News

Fintech exits: Could this year mark the technology sector’s coming of age?

Xignite

Twice in December the New York Stock Exchange’s famous pillars donned the colours of alternative lenders on the day their shares began trading publicly.

Financial News First came Lending Club’s red banner, then OnDeck’s blue and turquoise, for initial public offerings worth $1 billion and $230 million respectively.

The closely watched deals marked a coming of age of sorts for fintech firms, many of which are still in the earliest phases of life. They also raised the question of what lies ahead for fintech exits in 2015.

While some venture capitalists and fintech firm founders see a small, but swelling pipeline of firms ripe for public exits, others say fintech has a long way to go before it truly comes of age.

Matt Harris, managing director at Bain Capital Ventures in New York, said: “I think we’re going to see – pending market availability – a lot more IPOs relative to private exits in 2015 when looked at against the historic average.”

 

Within alternative lending specifically, Harris said the normal ratio of private exits to IPOs was about nine to one. But now, he said: “I think in this category it will be way closer to 50:50. There’s a pipeline that’s small, but super-fast growing.”

Social Finance or SoFi, which refinances student debt, is expected to file for an IPO this year and P2P lending platform Prosper is another closely watched candidate for a float in the coming years, venture capitalists say.

John Locke, a partner at Accel Partners in Silicon Valley, which has invested in small business funding firm CAN Capital, said: “2015 is going to be a big coming-out year for fintech.”

In addition to IPOs, Locke expects to see more M&A from classic financial services firms seeking to acquire the next generation of technology.

Venture capitalists describe a spectrum of fintech firms ready for some form of exit, with payments and alternative lenders looking more developed but wealth management and investment platforms and insurance fintech firms less so.

Harris said: “Payments are in the seventh inning, lending is in the fourth and capital markets and investments are earlier still.”

Venture capital investments in fintech firms reached a new high of $5.3 billion in 328 deals globally last year, according to Dow Jones VentureSource, more than twice the level in 2013.

But fintech is still just a fraction of overall venture capital investment.

Data provider CB Insights, which tracks US-based venture capital rounds, estimates that investments across all sectors reached $47.3 billion in 3,617 deals during 2014, the highest level since 2001. The firm does not break out fintech investments separately. There were 101 venture capital-backed IPOs, up for the third consecutive year, according to CB Insights.

Greg Brogger, founder of online trading site SharesPost, which allows investors to sell stakes in private companies, said: “A lot of successful exits in the last quarter of the year paved the way for a certain amount of enthusiasm going into this year. There seems to be support for those in the public market.” He added, however, that many companies still preferred to stay private, mature further, stabilise earnings and avoid market shocks that could disrupt their valuations.

Questions unanswered

The increased investment and visibility of fintech firms as they go public has raised the question of how the market and investors think about the companies.

Accel’s Locke said: “Lending Club in many ways is a bellwether for a number of other fintech companies thinking about the public market. Lending Club is being seen as a tech multiple, not a lending multiple or speciality finance multiple and rightly so.”

Lending Club’s stock was down about 20% from its first day of trading as of Friday morning while OnDeck’s share price was down about 40% from its first day as a public company. Personal finance platform Yodlee, which went public in a $75 million float in October, was trading more than 30% below its opening price.

Not all analysts have been bullish on the prospects for publicly traded P2P businesses. Sterne Agee analyst Henry Coffee wrote in a note about OnDeck this month: “In some ways, the rapidly growing marketplace lending and P2P business reminds us of the US prepaid card business five years ago.” He was referring to two companies that saw growth slow after regulatory scrutiny ramped up.

Amber Dolman, a partner in law firm Goodwin Procter’s financial institutions group, said: “You’ve got all the same pressures of a technology company – high, high growth but not necessarily a proven history of profitability. But when you start dealing with fintech you get the regulatory overlay.”

Scott Raney, a partner at Redpoint Ventures, said advisory was another area that held promise but where there were still questions. Companies such as Acorns, which helps save small amounts of money, and personal finance firm Personal Capital, are examples of firms on the rise in this sector.

Raney said: “They’re scaling [assets under management], they’ve had some very successful financings and are on nice trajectories, but there are still some questions left unanswered. Their models are based on AUM and they need a lot of accounts. How do you scale the acquisition of and managing those accounts?”

