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December, 2018 Volume 22

Auld Lang Syne

We always like to take time as a firm to think about trends that will evolve in the next year.  For 2019 we make the following five observations.

  • AI Acceleration – We have seen AI in a number of areas for growing bank revenues.  We will see more AI applications for other parts of the financial services industry.  The tools here will also reduce costs.  However, financial institutions will need to audit AI results to be sure an unintended bias does not appear.
  • Crypto Continues – Trading activities and support by institutions will continue to grow.  While we are not predicting upward price moment, we are seeing evidence that more and more mainstream investors are attracted by digital asset trading.
  • Big Iron Workarounds – The financial services industry has an ancient infrastructure that is unlikely to be replaced any time soon.  More startups will work to create smart workarounds for helping the incumbents move faster at lower cost to support their clients.
  • Employment Evolves – We will see more workers with multiple income sources resulting in employee benefit providers beginning to evolve to tap this opportunity with new product and service offers.  These gigs can offer a way to climb the financial ladder or create a lifestyle choice.
  • The war for technology savvy talent puts pressure on growth – Traditional education makes room for shorter duration certifications in software, engineering and data science.   The drive for apprenticeships emerge in technology fields and dependent business sectors.  Employers evolve benefit programs to create flexible benefits like helping to pay down student loans for employees.

Any feedback and insight you have on trends is also welcome.  Sent them to us at envision@vestigoventures.com.

—Mark & Dave
 

Envision Interview with Karl Muth

Blockchain insights from FRST CEO Karl Muth

New Investment – Kingfield Corporation

We invested in Craig Welch’s newest startup Kingfield Corporation’s (“Kingfield”) Series Seed. Craig’s previous venture was the very successful Acadia Soft.  Kingfield is a financial technology start-up that is currently developing a common industry communication network that will organize, standardize and facilitate delivery of operational type messages between institutional investors and the agent banks with which they have relationships. The building of this secure technology environment will allow all market participants to transmit routine post-trade correspondence, across all asset classes, through one client portal, thereby eliminating emails, chat, paper correspondence and other inefficient bespoke forms of communication. Our co-investors include Bain Capital Ventures and Contour Ventures.

First Sale – Mirador

It was a short time ago that we announced an investment in Mirador.  We are pleased to mention that they have sold the company providing our LP’s a 3X return on capital in a very short time.  This will allow us to post an excellent IRR for the Fund in its early days of operation.

Portfolio Updates

Long Game’s Look Ahead

2019 will be an exciting year for our company as we scale to support our customers to achieve their financial goals and have fun while doing so. Even so, we share concerns about the impact of an economic recession but hope that we can help our customers weather this time of insecurity.  Traditionally (and sadly) Lottery expands during times of economic hardship because people are looking for hope.  Hopefully this dynamic will help people to find our games of chance and be motivated to save instead.

Fintech is only at the beginning of its story.  Even the biggest FinTech companies are still small (~2M customers) relative to the opportunity (~200M customers) so lots of expansion is possible in the years to come!
So no surprise, we’re bullish about next year for Long Game. 2018 was our year of product-market fit and establishing channels for efficient growth and we start of 2019 with a new round of financing, poised to scale and monetize, and ready to help our customers succeed in the face of a tough economy.

Lindsay Holden, Long Game Savings CEO

What to Expect from towerIQ

2019 is a tremendously exciting year for towerIQ, we have a number of large achievements around the corner.  In particular we’ll be converting our pilot customers into enterprise customers in the beginning of Q1; this comes at the heels of launching our first 10 micro-services in January.  Our incredible engineering team has worked hard in ’18 and plans to nearly triple in size and productivity over the next twelve months.

The new year also represents a pivotal time for the commercial insurance market.  For the first time we are seeing large incumbents hiring Chief Digital Officers from other industries.  A number of large brokers saw internal projects fail in ’18 and will now be looking to buy additional solutions in ’19.  External pressures continue to drive brokerages to become more operationally efficient, we expect this will expedite our pipeline and adoption exponentially as the new year unfolds.

Adam Demos, towerIQ CEO

FRST Look at 2019

FRST enters an exciting phase with the new calendar year; we will be product-in-market around the time our Series A round of financing is set to occur.  Many of our customers, investors, and partners are generally oriented toward active trading (rather than being fundamentally long BTC, for instance) and turbulence in the markets always brings with it excited volumes and new arbitrage opportunities – we strongly believe that rough seas create interest in these markets and also interest in tools that can be used to increase the signal-to-noise ratio on a busy day.  Volatility in crypto markets is not new and it is not going away any time soon.

We believe identities – and, specifically, the ability to personify addresses and locations and traffic patterns on the network – will be the big change in blockchain in 2019 and that FRST’s technologies are at the center of this revolution.
Blockchain networks are quickly transforming from anonymous, trustless bazaars to reputation-centric, known-actor markets.  What began as an environment where KYC and AML, regulator-driven activities were seen as an inconvenience (that were frankly often performed at the de minimis end of the investigatory spectrum) will soon become a place where being identifiable is an asset rather than a liability

Karl Muth, FRST CEO

Interesting News

Financial services and blockchain: Disruption on the trading desk

Vestigo portfolio company CEO Karl Muth was recently featured on IBM’s blockchain blog. At Vestigo, we are lucky enough to have access to his thinking quite frequently, it is our pleasure to share his perspective with our readers.

Forbes Tech Predictions for 2019

Between our team’s obsession with data and industry backgrounds, there are few areas we monitor less closely than digital identity. We are excited by the potential synergies of blockchain technologies and AI in this space. Now if only we could find a FinTech use-case for 3D printing…

VIDEO: The Future of Insurance

Human progress is defined by the desire to take risk — whether that’s getting married, buying a home, having kids, getting on a plane, taking a new job, even moving to earthquake country (where this talk originally took place, in Los Angeles, as part of the a16z Summit 2018).

FinTech Trends for 2019

2018 has been a breakout year for FinTech. While we expect to remain busy through the end of the year, we are already thinking about where we will hunt for the next big FinTech startup in 2019.

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