Despite Market Declines, Fintech, Insurtech, Productivity Show Venture Promise

Despite down rounds, depressed markets and interest rate concerns, several sectors including fintech, insurtech and productivity management for evolving workplace processes are all showing promise for venture investing. 

Such companies and investments in them should continue to benefit once the inflationary cycle and the economy improve. JL 

Forbes reports:

Startups providing tech solutions capitalize on persistent customer demand in the current macroenvironment. The growing maturity of fintech products available means the sector (now) has the momentum it needs to endure the market conditions currently. Through their ability to reach consumers and businesses directly, rather than employing the legacy independent agents and brokers model, insurtech companies appeal to younger generations with systems more compatible with digital-first tendencies.  Increasing pressure for employers to offer greater flexibility and work-life balance, companies are providing seamless solutions to enhance remote team management and automate repetitive processes.

Every year, TrueBridge analyzes the Next Billion-Dollar Startups to spotlight the trends shaping the next wave of industry disruptors. Last year, we discussed how the convenience and innovation of digital alternatives turned what started as a pandemic-era necessity into a preference for consumers and a competitive advantage for businesses. 2022 represents a vastly different macro business environment, where having an innovative product and a large and growing market opportunity may not be enough to succeed in the long term.

This year’s class of Next Billion-Dollar Startups are building the products necessary to position themselves for success – and they are doing it as relatively well-capitalized companies. Nearly all the companies raised money in 2021 and/or 2022, giving them a runway for growth in a period marked by down rounds, structured terms, and required proof of a clear path to profitability.

The lion’s share of spots on this year’s list are comprised of startups in the Fintech, Insurtech, and Productivity sectors that have set their sights on modernizing and disrupting traditional industries. Startups providing tech-enabled solutions are poised for success as they capitalize on persistent customer demand in the current macroenvironment. They also continue a multi-year trend that was accelerated by the Covid pandemic as advances in technology accommodated a dramatic transition in the way we all live, work, and interact.

Read on to find out more about this year’s Next Billion-Dollar Startups and the industries in which they are providing a fresh dose of innovation.

Fintech: Persistent Momentum

For several years, hype and money has flooded the fintech scene across many regions of the world. Today’s environment looks very different, with anticipated down rounds from many of the buzziest titans that not long ago grabbed media headlines with their seemingly endless supply of record-breaking valuations. However, the expansion of the industry’s scope since its early days, combined with the growing maturity of fintech products available on the market, likely means the sector has the momentum it needs to endure the market conditions we are currently witnessing. Evidenced by this are 0x Labs, Equitybee, and Novo, three companies breaking the traditional payments and finance mold, earning them spots as Next Billion-Dollar Startups.

· 0x Labs is a developer of an open protocol designed for decentralized exchange on the Ethereum blockchain. Its technology is important infrastructure for the emerging crypto economy, enabling a new financial stack that is more efficient, transparent, and equitable than systems of the past. 0x enables the peer-to-peer exchange of tokenized assets such as NFTs, which prove ownership of a unique digital item. In April 2022, the company raised a $70 million Series B round led by Greylock. News of their Series B came shortly after Coinbase picked 0x to power its then-recently launched social NFT marketplace.

· EquityBee has developed a stock option financing platform intended to provide startup employees with the funding they need to exercise their stock options. While stock options can be a life-changing reward for employees when their company is performing well, not every startup employee has the funds to fully exercise the options available to them. EquityBee solves that problem by providing a marketplace for employees to connect to capital from a network of investors to finance the process. Last year, EquityBee raised a $55 million Series B round led by Group 11, which also led EquityBee’s Seed and Series A rounds.

· Novo is a banking platform that powers simple business checking accounts, bringing small business banking into the modern age with easy-to-use tools for founders on the go. As of January 2022, Novo has 150,000 small- and medium-sized business (SMB) customers and has collectively seen $5 billion in lifetime transactions. This momentum has been matched by significant funding – Novo raised a $90 million Series B financing at a $700 million valuation in 2022 led by new investor Stripes.