Public vs private

Looking at the roster of advisers on the three fintech IPOs in the third quarter, traditional investment banks, including Morgan StanleyGoldman SachsCredit SuisseCiti, and Bank of America Merrill Lynch are among the bookrunners.

But several fintech specialists say the decision to pursue a private versus public exit is largely driven by venture capital firms.

Dolman at Goodwin Procter said: “Before they listen to bankers, they’re listening to their investors and boards. The biases of a strategic investor on the board or private equity or venture capital fund is really going to guide the process as to whether or not the company is focused on an IPO or merger.”

Ex-bankers including former Citi banker Hans Morris, former Citi chief Vikram Pandit and former Morgan Stanley chief executive John Mack are among the advisers that are increasingly active in advising on investment in the sector and investing in fintech firms.

Stephane Dubois, chief executive of financial data firm Xignite, said fintech as a whole still had growing up to do before the market saw a spate of public exits.

He said: “I’m not anticipating a lot of IPOs in fintech in 2015. For a lot of the start-ups we heard about in 2014, it’s too early on.”

Source: Financial News

RECENT NEWS

Xignite, Inc., a cloud-based market data distribution and management solutions provider for financial services and technology companies, announced a new Vendor of Record service for clients subscribing to real-time and delayed market data. The new service vastly simplifies the administration and reporting required by exchanges and often eliminates the need to pay redistribution fees, potentially saving clients thousands of dollars a month.

As an approved Vendor of Record, also called a Service Facilitator, Xignite can redistribute real-time and delayed equities and options pricing data from Nasdaq, New York Stock Exchange (NYSE), Options Price Reporting Authority (OPRA), OTC Markets (OTCM), and the Toronto Stock Exchange (TSX). 

Adhering to the complex compliance guidelines required by exchanges is extremely difficult for investment advisers, financial advisers, or order management software providers that need to display real-time or delayed data. Each exchange has its own unique set of regulations and compliance requirements, and clients need to prove that they have control over who receives the data, in what format, and for what use case. Xignite’s Vendor of Record service eliminates the administrative burden of tracking these complex compliance requirements.

The new service utilizes Xignite’s cloud-native Entitlements and Usage Microservices to give firms complete control and transparency of their data consumption and usage. Xignite provides data entitlements, usage tracking, and exchange reporting across various data sets, users, and applications to ensure exchange compliance. Xignite’s new service sometimes eliminates the need to pay expensive redistribution fees. Exchange fees for display data, regardless of the number of users, can cost upwards of $10,000 per month. These high fees are especially difficult for smaller financial firms with just a few real-time data users.  

“Maneuvering through the maze of required compliance policies, entitlements, usage tracking, and reporting requirements, and being subjected to frequent audits is no easy feat,” said Vijay Choudhary, Head of Product for Xignite. “Xignite’s mission is to “Make Market Data Easy.” Today’s announcement is another step towards this. We are taking away the administrative burdens and complexity of licensing market data and allowing our clients the freedom to focus on their investment and trading strategies and building innovative products.”

Xignite’s Vendor of Record service is available for professional users with internal and display-only use cases. The service is available now as an add-on service for subscribers of our real-time and delayed equities and options pricing data APIs. These include:

XigniteGlobalOptions

XigniteGlobalQuotes

XigniteGlobalRealTime

XigniteGlobalRealTimeOptions

XigniteNASDAQLastSale

About Xignite

Xignite has been disrupting the financial and market data industry from its Silicon Valley headquarters since 2003 when it introduced the first commercial REST API. Since then, Xignite has continually refined its technology to help Fintech and financial institutions get the most value from their data. Today, more than 700 clients access over 500 cloud-native APIs to build efficient and cost-effective enterprise data management solutions. Visit xignite.com or follow on Twitter @xignite.

09/21/2021

Xignite, Inc., a provider of cloud-based market data distribution and management solutions for financial services and technology companies, today introduced XigniteGlobalETFs, a new Cloud API providing advanced analytical and full holdings data for exchange-traded funds (ETFs) globally. The popularity of ETF investing has been going through the roof and, in 2021, has broken all previous records. ETF data is critical to Xignite's digital investment manager (robo-advisor) clients, such as Betterment and SoFi, and our trading and brokerage clients, such as Robinhood and eToro, who offer their users collections made primarily of specially chosen, low-fee ETFs.

