Blueprint: Google infrastructure for Ethereum and Solana; UK digital lender Plend gets $40MM; $90MM for Family Office roboadvisor Arta
Hi Fintech Futurists —
You are the best, today’s agenda below.
CRYPTO: Google Cloud announces blockchain node service starting with Ethereum (link here) and Google Cloud Just Became a Solana Validator (link here)
DIGITAL LENDING: Ethical lender Plend raises £40m (link here)
DIGITAL INVESTING: Arta Finance raises $90m and exits stealth to make family offices more available (link here)
LONG TAKE: The $5 trillion of GDP that McKinsey, Goldman, and Galaxy say will be built in the Metaverse (link here)
PODCAST: AI-based underwriting of small business insurance, with Coterie CEO David McFarland (link here)
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Short Takes
CRYPTO: Google Cloud announces blockchain node service starting with Ethereum (link here) and Google Cloud Just Became a Solana Validator (link here)
Google launched Blockchain Node Engine, a service that will help power blockchain nodes, which are the underlying infrastructure of blockchain networks. Nodes play an essential role, creating anti-fragility and allowing multiple parties to validate and store data on various hardware devices, often containing copies of the entire transaction history. If one node is corrupted or discredited, the overall health of the network is not at risk.
The Google service aims to make it easy for people to set up a node without technical proficiency in setting it up your own hardware. We want more nodes generally, as it enhances security and decentralisation. Ethereum is the first blockchain to be supported by the service, and Solana is in the works. Google announced they will be running a validator on Solana, and will bring the service Solana in 2023. There will be a $100K Google Cloud credits grant to start-ups that use these services.
This is big news, and hurts Infura, Alchemy, and perhaps Quiknode and Blockdaemon. Google is making a play for the infrastructure layer, and it already controls the cloud hosting hardware on which the others rely. We are interested in seeing where Amazon and Microsoft land in this space. More players is a good thing, and they may be more likely to bring over some of the hesitant enterprise clients that wouldn’t use a crypto-native service.
DIGITAL LENDING: Ethical lender Plend raises £40m (link here)
UK-based digital lender Plend raised £40MM for its open banking-based credit product. Investors include the founders of Monzo and Starling Bank, Oodle Car Finance, Active Partners and others, showing that fintech insiders see the potential adoption of an alternate credit approach.
Plend is using a variety of metrics that can provide an indication of a person’s ability to repay loans by using open banking. Another way to say it is that they are rebuilding an alternate credit score. Since launching 4 month ago, over £40MM in loan applications have been processed, with the loan book increasing 20% each month. The economic situation is likely pushing a lot of people to look for financing, so we look at this underwriting with mixed reaction.
There are also issues around financial inclusion, and trying to use a deeper data set in order to avoid algorithmic prejudice. That may be a positive outcome from open banking integrations — a new, more granular look at who gets access to credit. That said, getting access to loans isn’t a strict good, especially if the underwriting just leads to defaults in the next credit cycle, and at today’s personal interest rates that may be quite likely.
👑 See related coverage 👑
DIGITAL INVESTING: Arta Finance raises $90m and exits stealth to make family offices more available (link here)
Arta Finance raised $90MM and has come out of stealth to digitize the family office suite for investors. Sequioa Capital India, Coatue, and over 140 tech and finance investors joined the round.
Family offices are set up for ultra HNW individuals, being a dedicated a wealth management shop across financial planning and investment management. They often have access to more bespoke investment opportunities, such as alternative assets, private equity, venture capital, private debt, and real estate. For Arta, however, users are able to join the platform with investments from $10K gaining access to “top-10 fund managers”. This is a funny statement to make in 2022, which we interpret to mean either BlackRock wants to distribute more ETFs (already in the trillions), or BlackStone is going down market to retail investors to push private equity (because they’ve saturated the other markets). The platform will also provide lines of credit against financial holdings.
All this goes back to the premise of roboadvisors “democratizing” access to financial products. We like Arta’s push into the more bespoke parts of financial planning and other family office services. That said, it’s shocking to see a $90MM check going into this play in the current environment.
👑 See related coverage 👑
Long Take: The $5 trillion of GDP that McKinsey, Goldman, and Galaxy say will be built in the Metaverse (link here)
We take a tour through three insightful reports sizing the metaverse opportunity, in particular parsing out descriptions of potential economic activity.
We see estimates ranging from $4 trillion to $8 trillion of revenue pool in the long run, and current investment in the hundreds of billions, of which about $10B per year is private. We also highlight some potential errors in pursuing strategy in the space, and offer hypothesis for the future.
Podcast Conversation: AI-based underwriting of small business insurance, with Coterie CEO David McFarland (link here)
In this conversation, we chat with David McFarland, co-founder and CEO of Coterie Insurance – a US- based insurance entity focused on making risk transfer efficient for the small commercial P&C insurance space.
Coterie uses industry-leading tech, deep insurance expertise, and product innovation to embed insurance into their partners’ existing products and workflows, leveraging data from multiple sources to turn small commercial accounts from an unprofitable obligation to a profitable opportunity.
Rest of the Best
Here are the rest of the updates hitting radar.
PAYTECH: CloudPay Raises $50 Million and Reports Growth as Payroll Evolution Continues
PAYTECH: Fintecture wants to replace paper checks or manual transfers for B2B payments
WEALTHTECH: UK’s most exclusive wealth tech, Privat 3 Money, launches bespoke mobile trading platform to HNW clients
WEALTHTECH: UBS launches digital wealth management platform in China
ROBOADVISOR: J.P. Morgan Launches Hybrid Robo-Advisor
DIGITAL INVESTING: Treasury management startup Vesto wants to help other startups put their idle cash to work
DIGITAL INVESTING: RapidSOS Raises $75 million
INSURTECH: Cover Genius raises $70 million
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