Blog

Sector: Technology

Rocio Wu

Rocio Wu is a Partner at F-Prime Capital, where she leads investments across AI, Enterprise, and FinTech. She regularly publishes her investment theses in the Forbes VC Column, exploring how emerging technologies reshape industries and global markets.

Previously, Rocio was an investor at Liquid 2 Ventures, founded by NFL Hall of Fame quarterback Joe Montana, where she backed companies including Chipper Cash, a leading African cross-border payments platform, and Overjet, an AI company transforming oral healthcare. Before her investing career, Rocio held operating roles at Google and Amazon spanning corporate development, go-to-market strategy, and marketing across the U.S., Japan, Spain, and China.

Rocio is a community builder who convenes founders, operators, and investors across networks such as Xooglers, Women in AI, Female Founders & Funders, and HBS Circles. She is drawn to founders who challenge conventional wisdom and to ideas that connect disciplines in unexpected ways – an orientation that shapes her approach to investing and company-building.

Rocio holds an MBA from Harvard Business School and a BA from Shanghai International Studies University, through a joint program with Universidad Pontificia Comillas in Spain.

Tracking the Disruptors With The F-Prime Fintech Index

The F-Prime Capital team conducts extensive primary market research on the global fintech sector. We closely track and benchmark the performance of established and emerging fintech companies, some of which belong to our portfolio of investments.

2021 was a record year for fintech investments and exits and there has never been a better time to look at the sector’s performance and take stock of the tremendous disruption that has occurred over the last 10 years.

Fintech began as a sleepy niche of companies selling technology to financial institutions. Venture capital investments averaged a mere $1B per year. The last five years have seen an explosion of disruptive startups. What began as new, digital front doors to the traditional financial industry has developed into an entirely new financial infrastructure. While payments and lending were first to ignite, fintech companies have captured market share across all financial sectors, including banking, insurance, asset management, and proptech. This fintech disruption has been fueled by over $283B of venture capital since 2015, including nearly $120B in 2021 (35% of decade’s fintech venture investments).

 

The F-Prime Fintech Index

Perhaps the most exciting news for the industry is that we are finally seeing fintech companies exit with increasing velocity. In 2021, there were a record 77 fintech companies that listed for over $393B. Eight of the ten largest fintech exits in history took place in 2021, and public fintech companies have surpassed $1.3 trillion in market cap. For the first time since working in fintech, we have enough public fintech companies to create a meaningful tracking index.

 

Today, we are excited to reveal the F-Prime Fintech Index. The F-Prime Fintech Index is composed of publicly traded companies powering the disruption of financial services. It features fintech companies listed after 2000 that meet our criteria for market capitalization, revenue growth, listing exchange, and daily trading volumes. For a complete description of our methodology, please visit the F-Prime Fintech Index website. The F-Prime Fintech Index companies trade at 11x average revenue multiples and have realized 62% average annual revenue growth. The F-Prime Fintech Index will enable all of us to benchmark the development of this rapidly-maturing sector and closely track the leading disruptors.

The F-Prime Fintech Index has surged 1,132% since 2015 when three leading companies (Block fka Square, Shopify, and PayPal) were listed. This gain compares favorably with the NASDAQ Index, up 223%, and the S&P 500, up 119% in the same period. The F-Prime Fintech Index has outperformed the S&P 500 and the NASDAQ by nearly 1,000% and 900%, respectively.

 

Tracking the State of Fintech

To accompany the launch of the F-Prime Fintech Index, we have also published a State of Fintech report. This report details the drivers of the disruption and depicts the striking advances made by fintech startups. Today we have published an overview of the industry and a deep dive into the payments and banking sectors. Soon, we will release an analysis of other sectors, including insurtech, asset management, crypto, proptech, and more.

 

Fintech has become one of the most significant segments in tech venture capital over the past five years, rising to nearly 35% of total tech venture funding in 2021, up from 11% in 2011. In 2021, fintech funding hit unprecedented levels, nearly tripling the 2020 value of $44 billion. The sector has surpassed the $100 billion+ funding mark in a single year for the first time and is increasingly going global.

 

There have been many forces fueling the growth in fintech funding. Some growth is simply a function of early startups raising larger, later-stage rounds with private capital markets ready to provide capital. In 2021, a record 312 deals fetched $100 million+ or more and fueled the creation of 157 new fintech unicorns. Globalization is another factor as fintech companies in Europe, Latin America, Africa, South East Asia & India follow early successes in the U.S. and China. Covid plays its role, providing a strong tailwind behind consumer adoption of digital payments, banking, and commerce.