One of the prime reasons for the dramatic increase is that ETFs have become virtually free to buy and sell thanks to innovative Fintech solutions powered by Xignite market data. Robo-advisors such as Personal Capital, SoFi, Wealthfront, and WealthSimple have helped make ETFs extremely popular as an easy, low-cost way to diversify their members' portfolios.

Zero-cost trading stock brokers like Robinhood have attracted investors that use ETFs as trading vehicles. As the ETF landscape evolves, it continues to democratize hard-to-access trading strategies for retail investors. This dramatic expansion, and the complexity of the ETF landscape, make it critical for our clients to have institutional quality data to integrate into their ETF-focused financial software and mobile applications. 

The new API offers daily and historical coverage of all listed ETFs in North America, Europe, and the largest Asian markets. Sourced from CFRA Research, one of the world's largest independent investment research firms, users can analyze underlying constituents across ETFs to quantify and compare sector, factor, and other risk exposures. The Xignite's Data Quality team cross-validates the ETF data across sources and proactively detects and fixes any missing information. 

"Inflows to ETFs have already set an annual record in 2021," says Vijay Choudhary, Vice President of Product Management for Xignite. "It is critical for our wealth management, trading, risk analysis, hedge fund, and other Fintech clients to have access to in-depth research on the ETF industry to make informed decisions on behalf of their clients," added Choudhary.

Xignite APIs are cloud-native and offer a robust selection of use case-based endpoints. These endpoints are ready-to-use pieces of code that developers can easily integrate into their product or app, regardless of type, amount, or frequency of data, without the need for any complex integration logic. The available XigniteGlobalETF endpoints are:

GetHoldings - Returns all holdings sorted by percentage portfolio weight for the specified date.

GetETFCharacteristics - Returns characteristics for one or many ETFs for the specified date.

GetVolatilityStatistics - Returns average volume and volatility at the specified date.

GetFundFlows - Returns fund flows for selected ETFs.

GetFundFlowsRange - Returns fund flows for a selected ETF across the specified time range.

GetHistoricalNAVs - Returns the historical NAVs for an ETF based on a start date and end date.

GetNAVs - Returns the closing NAV for one or more ETFs for the specified AsOfDate.

GetTrailingReturns - Returns trailing returns for one or many ETFs for the specified date.

SearchETFs - Returns a list of ETFs that match the search parameters.

 

About Xignite

Xignite has been disrupting the financial and market data industry from its Silicon Valley headquarters since 2003 when it introduced the first commercial REST API. Since then, Xignite has been continually refining its technology to help Fintech and financial institutions get the most value from their data. Today, more than 700 clients access over 500 cloud-native APIs and leverage a suite of specialized microservices to build efficient and cost-effective enterprise data management solutions. Visit xignite.com or follow on Twitter @xignite.

08/03/2021

Xignite, Inc., a provider of market data distribution and management solutions for financial services and technology companies, today revealed the results of its collaboration with Neeva, the world’s first ad-free, private subscription search engine. Neeva has built features to deliver information in a more user-friendly manner to a general audience. One new feature is a stock tracker, enabling users to look at stock prices based on different time intervals and other key data points. The stock tracker is powered by Xignite financial data. Click HERE to download the case study containing the full results.

Neeva’s stock tracker requires significant quantities of high-quality market data to function. The company initially enlisted a legacy data provider but quickly ran into issues with data and API quality. Neeva needed to integrate quickly and required fast and reliable financial data. After a trial and receiving a recommendation from another client, Neeva identified Xignite as a provider capable of delivering large quantities of market data in a comprehensive and developer-friendly manner. 

“We were impressed by Xignite and committed to them following a successful trial,” said Stephanie Chang, Head of Marketing at Neeva. “The main factors that drew us to Xignite were the consistency of their stock ticker coverage and the granularity of their time-series ticker data, as well as the speed and reliability as well as the speed and reliability of their API,” added Chang.

Integration of the Xignite financial data APIs into Neeva’s stock widget took less than two weeks, and Neeva noticed immediate results in terms of breadth, detail, and API quality. Powered by Xignite’s global quotes and global historical APIs. Neeva presents its users with rich and desirable views of key data points for a huge variety of stocks. Users can use a time-based filtration mechanism to drill into metrics like open price, daily highs, and lows, 52-week highs and lows, volume, and market cap. 

