insurance
What they do: Jetty creates, markets and administers customizable insurance products with an emphasis on the customer experience. Its core products include:
- Renters’ insurance (variations range from the more traditional fire or theft, to the more millennial broken laptop or phone and even bedbugs)
- Security deposit insurance (renters pay a one-off 17.5% fee up front that eliminates need to put up a security deposit)
- Lease guaranty (Jetty acts as your lease guarantor, eliminating search costs and risk for property managers)
Jetty is one of the few (if not only) companies to offer all three of these products under one roof, with its renters’ insurance offered D2C and other core products distributed through real estate partners.
Age: 2 years and 11 months (launched to market in April 2017)
Size: >40 employees based in NYC
Funding: $15.5m (including an $11.5m Series A round in August 2017)
Notable investors: Valar Ventures, Ribbit Capital, Social Capital
Why they’re different: The typical renters’ insurance experience involves several fairly arcane questions about your background and the property you are about to rent (“how far is the fire hydrant from the front door?”). Jetty aims to turn insurance from a product you are obligated to get to one which you love to get. It is doing so by focusing on three competencies: speed, value and personalization:
- Speed: Jetty is rebuilding most of insurance’s underlying technology — from sophisticated underwriting engines predicated on multiple sources, and so necessitating far less input data from the customer, all the way up to a beautiful, seamless user interface. As a result, Jetty’s interface asks for not much input data and spits back a quote in seconds
- Value: Jetty uses product separation to provide the protection its target customers actually want (standard initial quotes include portable electronics power-up, bedbug protection, and replacement cost (versus actual cash) value). Additionally, it eliminates many of the cost overheads and legacy tech that older firms contend with. This allows it to offer very competitive premiums to potential customers
- Personalization: Jetty outlines three initial quotes to make sure prospective customers fully understand what they would be paying for in each plan and includes comparisons between plans to give people a sense of what an appropriate level of cover is. This transparency allows customers to personalize their plans to maximize flexibility and value
By concentrating on the customer experience and optionality, Jetty hopes to win the next generation of customers to its platform.
How they will change the scene in 2019: Unlike many startups that are focused solely on product development, Jetty has been quite focused on its branding efforts, with an eventual intention to build a mass market consumer brand (first step: subway ads). We expect to see an even bigger brand presence from Jetty over the next few months, as it partners with property managers to expand its distribution and expand its membership rewards program. They are already available in 45 states and are slated to be going nationwide by early 2019.
4) Oscar Health
Where they play: InsurTech, Healthcare
What they do: Oscar offers health insurance plans to individuals and through small businesses by utilizing tech and data to improve the user experience. Oscar places an emphasis on mobile, customer experience and partnerships with care providers.
Users: 250,000 individual members and small businesses
Age: 6 years
Size: >700 employees
Funding: $1.3bn (including a $375m investment from Alphabet in August 2018)
Notable investors: Alphabet, Founders Fund, Fidelity, CapitalG
Why they’re different: Oscar improves the distribution of healthcare services by using modern communication channels. On their website, customer testimonials point to Oscar’s app, step tracking features and the ability to send a phone image to a doctor as differentiators. This focus on customer centricity is mirrored in its rigor when considering the underlying tech as well. Oscar’s end goal has been to “own the stack” and so built its own systems from the ground up and continues to iteratively improve efficiency.
How they will change the scene in 2019: Oscar intends to use the copious funding it has received recently to accelerate its product roadmap and launch new product lines, including a third vertical — Medicare Advantage Plans — in 2020. Besides these tangible and exciting changes, Oscar continues to expand into new states and increase its coverage in its core markets.
Where they play: B2B (for mid-market companies), SaaS, Spend Management
What they do: Lower overhead costs for companies by allowing mid-size firms to request, approve and monitor employee purchasing on one platform, in real-time. Teampay’s platform issues (virtual and physical) corporate credit cards, facilitates smart purchasing decisions and automatically speaks to leading accounting systems such as Quickbooks.
Users: Undisclosed, but the prevailing sentiment is positive and consistent!
Age: 2 years and 3 months
Size: 11–50 employees
Funding: $4m (including a Seed round in February 2018, entertainingly described by CEO Andrew Hoag here)
Notable investors: Crosscut Ventures, Precursor Ventures, KEC Ventures
Why they’re different: Teampay prides itself on enabling internal finance teams to have a greater level of analytical sophistication when judging purchasing activities, and overall, on saving costs for firms. For its clients’ employees, Teampay aims to simplify what can often be an unsavory process. Teampay explains the customer need here. Functionally, it is focused on delivering a D2C-level user experience through its B2B software. Teampay aims to empower employees throughout its client companies, mostly in the ‘unmanaged middle’, to make spending decisions efficiently. Teampay also plays in a rarefied field — at its time of conception, few companies had raised funds in the past 15 years to help businesses manage what they spend.
