Bonus Food: YCombinator W21 Batch Fintech Breakdown 💸 (Part 2)

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

Y Combinator announced their Winter 21 batch this past week, and being a giant fintech nerd that’s impossible to resist. This post gives a brief synopsis of each fintech company, followed by my take on what makes them interesting (or not).

This batch was so large, I've split it into two parts. Yesterday, I covered the first 21 that you can find here.

Today, there’s another 22 to crack through.

• I’ve added 🤔 my analysis to each of them.

• I've added 🤓 emojis next to the ones I'm most excited by.

The big themes are not a giant surprise but give a flavor for the rest of 2021:

1. Bookeeping for SMBs in emerging markets is a massive opportunity

2. BNPL and Plaid for X Geographical expansion

3. Embedded lending is significant in this batch for the US

4. Some very clever proptech / homeownership fintech

5. Insurance everywhere

6. Wage advances everywhere

7. India and Latam especially strong in this batch

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Bonus Food: Y Combinator Winter 21 Fintech Special Part 2

22. Finary.EU - The new wealth manager/aggregation platform 🤓🤓🤓

• Finary is aimed at the "mass affluent" (think Amex Platinum customers) and creates the "ultimate portfolio tracker" with a real-time data feed.  Finary brings together Angel investments, 401ks, stocks, real estate, and crypto in one place.  It aggregates everything from traditional banks to brokerages to your Robinhood account to create a "net worth" position.

• 🤔 This aggregator play makes complete sense.  Having lots of investments in many different platforms is a high-quality problem but a problem worth solving.  The rise of DIY angel investing or real estate investing fintechs creates yet another platform to manage. It lets a user track across the US, Canada, and Europe, which is impressive.  I like this a lot.  (PS, imagine this + investor composer 🤯)

23. BimaPe - The hub for family insurance (India)

• BimaPe lets you discover hidden insurance benefits, understand your policies' nature, and make more informed purchases for the whole family.  People often have insurance thrown in as a value-added benefit of another product they bought and don't take advantage of. BimaPe simplifies insurance to a very clear what is and what is not insured.

• 🤔 Founder Rahul Mathur is a genuine Jobs to be Done practitioner, is incredibly well-read and relentless in his pursuit of Insuretech knowledge and growth. His Twitter account is worth a follow, as he's learning and building the company in public.  I get the sense this is the first but not the last company Rahul will found.

24. R2 Capital - Stripe Capital for Latam 🤓

• R2 embeds its technology for lending to SMBs on top of payments processors, POS systems, and marketplace apps and collects its fees as a % of sales.  

• 🤔 SMBs consistently hit cash flow issues, where suppliers want to pay upfront for inventory, and the SMB has sales demand but doesn't yet have the cash from those sales. Large banks solve this for larger corporates with working capital, a credit line secured against that corporation's historical sales performance (or other risk metrics). Stripe Capital has solved this for the USA, but globally it's still a significant problem.  R2 is neat in that it's a single product and playing a region where SMB cashflow pain is exceptionally high.

25. Purpose - The card for conscious consumers

• Purpose is a Neobank (running on Bancorp) which means you get FDIC insurance and the usual features like card freezing and management.  Purpose builds an impact score into your everyday spend and gives rewards for supporting ethical businesses or cashback on better products for the planet.

• 🤔 If Neobanks are banks with better marketing, then going after purpose makes sense. Ethical is the new luxury, after all.  It's hard to tell what makes Purpose more than a "me too" player. I'm still waiting for someone to do self-driving carbon offsetting. Don't just show me my impact; auto-offset my life.

26. Kredi - Rocket Mortgage for LatAm

• Kredi is a mortgage loan marketplace.  Customers fill in a single loan application, and Kredit helps customers secure the lowest-cost mortgage.  

• 🤔 Considering Rocket Mortgage is valued at $45bn, a similar play for the LatAm market size has a significant TAM.  I am surprised we haven't seen a proper aggregation of these price comparison services, like Credit Karma + Rocket Mortgage, as my financial product menu. Maybe it's a matter of time :).

27. Udhaar App - Mobile Quickbooks for Pakistan

• Udhaar helps SMBs manage inventory and payments collections in Pakistan.  Like Trienta, it helps with reporting, accounting, and chasing payments (collections). Its primary competitor is paper bookkeeping, and it is live with 20k merchants.

