Venture capital funding for fintech startups has ballooned over the past several years, rising from $1.9 billion in 2010 to $27.5 billion in 2017. While some fintech trends like lending and mobile payment wallets have fizzled out, others are on the upswing.
Real estate tech is a hot sector. “In the past 12 to 18 months, real estate tech-focused investment funds have emerged,” said Merritt Hummer, a principal at Bain Capital Ventures who moderated a talk on fintech trends at Forbes’ 30 Under 30 Summit in Boston. Big real estate developers like Brookfield have launched strategic venture funds. As of this summer, two-year-old VC firm Fifth Wall was aiming to raise a $400 million fund for real estate tech.
Opendoor, the San Francisco startup that lets people buy homes online, recently raised $400 million at a valuation above $2 billion. Startups like Cadre and PeerStreet have built platforms that make it easier to invest in real estate. And other companies are offering new options for viewing homes online and getting mortgages more quickly.
Insuretech is a growing category. “The general concept is, your technology stack is decades old, and the payment technology and infrastructure need to be updated,” said Patricia Kemp, a general partner at fintech-focused VC firm Oak HC/FT, at Forbes’ 30 Under 30 Summit.
Oak has invested in Trov, a Northern California startup that provides on-demand insurance, and Clara Analytics, which uses artificial intelligence to help insurance providers more efficiently manage and prioritize claims. Lemonade, a fintech that offers rental insurance, has been expanding.
Will blockchain technology play a big role in transforming insurance? For example, could programmable “smart contracts” more efficiently automate insurance payouts for people making claims? Kemp said insurance could be a “terrific use case” for blockchain. “But 70% of the cost of insurance is moving the paper around,” she added. “So there’s all this innovation needed in just the basics before you even get to something like smart contracts.”
More broadly, studying areas of financial services that are still dominated by paper can uncover opportunities. “If you go into a company that pays bills, half of what they pay is by paper check,” said Matt Brennan, a partner at General Catalyst. “Getting that all into one spot can be pretty innovative, believe it or not.”