Bonus Food: YCombinator W21 Batch Fintech Breakdown 💸 (Part 1)

Hey 👋, welcome to this Bonus Food edition of Brainfood.

Y Combinator announced their Winter 21 batch this past week, and there were 43 (yes, forty-three) fintech companies. That's the kind of thing I can't let slide. So here are 43 fintech companies you should know. I’ve provided a short synopsis of each company, as well as my analysis 🤔 of each of them. This is based on publicly available data and my own experience only (!)

This batch was so large, I've split it into two parts. Today, the first 21. Tomorrow, the other 22. So here is part 1, and tomorrow I’ll publish part 2.

Look out for 🤓 emojis next to the ones I'm most excited by.

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Bonus Food: Y Combinator Winter 21 Fintech Special Part 1

1. Nano Technologies - Payroll to pay gig workers daily in SEA

• Nanotechnologies provide the worker-facing app as well as the retailer/manufacturer-facing service to manage payroll. I've seen a few platforms like this (e.g., Egypt's DoPay) that build a small but perfectly formed market.

• 🤔 Across large parts of the world, cash in / out still dominates. Major markets like Indonesia and the Philipines are well served by major Gig platforms like Deliveryhero or Grab. Still, for long-tail merchants, there isn't an obvious solution for digital payroll.

2. Kanda - Affirm for general contractors

• Homeowners may want to remodel their house but cannot afford to pay upfront, and general contractors typically need to be paid either upfront or take the risk of being paid after work completes. By embedding a BNPL experience, they may convert up to 30% more quotes and get paid upfront. Kanda also offers an all-in-one "quote builder" API that significantly helps small trade contractors uplift their online presence. 

• 🤔 General contracting is a market not known for its Shopify-like online servicing, and Kanda could expand from BNPL into other finance and payment types easily.

3. Nextpay - SMB Neobank for the Philippines

• Nextpay is an all-in-one SMB Neobank, with digital account opening, servicing, and bookkeeping. SMB merchants are the majority of retail in markets like the Philippines, and overwhelmingly activities like bookkeeping are in the paper, and most payments are in cash. This creates manual overhead and the risk of theft. Many of these SMBs are not well serviced by banks, whose branch-based model makes this size of merchant un-economical.

• 🤔 Services like Nextpay have already proven their value in adjacent economies like Indonesia. For example, Bukukas has raised from Sequoia and has moved from basic bookkeeping into managing payroll, payments, and fuller bank-like services. Nextpay is solving a big problem in very large markets.

4. Djamo - Neobank for French-speaking Africans 🤓

• The rich, varied continent that is Africa is home to some 141m native french speakers, of which less than 25% are banked, having a service by this community and opening up a massive market opportunity. Djamo is a Neobank in french first, with the standard no fee and digital account opening promises that Neobanks offer.

• 🤔 The continent of Africa is in the midst of a Fintech boom. Major players like Flutterwave and Paystack delivering in e-commerce and payments. We're also now seeing the rise of Neobanks for given regions; just last week, Kuda announced a further $25m in funding in Nigeria. Djamo is playing in a huge market.

 5. HUBUC - Next Gen BaaS provider for Europe 🤓

• HUBUC offers cards, FX, IABN, account aggregation, and payment initiation all in one place. As BaaS heats up in Europe and looks for Geographic expansion, HUBUC is coming out of the gate with a broad set of capabilities and Geos.

• 🤔 Banking as a Service has been massive through 2020, and no surprise, we see continued Geographic and capability expansion. The USA has seen the second wave of players like Privacy.com, Unit, and Bond enter to make BaaS more modular and more complete; Europe is now starting to see the same. (Covered in BF Dec 5th, 2020)

6. Cheqout - QR code-based in-store payments

• Post-Covid, having a QR code at your table and order to the table has become a reality for many. Cheqout is an all-in-one solution that helps manage the menu, ordering, and payments for both the retailer and the buyer. It handles tips and allows staff to claim their table, so if one waiter is winning the lion's share of tips, they would be compensated for that.