“Xignite’s vision is to Make Market Data Easy. With our industry leading technology combined with Neeva’s user friendly search engine we have done just that,” said Stephane Dubois, CEO and Founder of Xignite. “We look forward to continuing our work with Neeva as they disrupt the search engine marketplace.” 

About Xignite

Xignite has been disrupting the financial and market data industry from its Silicon Valley headquarters since 2006, when it introduced the first commercial REST API. Since then, Xignite has been continually refining its technology to help fintech and financial institutions get the most value from their data. Today, more than 700 clients access over 500 cloud-native APIs and leverage a suite of specialized microservices to build efficient and cost-effective enterprise data management solutions. Visit http://www.xignite.com or follow on Twitter @xignite

About Neeva

Neeva is the world’s first ad-free, private subscription search engine. Neeva focuses entirely on the consumer, delivering only real, high-quality, trustworthy results. Neeva blocks third-party website trackers and will never sell or share customer data with any third party, especially advertisers. Neeva also makes it easy to search within personal email accounts, calendars, and cloud storage platforms surfacing the most important information from the same familiar search box. Neeva was founded by former executives from Google and YouTube. Learn more and sign up at Neeva.com.

07/15/2021

Xignite, Inc., a provider of market data distribution and management solutions for financial services and technology companies, announced today it has enhanced the data coverage for its’ interbanks and interest rates APIs in preparation for the required transition from the London Interbank Offered Rate (LIBOR) benchmark interest rate at the end of 2021.

Used in financial products such as adjustable-rate mortgages, consumer loans, credit cards and derivatives, LIBOR has been the world's most widely used benchmark for short-term rates. But after the 2008 financial crisis the U.S. Federal Reserve recommended a new benchmark interest rate to replace the outdated and problematic LIBOR. In the U.S market the new benchmark is Secured Overnight Funding Rate (SOFR), which is based on transactions in the U.S. Treasury repurchase, or repo, market, where banks and investors borrow or lend Treasuries overnight. Other countries are introducing their own local-currency-denominated alternative reference rates for short-term lending.

Xignite banking, and Fintech customers that build apps for capital markets, investment management, financing, and foreign currency exchange purposes, require interbank and interest rates data to manage exchange and interest rate risk. Xignite enhanced its Interbanks and Rates APIs with SOFR earlier this year and has now added four of the alternative overnight risk-free rates (RFRs) recommended to replace LIBOR for currencies in respective markets. The new rates include Euro Short-Term Rate (ESTR), Swiss Reference Rates (SARON), Sterling Overnight Index Average (SONIA), and Tokyo Overnight Average Rate (TONAR). These additional rates are available now at no additional cost to customers.

“Our rates and InterBanks APIs were the first REST APIs ever released to serve the needs of the lending and banking industries. They uniquely aggregate rates that are used by dozens of firms globally in critical business processes,” said Vijay Choudhary, Vice President of Product Management for Xignite “Given the major shift the industry is experiencing regarding reference rates, it was critical for us to support those new rates to give our clients the data they need to run their businesses,” added Choudhary.

Xignite’s Interbanks API offers real-time and historical interbank and deposit rates for currencies in 40 countries. Xignite’s Interest Rates API provides interest rate data for over 600 global treasury, money market and private capital market instruments and benchmarks. The new alternative T+1 (24hr+ delayed) rates include:

  •         Europe: Euro Short-Term Rate (ESTR) is an interest rate benchmark that reflects the overnight borrowing costs of banks within the eurozone. The rate is calculated and published by the European Central Bank.
  •         Switzerland: Swiss Reference Rates (SARON) represents the overnight interest rate of the secured money market for Swiss francs (CHF). The rate is calculated and published by SIX.
  •         United Kingdom: Sterling Overnight Index Average (SONIA) is the effective overnight interest rate paid by banks for unsecured transactions in the British sterling.
  •         Japan: Tokyo Overnight Average Rate (TONAR) is an unsecured interbank overnight interest rate and reference rate for the Japanese yen. The rate is calculated and published by the Bank of Japan.

About Xignite

Xignite has been disrupting the financial and market data industry from its Silicon Valley headquarters since 2006, when it introduced the first commercial REST API. Since then, Xignite has been continually refining its technology to help fintech and financial institutions get the most value from their data. Today, more than 700 clients access over 500 cloud-native APIs and leverage a suite of specialized microservices to build efficient and cost-effective enterprise data management solutions. Visit http://www.xignite.com or follow on Twitter @xignite.

06/09/2021