How they will change the scene in 2019: Teampay is one of the youngest companies on this list and has built a product that seems long overdue. Whilst competitors have emerged in its field, Teampay has spent time refining its product and testing it with customers. This has enabled it to now shift gears towards go-to-market. And this market is sizeable:
“B2B payments are $18T in the US alone, of which only $1T is yet online.”
— Andrew Hoag, CEO of Teampay
So, in the next few months, we can expect to see a lot more from this company, potentially including a Series A round in the not-too-distant future.
Where they play: Blockchain, Crypto, VC, Space
What they do: Founded by Ethereum cofounder Joseph Lubin, ConsenSys describes itself as a ‘venture production studio’ focused on nurturing startups and products built around the Ethereum network. It generates revenue through its:
- Academy: develops talent for the blockchain ecosystem
- Capital arm: provides venture capital and token sale advisory
- Solutions consultancy: enterprise advisory and development
- Catalyst consultancy: marketing and branding agency
- Diligence consultancy: security audits to generate use cases for blockchain, for example
ConsenSys also incubates blockchain startups internally through ConsenSys Labs, which aims to improve blockchain product design through its Labs Design function. So, yeah, ConsenSys does quite a bit.
Users: Users is an ambiguous term here. ConsenSys is building for the Ethereum ecosystem, and that blockchain has nearly 50 million unique addresses registered to it and 30x more developers than the next biggest blockchain community. ConsenSys specifically manages more than 50 projects and has 40,000 readers of its weekly newsletter.
Age: 4 years and 1 month
Size: >1100 employees (or what ConsenSys calls Members, who are all part of “The ConsenSys Mesh”)
Funding: Undisclosed (Lubin owns a majority stake, and partially funds ConsenSys from his Bitcoin and Ether holdings according to Forbes, whilst additional funding is produced internally)
Notable investors: None known
Why they’re different: All of the above. ConsenSys is very high growth and in many ways the first organization of its kind. It is focused on maintaining a flat, remote-first structure, and both incubating organizations internally and helping incumbents enter the blockchain (mostly Ethereum) ecosystem. It is half for-profit company and half loose network of entrepreneurs peering decades into the future and trying to get the world there today.
“Ethereum provides several opportunities to humanity which it has never had before now — the ability to represent the true value of common goods, to disintermediate traditional industries previously owned by actors extracting disproportionate amounts of value, and an immutable public-ledger which favors truth over the views of a few individuals in power. And this is only the beginning.”
— Thomas Rush, Head of Platform for ConsenSys Labs
How they will change the scene in 2019: Some of ConsenSys Labs’ more promising investments are already bearing fruit, notably Kaleido which recently announced a recent collaboration with Amazon, whilst others are likely to emerge similarly in 2019. Longer term, ConsenSys is focused on building out Web3 to create a more seamless user experience for blockchain-enabled platforms and specifically on developing the proof of stake (etc.) architecture of Ethereum 2.0. And ConsenSys might be poised to continue changing the scene long beyond 2019, with its recent acquisition of Planetary Resources. In the transaction press release, Lubin alluded to Ethereum’s potential to “help humanity craft new societal rule systems through automated trust and guaranteed execution”. How might Ethereum and an asteroid mining company work together? As Planetary Resources’ General Counsel Brian Israel says, “Ethereum smart contract functionality is a natural solution for private-ordering and commerce in space”, whilst its CEO Chris Lewicki identifies his company’s work as, “to expand humanity’s economic sphere of influence into the Solar System.” Watch out SpaceX, ConsenSys has got its eyes locked squarely on the future.
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Rishi (@rishidutta) and Guo (@chinguojie) are MBA students at The Wharton School in the class of 2020 who love talking and writing about fintech. The authors would like to thank each of the companies above for taking the time to share their insights, the InSITE Fellows Program and the Wharton FinTech Club. Profile data sourced from Crunchbase unless otherwise noted.
Rishi previously worked at J.P. Morgan, covering fintech, financial and technology companies. He graduated with first-class honors from the University of Cambridge with a degree in economics in 2013.
Guo Jie most recently worked at Square Inc. in its finance and strategy and corporate development teams. He graduated summa cum laude from Cornell University with a dual degree in electrical and computer engineering and economics in 2013.