However, a more profound explanation is that the early startups that did the heavy lifting of building API-first financial infrastructure laid the foundation for future startups to launch financial services faster and at lower costs. Thanks to companies like Marqeta, Plaid/Quovo (an F-Prime portfolio company), and SynapseFi, it has never been easier to launch a fintech company or embed financial services in non-fintech offerings. Indeed, as financial services have been digitized and embedded into other offerings, the very definition of fintech has expanded to include software vendors to hospitals, travel agencies, hotels, and restaurants.

Nowhere has disruption been more sweeping than in payments — the primary driver of fintech growth. Payments startups have attracted more than $118 billion in investments over the past decade. Natively digital payment processors like Paypal, Block, Stripe, and Adyen have captured a 32% share of total U.S. digital payments volume.

 The digitization of payments has led to a new class of software-first payments companies adding other financial products to their platforms. Public markets have rewarded these high-performing payments players with high valuations. Leading payment disruptors accounted for 74% of the F-Prime Fintech Index by market cap as of Q3 2021.

 

Akin to the rapid adoption of digital payments, we are seeing an acceleration of digital banking adoption spurred by the pandemic. This trend has fueled the rise of a new class of digital native banks or neobanks which have emerged as viable alternatives to large-scale banking institutions.

Consumers are attracted to neobanks by the digital experience, fee transparency, and novel features such as early-deposit access, overdraft protection, and multi-currency cards. Interestingly, many of the top neobanks did not start as banks but led with consumer-friendly services that leveraged a customer’s existing bank account.

While digital banks are still small by assets, they have attractive unit economics (low acquisition costs, growing revenue per user) plus efficient hyper-growth. Given their customer profile, they have significant room to increase their revenue base over their customers’ lifetime.

The rise of neobanks and gains by megabanks has ultimately squeezed regional and community banks, which have seen a 27 percentage point drop in new account openings since 2017. In response, many are increasingly collaborating with fintechs to accelerate their digitalization and personalization capabilities. And in turn, fintechs are leveraging the bank partner’s charter and earned reputation to accelerate their growth. We anticipate seeing more banking-Fintech collaborations to accelerate bank transformation, especially for regional/community banks and credit unions.

The fintech market is unlikely to cool soon – there are over 200 private fintech unicorns ($1 billion-plus valuation) globally – many of which have already filed to go public in the coming quarter or two.  We will use the F-Prime Fintech Index to track the performance of these companies in capital markets and anticipate adding nearly $500B to the index over the coming few years as fintech companies list.

 

Despite their remarkable rise, venture-backed fintech startups have also collectively captured ~10% or less of the financial industry revenue with plenty of room for growth.

Read F-Prime Capital’s State of Fintech report and visit the F-Prime Fintech Index website for more information. We welcome feedback and thoughts from the Fintech community as we continue to refine the Index. To reach the F-Prime Fintech Index team, email us and follow our Twitter/Linkedin to stay updated and join a future discussion.

Parrot

Parrot is a Mexican food tech startup that helps the country’s restaurants to digitize and optimize their operations through technology. Its ParrotConnect solution is an all-in-one platform for today’s restaurants: multi-brand and multi-channel, which allows the user to manage all business tasks from one device. Integrate orders from delivery apps, table service and take-away orders on the same screen, configuration of personnel permissions, menu editor, kitchen areas, types of payment, cashier operations, and real-time reports from a single management portal.

Notabene

Notabene is a reg-tech compliance SaaS solution that connects the traditional financial industry and crypto industry. The company works to make crypto transactions a part of the everyday economy by providing software, tools, and comprehensive data to manage regulatory and counterparty risks in crypto transactions.

Hone: HR’s Secret Weapon

Across every sector and every geography, the teams that attract and retain the strongest talent are the ones that ultimately win.

Reading the headlines you’ll see no shortage of well-capitalized startups seemingly poised for growth. Yet in boom times and bust, one common thread has always connected the very best companies: talent. Across every sector and every geography, the teams that attract and retain the strongest talent are the ones that ultimately win.

Given the importance of recruiting, it has been rewarding to see so many startups tackle talent acquisition. Yet retention, equally as important, has typically been under-served by the startup market, which is suffering from a historically tight labor market and a Covid-inspired “Great Resignation” leading millions of workers to leave their jobs. In fact, 55 percent of Americans expect to look for a new job in the coming year.

Enter Hone, the company providing live, cohort-based management and leadership training that teams love.

