Blueprint: Experian's $350MM+ shopping trip; Damien Hirst and Drake's NFT dividend; $9B valuation for Pokemon GO metaverse maker
Gm Fintech Futurists — our agenda for today is below.
NFTs: Damien Hirst Turns His Drake Album Art into 10,000 Ethereum NFTs (link here)
METAVERSE: Niantic Raises $300M Investment at $9 Billion Valuation to build “real-world metaverse” (link here)
RESEARCH: World Economic Forum CBDC analysis in the era of Populism, Institutionalism, and Hofstede's Cultural DNA (link here)
PODCAST: Powering the FX behind Africa's trillion-dollar growth, with Aza CEO Elizabeth Rossiello (link here)
If you want to go deeper in Fintech & DeFi, check out premium subscription below.
Visit our carefully curated Sponsors:
24/7 payments that are available to every business. Cryptopowered by Mercuryo. Mercuryo builds a custom payment toolbox to let your business scale globally.
You’ll Get Leads and Close Deals at Fintech Meetup! That’s why organizations like Argyle, Citi, Nium and Urban FT are all taking 2x more tickets in 2022 than they did in 2021! Meet with everyone you need to meet: Fintechs, Banks, Networks, Solution Providers, Tech cos, Neobanks, Credit Unions and many others! Online, March 22-24. Prices go up on Friday
👉 Get your ticket now
Perpetual Protocol is a decentralized perpetual futures contracts exchange on the cutting edge of finance and technology. Traders use it to permissionlessly trade the most popular products in Web3. Builders create new protocols and projects on top of it. Liquidity providers use it to earn yield on their capital.
👉 Learn more at perp.fi
Consumer Fintech: Experian buys InsurTech, PayTech firms in $353m acquisitions (link here, here)
Experian, a consumer credit company, reported half-year revenues of about $3 billion, and announced two acquisitions (1) insurtech Gabi and (2) paytech start-up PagueVeloz for $320 million and $33 million respectively. For scale, Experian covers over 1 billion people and businesses globally, with more than 235 million people and over 25 million businesses in the United States. It also occasionally generates data breaches.
These acquisitions send interesting signals about product focus for a data company at mature scale. Put another way, they reveal the commercial direction of what you can do with financial data on everything and everyone. You can see above the revenue generation of the areas where the acquisitions fit. First up, Gabi.
Gabi is a US-based insurance aggregator that allows for comparison of insurance carrier rates for home and auto products. Similarweb suggests traffic of 250,000 per month, or a couple million per year — a $320 million EV sale prices each web visitor at $100+, and let’s assume that converts 10% into leads, implying each lead is worth $1,000. A bit expensive honestly, but it sort of fits into our mental model about Credit Karma, Lending Tree, and similar lead gen websites. We guess the interesting part of this for Experian is getting a deeper customer data set relating to insurance product, which thereafter allows them to generate better pre-qualified leads. Insurance analytics is a chunky market too — $23 billion in revenue by 2027.
Second, PagueVeloz operates in Brazil as a digital payment gateway. They perform a variety of payment and receipt services for their customers, most notably issuing and recognising boleto bancảrio, one of Brazil’s most popular cash payment methods. A boleto (‘ticket’) enables consumers to engage in eCommerce and settle the transaction in cash, specifying the amount and due date like an invoice. PagueVeloz generate boleto online or in-app and immediately send customised SMS order notifications to consumers.
Two-thirds of Brazil’s population do not use a credit card and 55 million are unbanked, making boleto bancảrio the only way to buy online and obtain credit terms for many. For those that do use credit cards there are limitations. In this way, PagueVeloz is paving the way for banked and unbanked Brazilians to engage in eCommerce. Experian is able to use data out of this fintech to reach into the long tail of the economy, and quantify parts of the debt write-off process, which in turn makes its data stores in LatAm more valuable.
There are some existential concerns about a honeypot of consumer data of this magnitude. But it is undeniably a large platform business with returns to scale, and compelling re-investment opportunities over the medium term.
This week in the land of NFTs, Damien Hirst rewarded holders of his ‘The Currency’ project with an additional piece of generative art, per below.
Based on Hirst’s previous design of Drake’s album cover of “Certified Lover Boy” (12 emojis of pregnant women), the artist made 10,000 remixes of the cover using visual artifacts from “The Currency” and distributed them to NFT holders as a Thanksgiving gift.
There are a few points to highlight here: (1) the use of airdrops in NFTs as a necessary mechanism for building and engaging communities, which has financial implications, (2) NFT art acting as a medium for both emerging and established artists, coalescing into an asset class, and (3) the role of remixing pop culture, high art, and technology into a financial soup.
Airdrops have shown to be a meaningful way to share value with art owners. In DeFi, protocol token distribution tends to promote a flurry of yield farming and speculation, rather than organic usage of the platform. To stop this, DeFi protocols introduce staking rewards to lock up project tokens at some interest rate. You can’t do that with NFTs as easily yet! So to keep owners from selling, artists distribute new work into the wallets of existing collectors, thereby locking in communities that can both appreciate the work and hold assets in order to receive new assets. Think of it like a automated dividend.