• 🤔 In fintech over the past decade, countless "QR-based" ordering apps are looking to replicate WeChat pay experiences that haven't succeeded. Cheqout could be the right level of service at the exact right time post-pandemic.

7. Broad - European Neobank for Brazilians to hold and spend currency overseas

• Broad is domiciled and registered in the UK, where access to international currencies and FX markets is much simpler and more affordable than from Brazil. For Brazilians looking to travel, this gives them all of the benefits of spending like a European with much lower FX and conversion fees.

• 🤔 Broad is odd at first glance, but when you consider over the past decade, the Brazilian Real has been losing value against the dollar, and the high fees charged by local banks to Brazilians for FX, it makes more sense. I see it as a sort of "Revolut for the Brazilian middle class to experience the rest of the world." Interesting they chose the UK to base in.

8. Friz  - Credit card for freelancers in Asia

• Freelancers struggle with access to all kinds of credit and loans because of the absence of a monthly payslip. Friz creates a tailored credit score. It tracks income from multiple freelance platforms, integrates invoices, and brings that together into one space, a spending card, and expense tracking.

• 🤔 The "cards for freelancers" space has been white-hot in recent years, but interesting, Friz is proving a "credit line via a card" for a one-time fee of 1% on the line or 2% against a purchase. They're not compounding the interest, but that's an interesting business model. Curious about the risk calculation behind the scenes there.

9. NowPay - Employer payroll advances in Egypt

• NowPay offers saving, spending, budgeting, and borrowing services. Including getting a salary at any time of the month and spending management inside an app.

• 🤔 Payroll advance services like Branch have gained significant popularity with the advent of Payroll APIs. It's powerful for Gig workers but also any employee under financial stress. The employer gets a more engaged and more active employee, and the employee gets an alternative to payday lending.

10. Dayra - Embedded finance for gig workers in Egypt

• Dayra offers payroll advances, budgeting, and more but is aimed more at tech companies. Dayra gives its customers the ability to use a Dayra app or directly build the service into an app using their API. Where NowPay is a complete solution for a larger corporate, Dayra may suit the gig economy more.

• 🤔 Dayra isn't a pure payroll API but a payroll advance and budgeting service with an API. That's an interesting nuance given the market and audience. Egypt has an estimated population of over 100m people, and while the economy has struggled in recent years, services like NowPay and Dayra are playing in a huge market.

11. Treinta - Quickbooks for Latam microbusinesses

• Treinta manages a micro SMBs inventory against its sales; it also provides a dashboard and metrics on how the business performs. It claims to save 30 mins per day of bookkeeping. It includes the ability to chase payments (or reminders to make a payment) with automatic notifications.

• 🤔 Mobile-first bookkeeping and accounting make sense for Micro-SMBs where the primary competition is paper. The bookkeeping platform's data is a natural entry point for a payments business, spend management, and later lending. Bookkeeping is a killer wedge product for Micro-SMBs when competing with paper.

12. Moonshot Brands - Amazon and Shopify brand acquisition vehicle

• Moonshot brands identify profitable e-commerce businesses on Amazon or Shopify, then purchase them from the founders before aiming to turbocharge growth with their "data-driven technology platform."

• 🤔 What is the exit for a mid-scale Shopify business that's a lifestyle brand but struggling to scale? The private equity world doesn't neatly understand that type of business, so Moonshot has found an interesting niche. Will we see more acquisition/roll-up vehicles for digital-first businesses?

13. Pagaloop - SMB working capital with personal credit cards

• Pagaloop allows its SMB customers to cover payroll, rent, logistics, or even unforeseen expenses with their credit cards when a supplier doesn't accept cards. Customers create an account, add their existing cards, add beneficiaries and then make a payment (which they can repay immediately, or over 3,6,9 or 12 months).

• 🤔 Pagaloop is interesting; their commission for the service is 4.7%, with a further 4.8% if the payment is deferred over several months. This is a neat twist on mixing personal and business finances, something smaller companies have done informally for a long time.  