 

During the pandemic, consumers and professionals have come to rely on high-quality digital experiences, such as Peloton for fitness, Zoom for video-based meetings and Outschool and Coursera for education. Hone epitomizes the next evolution in employee education tools that leverage the kinds of digital experiences we’ve come to expect in the post-Covid era. In short, they’re building the next generation employee engagement, training, and retention tools–the kind of technology today’s employers and employees need–to usher in the future of work.

There’s an old adage that people don’t quit jobs; they quit bosses, and the data proves it out. 94% of employees say they would remain with one company longer if their employers were more invested in their training and education. And managers, too, feel more engaged when they have room to grow. Managers who have room to learn and grow are 3.5x more likely to be happy and engaged and 3.3x more likely to want to stay at their organization for 2 years. 

Through live, cohort-based training, Hone delivers the tools managers need to increase employee retention. By focusing on the highest-impact competencies for leadership and management and by practicing skills live in cohort-based learning teams, Hone has helped over 11,000 managers across 100+ organizations turn lessons into skills and drive lasting behavioral change. Their 300+ monthly courses include management themes, such as giving feedback that lands and building high-trust relationships, as well as issues relating to DEI, such as managing bias in the workplace, addressing microaggressions on the team and embracing diversity with inclusion.

Most importantly: Hone works. Unlike most e-learning lessons that average 10% completion rates, Hone’s training completion rates are 84%, with 90% of learners demonstrating a lasting behavior change. This shouldn’t be surprising given the caliber of the coaches — on average they score an impressive 4.8/5.0.  HR buyers are happy, too: 89% of pilot programs lead to expansions.

 

As with any startup, the strength lies in the team, beginning with a strong bench of leaders at the helm. Co-founder and CEO Tom Griffiths was formerly co-founder and Chief Product Officer at gaming unicorn FanDuel. In his capacity at FanDuel, he successfully helped the company pivot from a news surveying app to a multibillion-dollar sports gaming platform earning $150M+ in revenue. Meanwhile, co-founder and Chief Customer Officer Savina Perez is an HR and DEI guru, having led growth at several venture-backed startups and previously served in executive roles at Culture IQ and Curalate. The two united over their passion for training, culture and people and are the perfect duo to help companies upskill and retain their most precious resources: their employees. They have successfully built out a stellar team of 30 members, 50% of whom are female, and 43% of whom are non-white.

We couldn’t be more excited to join Tom, Savina and the rest of the Hone team on their journey to revolutionize employee performance and retention through live, cohort-based leadership and management training. If you think your team could use a boost in employee engagement and retention (and what team can’t?), check out their incredible offerings at Honehq.com.

Hone

Hone is a Live Learning Platform for organizations to teach transformational leadership, management, and people skills at scale. The company empowers HR and Learning & Development teams to tackle people development in a modern way, with easy deployment of small-group, live cohort learning at scale, and data and tools to measure its impact. Through a blend of live online cohort-based programs, world-class instructors, and a powerful behavior change platform, Hone cultivates soft skills with hard data, leading to lasting behavior change in 90% of learners who go through our programs. Hone has trained thousands of learners in 58+ countries, and serves a rapidly expanding list of clients including GoFundMe, ServiceNow, Rover, Grove Collaborative and more.

Sarah Lamont

Sarah Lamont is a Senior Associate at F-Prime, where she focuses on early-stage investments in fintech. Prior to joining F-Prime, she was a senior consultant at Oliver Wyman in the Private Capital & Financial Services practices, working with some of the world’s largest banks, private equity firms, and other financial institutions across the US and Europe.

In addition to her role at F-Prime, Sarah also co-leads the Boston chapter of the Emerging Venture Capitalists Association (EVCA) and is a Data Advocate for Fintech Sandbox, a non-profit serving fintech entrepreneurs by aggregating data and infrastructure for free during a startup’s development phase.

Sarah is a graduate of the University of Virginia, where she majored in Mechanical Engineering and learned how to fly a Cessna.

Tierney Caputo

Tierney Caputo joined F-Prime in September 2021. She is the Executive Assistant to David Jegen. Prior to F-Prime, she worked as an Executive Assistant and Event Planner. Tierney received her BA in Communications and Public Relations from Virginia Tech.

Burro

Burro is a robotics company building an autonomous platform designed to free growers and their workforce from tedious tasks, while building the modular base for greater autonomy. Founded in 2017, the company offers the only fully autonomous, plug-and-play collaborative farming robot on the market.

Guros

Guros is an embedded insurance company in Mexico that’s transforming the entire insurance experience, from purchasing to managing vehicle and mobile insurance. They’re on a mission to democratize insurance in Latin America; both for end-customers and neobanks/fintechs who want to embed insurance into their platform, but need to do so in a much simpler, faster, and reliable way.