Hirst’s “The Currency” was sold for $2k, went up to about $60k, and now trades around $20k. “Great Expectations” floats between $3k and $6k; suggesting a 20-30% dividend. Now, that doesn’t get you from $20k to $60k, but it may stop people from selling and thereby creating more price collapse. Or not, who knows!
These markets are all still early and immature, and participants are discovering solutions through experimentation. Further, the cultural quality of participants is increasing — Eminem, Snoop Dogg, Shakira and Jay-Z are just a few of the high profile names getting involved. It’s not a coincidence that Collin’s dictionary named NFT as the word of the year in 2021.
METAVERSE: Niantic Raises $300M Investment at $9 Billion Valuation to build “real-world metaverse” (link here)
The metaverse continues to draw in more attention and capital. Niantic, the creator of Pokemon GO, is raising $300 million at a $9 billion valuation — the spending from Pokemon GO alone is annualizing to over $1.2 billion. The news comes shortly after the Winklelvoss twins announced a $400 million round for their metaverse bet, and not long after Facebook’s rebrand to Meta, which we covered earlier this month in more detail here.
Niantic's work is focused on augemented reality (“AR”), building out their extensive 3D map of the physical space to create a world where the lines between real and virtual are increasingly blurred, and which delivers an open computational layer for products and services to be overlaid onto the environment. If you’ve seen that Zuckerberg video, this is the part where people can interact with digital objects (like art and games) before buying them. And we know that tens of millions of people do use Niantic AR apps each month — though that’s a far cry from the necessary billions.
The question is whether Niantic can capture this middle layer — powering third party intellectual property, rather than trying to go it all themselves (e.g., Harry Potter game was shut down, Transformers in the works). Niantic is also looking to build out their own hardware, teasing their own headset earlier this year, which hints at the future of all-day AR glasses. Businesses are taking note about consumer behavior of this type — Adidas acquired real estate in the Sandbox and is partnering with Coinbase.
This is all cool exciting stuff. It is honestly hard to tell if we are still in the Second Life phase of the metaverse project, or whether our digital object economies will actually spill out into the third dimension. At the least, it is an interesting risk asset for portfolios that look to the frontier.
Rest of the Best
Here are the rest of the updates hitting our radar:
NEOBANK: Jefa raises $2 million to offer digital accounts for women in LATAM (link here)
PAYTECH: Payhawk raises $112M to better compete in the heated corporate card race (link here)
PAYTECH: Japan’s Credit Card Fintech Nudge Inc. Extends Pre-Series A Round with Capital from Sony Innovation Fund, Others (link here)
BNPL: Lee Fixel’s Addition leads $32M investment into TruePay, a Brazilian B2B ‘buy now, pay later’ startup (link here)
INSURTECH: Insurance startup Slide raises $100 million (link here)
INSURTECH: Swiss Re partners with Baidu (link here)
CRYPTO: Ethereum layer-two TVL reaches all-time high (link here)
GEOPOLITICS & TECH: US-China tech war: Xi Jinping doubles down on ‘technology security’ measures as part of nation’s five-year plan (link here)
ARTIFICIAL INTELLIGENCE: Nuon AI and Ignite Systems partner to deliver UK’s first embedded AI pricing service (link here)
Analysis: World Economic Forum CBDC analysis in the era of Populism, Institutionalism, and Hofstede's Cultural DNA (link here)
What is the World Economic Forum’s stance on CBDCs and stablecoins, and what does this mean for you in a macro context?
We anchor our writing around the World Economic Forum 223 page report on CBDCs and stablecoins. The analysis highlights the key conclusions across several white papers in the report. We then add a layer of meta analysis around the language in the report, and question what it is trying to accomplish, and whether that will work with the Web3 revolution. This leads us to think about the tension between populism, as represented by crypto, and institutionalism, as represented by banking structures. We discuss theories of cultural and national DNA, and the rise of populism, as difficult problems to solve for any global alignment.
Podcast Conversation: Powering the FX behind Africa's trillion-dollar growth, with Aza CEO Elizabeth Rossiello (link here)
In this conversation, we chat with Elizabeth Rossiello – the CEO and founder of AZA, an established provider of currency trading solutions which accelerate global access to frontier markets through an innovative infrastructure. Elizabeth founded the company in 2013 in Nairobi, Kenya and has expanded it to 10+ markets across Africa and Europe.
More specifically, we touch on ratings agencies and the activity of rating intitutions, M-Pesa and how it influenced the thinking towards a crypto-centric future, Africa’s banking landscape and some of the outstanding issues it faces, Bitpesa and how it became Aza, banking infrastructure in Africa, and so so much more!
“…we were called BitPesa for any OGs listening in. We changed to AZA a few years ago because Pesa is a Swahili word and similar to east Africa, and we moved heavy into west Africa and other markets that didn't associate with that word. And also, it was one of our products. So, we kept it as that, instead of just the brand name. But when we started, the idea was why can't we take what's successful here in Kenya and share it with the rest of the world? And what's successful was instant ability to pay. Ability to pay when you're not in person, almost like a PayPal like ability to pay, but connecting to all of your banking needs with your phone. And then how do you do that internationally?”
If you want to go deeper in Fintech & DeFi, upgrade to a premium Blueprint subscription below. Our value prop is simple: experienced judgment, accurate vision. If you knew the shape of the tomorrow, what would you do today?