• 🤔 This category feels huge for emerging economies, where SMBs are the lifeblood, and paper is the primary competition.  The opportunity to move into payments and lending from this data is significant.

28. Kodo - Corporate credit card for India's startups (e.g., Ramp) 🤓

• Kodo is the corporate spend card that helps automate expenses and provides rewards on spending high growth businesses have (e.g., AWS).  It includes an expenses dashboard, employee card management, and a flexible line of credit for the entire company (including working capital loans).

• 🤔 India's startup ecosystem is gaining incredible momentum, and selling tools to that community is a bet on growth.  Ramp and Brex have proven the model; it will be interesting to watch Kodo execute.

29. Fintoc - "Plaid for Latam"

• Fintoc manages account data aggregation for credit scoring, reconciliation, and simplified KYC.

• 🤔 It's hard to understate Plaid's impact on customer onboarding in the USA; it indeed created a category.  There are multiple players now across various parts of Latam attempting to be the Plaid. Whether one or several can gain significant traction will be interesting to watch. Will Plaid (or others) look to M&A here?

30. Alinea - Robinhood with an ESG focus

• Alinea matches an investor to stocks based on their interests, provides bite-sized insights, and gives impact against each company.  They charge a membership fee and are a registered investment advisor with the SEC.

• 🤔 Given the rise of the social investing platforms (Public.com and Commonstock) as a reaction to Robinhood's more capitalist leanings, it's interesting to see Alinea appeal to the more ESG conscious.  Its focus on bitesize reviews of impact is an interesting angle. It reminds me of Tickr in the UK (although I like Tickrs theme approach more, it's a neater abstraction)

31. Lendflow - Embedded lending for software companies 🤓

• Lendflow has created embedded lending infrastructure to allow platforms to become a source of capital to their customers.  Lendflow brings together application tools, underwriting infrastructure (e.g., document capture, credit scoring), and a lending marketplace.

• 🤔 I first covered Lendflow back on Aug 2nd, 2020 - back then, I liked how they bake in customer support, compliance, underwriting, and collections hidden behind the API.  I also like their panel of lenders; it's capital-light for lendflow and the platform.

32. OctFi - BNPL for Southeast Asia

• OctFi providers0% interest loans for consumers to renovate or furnish their house.  Like Klarna or Affirm, OctFi has an app front end for consumers that offers flexible payment options at the checkout.  OctFi claims a 34% increase in order value and a 20% increase in sales conversion.

• 🤔 Southeast Asia is rewards and deals mad (even compared to the USA), with 8% cashback being typical. In this market, BNPL feels like an ideal fit.  Singapore and South East Asia have had an explosion of wallets, checkouts, and payment mechanisms in the past ten years (more so than the west), so OctFi is in a crowded space but could have that BNPL edge stand out. Expect me-too plays to follow.

33. Bimaplan - Insurance for the next billion Indians

• Bimaplan is a mobile-first insurance company that uses India's unique digital infrastructure (like its identity system, Aadhaar, and massive 4G mobile penetration) to access customers the traditional industry couldn't. They're live with one underwriter and selling their first 1,000 policies in Q1.

• 🤔 India's finance businesses historically only served the affluent and mass affluent markets because all their cost and distribution models could manage.  Digital infrastructure has created a massive demand for companies like Bimaplan. India is in a digital gold rush for fintech and Insuretech.

34. Bueno Finance - Credit builder for Gig workers

• Bueno offers "a digital credit card over UPI," India's Universal Payments Interface. It positions itself as a credit-building platform for blue-collar workers.  It builds a revolving line of credit by offering instant access via a partnership with platforms they work for (e.g., Uber). Then the credit line increases over time as repayment behavior is observed.

• 🤔 Bueno estimates platforms currently pay 15m gig workers, and now, Bueno has just short of 100k users. That's not lousy traction for such a young company.  I'm surprised to see them not lead on the "instant payouts" feature we see with many gig worker cash advance products.  But this is a huge problem globally, and it's exciting to see more people executing on it.

35. Sivo - "Debt-as-a-service." 

• Sivo provides an API and risk protocol for fintech, neobank, and gig worker platforms to lend money to their users at scale.  They have a $100m debt capital partnership and "100 companies in their pipeline."