Insurtech: Reshaping The Customer Journey

As businesses and individuals look to reinvent everyday systems in this digital era, insurtech companies have been gaining momentum and stealing market share from incumbent legacy providers by offering enduring, digitally integrated value to users.Through their ability to reach consumers and businesses directly, rather than employing the legacy independent agents and brokers model, insurtech companies have appealed to younger generations with systems that are more compatible with today’s digital-first tendencies Cowbell Cyber, Insurify, and Kin Insurance are leading this charge, earning their spots as three of this year’s Next Billion-Dollar Startups.

· Cowbell Cyber is the leading provider of cyber insurance for SMBs, delivering standalone cyber coverage tailored to the unique needs of each of its customers. Their technology relies on AI for continuous risk assessment and underwriting, delivering policyholders a closed-loop approach to risk management. In March 2022, Cowbell raised a financing led by Anthemis Group. At the time of the round, Cowbell disclosed that it had developed the largest cyber insurance distribution network in the U.S. with more than 14,000 producers, growing its monitored risk pool to more than 23 million businesses – 70% of the United States SMB market.

· Insurify’s platform helps users compare online car, home, and life insurance quotes in one place. The company has developed AI to make insurance shopping simple, affordable, and hassle-free. Insurify founder and CEO Snejina Zacharia was inspired to build a better insurance shopping experience following a minor car accident that led to skyrocketing car insurance rates. Insurify raised a $100 million Series B funding round led by Motive Partners in September 2021.

· Kin Insurance: Kin Insurance is the developer of an online insurance platform designed to provide simple, personalized, and affordable home insurance. The company’s direct-to-consumer platform uses data and technology to determine the best way to insure homes where insurance is harder to get, especially in regions exposed to extreme weather and fires. Kin Insurance closed an $82 million Series D round in March 2022 that was led by QED.

Productivity: Reorganizing the Workplace With Automation and Collaboration Tools

With hybrid and remote work policies now the norm and increasing pressure for employers to offer greater flexibility and work-life balance, it’s no wonder several companies among the Next Billion-Dollar Startups are providing seamless solutions to both enhance remote team management and automate mundane, repetitive processes. Firstbase, Fountain, Instawork, and LinkSquares are a few of the many rapidly growing companies on the 2022 Next Billion-Dollar Startups in this space.

· Firstbase is a remote team management platform designed to help companies set up, manage, maintain, and retrieve all the physical equipment remote workers need to succeed at home. From laptops and peripherals to desks, chairs, lamps, and more, Firstbase levels up organizations by helping them enable work-from-anywhere capabilities. The company raised a $50 million Series B round led by Kleiner Perkins in March 2022.

· Fountain’s all-in-one high-volume hiring platform empowers the world’s leading enterprises to find the right people through smart, fast, and seamless recruiting. Founded in 2014, Fountain started with a vision to disrupt applicant tracking systems, which are often designed for salaried employees despite much of the global workforce being comprised of hourly workers. Fountain’s purpose-built solution is designed to keep hourly workers top of mind and connected throughout the applicant process. In June 2022, the company raised an $85 million Series C funding round led by SoftBank and B Capital.

· Instawork has developed an online job marketplace designed to connect local businesses with skilled hourly professionals. The company is a leader in the modernization of the hiring and payment of hourly workers, and usage on their platform has skyrocketed since the pandemic as workers turn to flexible work options. Instawork raised $60 million in a Series C funding round in 2021, led by Craft Ventures.

· LinkSquares is a developer of a legal document analytics platform designed to identify key data and liabilities in contracts. The company’s AI-powered contract management platform provides its customers with everything needed to write, execute, and analyze contracts quickly. Its flexible automation platform offers customers better visibility and collaboration. In March 2022, the company raised a $100 million Series C funding round led by G Squared.

While pandemic-era trends have fueled the hypergrowth of many startups, this year’s Next Billion-Dollar Startups are poised to continue their growth despite challenging market conditions by developing innovative products that continue to disrupt and advance traditional industries.