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Monday July 28, 2014

NY FinTech’s Forecast for 2013: Bullish

Henry O’Connor of Multiplier Capital and Jordan Bettman of Bain Capital Venture Partners (photo: L. Keyson)

By Lauren Keyson

At NY FinTech Startups midtown event last night, people were bullish on financial technology all across the board — entrepreneurism, investment and service.  The meetup’s founder Jon Zanoff selected a panel of VCs that get involved at different stages; including Multiplier Capital, a profit generating company that favors late stage investments.  At the opposite end of the spectrum was Deep Creek Capital, a firm that that takes positions at the earliest junctures.

“FinTech is a fantastic place to be,” Zanoff said.  “Banks and brokerages are the ultimate exit strategy and you have more of them in NY than anywhere else. They are looking to stay agile, and they are looking for young, small, sharp groups of entrepreneurs to help them get to that next level very quickly and efficiently. I think FinTech will continue to be red hot amongst the startup scene in 2013.”

Zanoff likes the payments area, even though he thinks it’s a little overbought. “I think that companies that are focusing on regulatory changes are going to be very attractive moving forward in a Dodd Frank world.”

Michael Giles, the meetup’s organizer, predicted four top trends, including a consolidation of companies. Instead of funding everything, VCs will pluck the best deals and companies will have a tougher time raising a follow up round.  With more openness in connectivity, integration is key – a paradigm shift. Collaborative consumption/social is still big and will get bigger – especially at FinTech.

Panelist Jordan Bettman of Bain Capital Ventures sees a shift towards more business-to-business payments. He said that the focus had previously been on merchant payments, whether it be a dongle with protection software or Square, a relatively new payment platform.  This is in addition to a lot of other competitors who are coming in and trying to sign up micro merchants. “It used to all be on the consumer side,” he said. “But in B2B, if you look at the amount of value transacted every year between businesses in the U.S., it’s 40x what you find on the consumer side. So what we think is, although it’s certainly a lot sexier to talk about Square, there are some interesting opportunities coming up in B2B.”

Big data is is another area that will be important in 2013, said panelist and VC Henry O’Connor of Multiplier Capital. “I’m excited to look at big data application over the next year and beyond to see how it can be applied to the financial space.  It’s analyzing human behavior in its most basic form and finding ways that you can tap that “analyzation” and applying it to financial technology that’s the most fascinating.”

Mike Cichowski of Edison Ventures is excited about capital markets opportunities, especially given the historic market structure changes resulting from Dodd Frank and other regulations. He uses the example of the electronification of OTC derivatives as an example.  “So we’re bullish on opportunities there,” he said.  “As well as in risk analytics, compliance and the like.  We’re big on FinTech — It’s a very underserved market in terms of investors, but it’s a global multi-billion dollar opportunity. “