Date post: | 14-Jul-2015 |
Category: |
Economy & Finance |
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Strictly Confidential01/15/15 Copyright © Canaan Partners 2014, All rights reserved.
Canaan Partners Overview
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Recent Fund Announcement
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Total Assets Under Management
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Early Stage, Multi-Sector
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12 Exits in 12 Months
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Crowdfunding
Lending alternatives
Payments and digital currency
Unique SKUs
High margin products
Ability to leverage social
eCommerce
Reinventing old industries
Crowdsourcing
Reputation economy
Marketplaces
Technology Investing Themes
FinTech
Data center efficiency
Software defined everything
Internet of everything
Business analytics
Mobile/Enterprise apps
eCommerce enablement
Big Data Cloud
01/15/15 Strictly ConfidentialCopyright © Canaan Partners 2014, All rights reserved. 7
Crowdfunding
Lending alternatives
Payments and digital currency
Technology Investing Themes
FinTech
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Dan Ciporin, General Partner
Experience Education
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The FinTech Opportunity: Watch Out Money,
Your World is Changing!
January 15, 2015
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AdTech
$165B
Financial Services
$25,450B
Financial Services Spend Eclipses AdTech by 150x
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Traditional Bank Lending Turned On Its Head
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4th Largest US Internet IPO in History
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Financial Services is a $25T+ Business
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1.7
3.1
9.4
11.2
0
2
4
6
8
10
12
Commercial Consumer Credit Home Mortgage Deposits
Total ($ Trillions)
Source: Deposits, Consumer Credit and Home Mortgage from Federal Reserve Bank; and Commercial from MarketWatch
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Financial Sector Has Yet to Optimize Technology
13
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Lack of Innovation Hamstringing Margins
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Reliance on Trading Volumes to Drive Revenue
15
% Equity Trading Volume Over GDP
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Basel I Basel II Basel III
1988
2005 -
2009 (slow
adoption)
2010
Common Equity 2.00% 4.50%
Tier 1 Capital of
Risk Weight
Assets
4.00% 6.00%
Leverage Ratio
3% - (US FED announced it would be
6% for 8 Systemically important
financial institutions, 5% for insured
bank holding companies)
Liquidity Coverage
Ratio
Firms of size need to hold 21-30 days
of net cash outflow on hand
Other Notes
Defined Risk Weighted
Assets (RWA), Tier 1 Capital
Ratio, Leverage Ratio
an additional "mandatory capital
conservation butter" of 2.5%
Focused on mainly on
reporting requirements
a "discretionary counter-cyclical buffer",
which would allow national regulators to
require up to another 2.5% of capital
during periods of high credit growth.
Regulation Increases Pressure on Banks
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Reserve Requirements Also Cutting into ROE
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Cost Advantages Powered by Tech
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Origination All online
Pays commissions to
agents accepting
physical cash
Gross sending
volume
90% ACH, 10%
cards Mostly Cash
Gross margins 66.5% 45%/55%
Other costs No physical locations
Cost for maintaining
and growing physical
locations
Not Just P2P: Remittance Another Example
19
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Personal Asset-Backed Securities: Yet Another
Example
Technology expansion of the market via the Internet: allows for loans against physical goods to be originated online
Principal/interest rate losses over 4 years: ZERO. Defaults of 10%, but with 130% recovery of those defaults
2014 Revenues of ~$20 MM on ~$73 MM of originations, growth rate of over 70%
Automated appraisal system built upon 45K historic appraisals
Extremely attractive lifetime values, based upon strong repeat usage
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The Market is Evolving
21
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P2P Forecasted to be $500B in 10 Years from Just
5 Players Alone
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Opportunities Abound
MASSIVE market (Trillions, not Billions)
Lack of innovation from incumbents
Regulatory environment lifting startups
FinTech exploding now
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Questions?
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