NY FinTech Lab Graduates Class, Says U.S. Fintech Investment Booming
According to a report, by Accenture and the Partnership Fund for New York City, $9.89 billion worth of investments went into fintech in 2014 across the U.S., up from $3.39 billion in 2013.
That was the word on Thursday at the demo day for the 2015 class of the New York FinTech Innovation Lab. The five-year-old program, created by the Partnership Fund for New York City and Accenture, helps fintech startups get their ideas ready for market.
Fintech is often a marriage of ideas in software, machine-learning, and even hardware with parts of the financial industry such as wealth management, insurance, payments, and lending. Many of the alumni of the lab remain in New York or open offices here, which is not surprising given the breadth of financial institutions in the city.
Seven startups graduated this time around. They demoed ideas such as social media insights for analysts and traders, cash management software, and a platform to help low-income students find nontraditional ways to pay for college.
If they can scale up and prove their technology’s worth, the graduates have a chance to chase last year’s surge in fintech funding. This boom occurred while deal volume for the sector remained almost flat, with 493 deals in 2014 down from 494 deals in 2013.
New York shared some of the action, the report said, with fintech investments last year growing to $768 million, up 32 percent compared with 2013. The number of deals for the sector in the city rose from 71 to 85 last year.
The financial industry has deep roots here, with big banks and financial firms all holding court in the city. Combined with the latest renaissance in local startup activity, fintech may be the way for the city to leave a lasting mark in innovation.
But bulking up the city’s fintech community to powerhouse status will still take time. When the FinTech Innovation Lab got its start in 2010, the city was largely betting on other industries to lead its technology future. “Tech in New York meant digital media and ad tech,” said Maria Gotsch, president and CEO of the Partnership Fund for New York City, at the commencement of demo day. “To most people we had to explain what fintech was.”
Five years later, the FinTech Innovation Lab has a relatively small group of alumni, but they collectively raised $176 million in venture financing and have racked up a couple of notable exits. Inktank, a graduate of the 2013 class, was acquired last May for $175 million by Red Hat. The New York Stock Exchange acquired True Office, class of 2012, last November.
Gotsch said demand for local fintech startups is driven by banks looking for ways to remain competitive, and venture capitalists who understand the space—both of which are plentiful here. “That is New York’s secret sauce,” she said.
Now it is up to this year’s graduates to make good on such opportunities. Here is a quick list of the class of 2015.
Digital Asset Holdings—Developing a secure ledger and distribution service that also cuts down on trade processing time.
EverSafe—An online service that helps protect the assets of seniors, who may become targets of identity theft and other financial abuse, by analyzing financial accounts and credit card activity for suspicious transactions.
Max—Cash management software that monitors interest rates on a daily basis and relocates the users’ bank account funds so they can get the highest yield possibly.
PierceMatrix—Provides security recommendations, learns how hackers sneak into systems, and shares the discovery of known threats with third-parties who partner with companies.
PYT Funds—Pay Your Tuition gives students who are academic achievers from low- and middle-income families a chance to gather funds to attend college. The technology helps them find a mix of crowdfunding and philanthropy, along with traditional financing, to pay their tuition.
Social Alpha—Uses machine learning to give traders, investment managers, and analysts insights on online news and social media comments that could have some effect on financial markets.
Ufora—Automates handling of large datasets by using algorithms and hardware to do the heavy lifting, thus freeing up analysts to do other work.