14. Ziina - Digital wallet for MENA

• Ziina is launching a Neobank / digital wallet for the UAE and the wider region, which has seen a flurry of fintech activity in recent years. Notably, Liv has gained traction with the ex-pat community in Dubai and focussed on the premium / aspirational approach to Neobanking.

• 🤔 Ziina isn't giving much away, so it's hard to tell what makes this unique beyond a "me too." If anyone knows more, shout :)

15. Mono - "Plaid for Africa but better."

• Mono allows companies to access data from their customer's bank accounts and debit money from those bank accounts. Major players like Flutterwave already use mono, and its focus on payments allows it to move into data-driven payments or become a payments rail in its own right.

• 🤔 "Plaid for X" and "X for Africa" are becoming memes that miss the value of change happening on the continent. Having a low-cost payment rail that works across the continent could be a game-changer, especially when paired with the ability to validate accounts that can afford to pay (or are real) before a payment happens.  

16. Z1 - Neobank for teenagers in Latam (on prepaid)

• Z1 is an app targeted at teenagers and young adults. It has a card-linked app that allows them to spend and manage their own money while giving parents some ability to block certain spending types / manage a budget.  

• 🤔 These accounts have gained popularity in the USA and Europe to allow teenagers (who increasingly live in a world of digital payments) to have an element of financial freedom before they are eligible for a complete bank account. Almost none of these services have successfully converted those teenagers into adult users (despite demand from users for that).

17. Mendel - Employee spend workflows 

• Mendel creates workflows for spend management and gives each employee a "smart card" (which I assume means virtual card), which helps automate expenses.

• 🤔 Given the popularity of Ramp and Brex, I'm not surprised to see this model gaining popularity around the world. Based in Mexico, Mendel is placed to benefit from the rise of the regional tech giants.

18. Mythia - Reward card for gamers 🤓

• Mythia is a rewards card for gamers, where each swipe gets a reward, including free PS5s, VR headsets, and more. Gems are like airline miles but "much easier to redeem." They also have challenges like "buy something from amazon" to get extra Gems.

• 🤔 When I covered this back in November last year, I said, "I love this so much, and at the same time, watching the video demo, I can't help but feel the UI has a long way to go. Mythia is an example of the stuff big banks won't do, but that has a massive market. How long till we see Razer do this? Or Epic? Imagine the VBucks debit reward card for teenagers (with parental oversight). "

19. Finantier - "Plaid for SEA"

• Finantier has many of the use cases you'd expect from Plaid, account aggregation, soft KYC as well as income verification. It also adds subscriptions and recurring payment setups from its APIs.

• 🤔 Given the sheer scale of SEA across the Philippines, Indonesia, Vietnam, Thailand, Malaysia, and more, the market size here is substantial, but so is the challenge of ensuring this API's performance across all of those markets. If Finantier can scale this even in one of the larger markets like Indonesia, the market size suggests a significant opportunity.

20. Tint - Embedded Insurance (Insurance as a Service) 

• Tint has a platform for non-finance companies to add insurance to their offering. Early use cases include ride-hailing and delivery apps, adding insurance for their drivers. Tint allows the user to design the insurance product and provider's underwriting. A marketplace of insurance companies then provides the insurance itself. 

• 🤔 It feels like Insurance-as-a-Service is everywhere. It's hard to see how real the traction is from a distance, but banking as a service started slow too. How long until Shopify embeds insurance? (Originally covered Jan 10th)

21. SoloSuit - Respond to debt collection lawsuits

• Solosuit helps people respond to debt collection lawsuits by automatically managing the response within 14 to 30 days. The user answers a few questions, which an attorney reviews before Solosuit does the filling on your behalf. Fees range from free to $200 depending on the complexity involved.

• 🤔 Given how popular TrueAccord is becoming, it seems helping people with problem debt is meaningful and a growth area of fintech. I'm also generally a fan of anything taking a consistent paper-based problem and trying to automate it at scale. Does this fit better with a modern debt collection/advice firm than with an individual company, though?

Phew, that’s a whole lot of companies. Tomorrow, we’ll be diving into another 22 Fintech companies from W21. There’s a couple in there that I’m super excited by.

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Until tomorrow 👋