• 🤔 I covered Sivo in Jan 2021 and had this to say.  "Debt financing is hard, and getting the lines of credit in place takes months if not years. Banks see each customer as a snowflake and never productised their risk models. Sivo is doing just that."  Arguably competitive with lendflow, there is some noise around the VC community about founder track record, so keep an eye on this one. Theranos of fintech, or next big thing? You decide.

36. Finary - Discord for investing

• Finary is essentially group chats about stocks. They are taking r/wallstreetbets real-time. It also has tools for creators to build their communities and manage content over the top.

• 🤔 Another startup about investing called Finary is confusing, but I like where this one is going. It's essentially built a community set of tools and then aggregates all of the brokers.  Instead of being with public or commonstock, you can use any broker and then have community via Finary.  Clever.

37. Brick - Banking for homeowners to increase their home value 🤓🤓

• Brick helps homeowners plan and pay for high ROI home improvements. It pairs ROI analysis with 0% financing to figure out what improvement will add the most value. Customers pay for projects on their brick card (backed by Blue Ridge Bank) and charge $95 a year.

• 🤓 I've said a few times; there's money to be made in SaaS subscriptions for the more complex consumer problems. Consumers essentially project-manage their have a house without project management tools or time.  Brick is a good mix of financing, SaaS models, and consumer planning tools. The planning tools also feed a risk model; if the consumer identifies something high ROI then executes that plan, Brick would see that spending activity come through on the card. The space for merchant partnerships and discounts must be ripe here too.

38. Krab - Accounts, invoices, and Lending platform for trucking companies

• For truckers and trucking companies with no formal credit score, Krab creates a company's credit profile by pulling data and offering loans from multiple banks.  The app also helps manage orders, invoices, payments, and collections for the trucking company.

• 🤔 Seeing Krab as a lending business is missing some of the tricks. It's a vertically focussed bookkeeping service that happens to do lending. I wonder if the value for this in the Indian market long-term is in SaaS subscriptions or lending?  It's also another example of Indian companies able to do more because of the public APIs available as open-source infrastructure.

39. Gerald - Autopay household bills

• Gerald gives overdraft and late fee protection by connecting bank accounts, providing notifications for upcoming payments, and offering a cash advance if needed for $9.99 a month

• 🤔 So let me get this straight. For $9.99 a month, I don't have to worry about my overdraft. What if I just paid a fee for an overdraft?  Unarranged overdraft fees can be costly, and I like that Gerald is halfway between data-driven insurance and financial bot looking out for you, and not everyone has an arranged overdraft.  Still, this feels like a feature, not a product. Imagine building this as a rule on Astra.finance - then any fintech could replicate it.  I could be being unkind here, so do correct me if I'm missing it.

40. GroMo - App for agent insurance in India

• India has 4m independent Insurance agents, but much of their work is manual or local.  GroMo has built a platform that allows agents to become certified, get more customers, and get shorter payout cycles for commissions.

• 🤔 By taking a % cut of sales, GroMo is bringing its agents massive distribution in return for a small cut of the new deals it creates. Nice.

41. Hapi - Robinhood for Latam

• Hapi is making the US stock market available to consumers in Latam with no commissions. The app interface looks uncannily like Robinhood. They're working with Viewtrade as the registered broker-dealer and Apex clearing.

• 🤔 YCominator is low key becoming rocket internet. They are taking what works in the US and doing it elsewhere. There's a formula for Robinhood clones. Take local KYC knowledge + Apex clearing and make a stockbroker app for your market today! In all seriousness, this is another example of where LatAm consumers have missed opportunities for decades, and Hapi is closing that gap with digital infrastructure.

42. Finely - Simplified debt capital management

• Finley helps growing companies automate due diligence, compliance, and reporting with their capital providers. Finley is for fintech companies, real estate startups, or transportation companies.

• 🤔 Let's say you're a fintech getting into lending. You have a capital provider (e.g., an asset manager or bank), now there's a bunch of non-differentiated stuff you have to do for that bank.  Finley has built all of that back-office infrastructure and packaged it.

43. Atrato - Affirm for Latam

• Atrato lets consumers pay for purchases in up to 24 monthly installments without a credit card.  They are live in Mexico with 110 merchants and growing GMV 45% MoM.

• 🤔 The risk model for BNPL hasn't been proven in LatAm yet, so I'm curious to see how Atrato scales and what level of risk merchants are taking on. However, the sheer demand Nubank saw when they opened up even marginally good digital lending products in Brazil makes me think there will be massive demand for this product, especially from the financially excluded.