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What VCs are looking for in fintech

Xignite

Upstart Business Journal fintechThe fintech industry has experienced tremendous growth in the past five years, largely fueled by venture capital investment. Fintech venture investment grew from less than $1 billion in 2010 to more than $14 billion over 12 months in 2015, according to venture capital research firm CB Insights.

We gathered insights from a group of noted fintech venture capitalists to discuss key trends that they expect to play out within the sector in 2016.

Consumer-focused firms will expand their ecosystem

Among the most recognized and successful direct-to-consumer sectors in fintech, a sizable number of marketplace lenders, payment companies and robo-advisory firms have attracted a major proportion of VC startup and later-stage funding. These industries have begun to mature somewhat and have had early winners emerge, such as marketplace lenders Prosper Marketplace, Inc. and Lending Club, online payment processors Stripe, and robo-advisors Wealthfront Inc. and Betterment LLC.

Investment within these areas was one of the hottest trends over the past 12 months, according to Michael Walsh, general partner of San Francisco-based Green Visor Capital.

“We believe these groups probably garnered more attention and investment over a short period of time than made sense, relative to other fintech opportunities. Looking ahead to 2016, while we remain positive on these groups long term, we do believe they may take a back seat to some other areas, such as security, info services, and back and middle office automation,” Walsh says. “We expect to see some consolidation over the short- to medium-term.”

While these main categories may come under pressure in 2016, David Jegen, partner at Boston-based F-Prime Capital, believes there will still be options within the space and expects to see derivative opportunities created expanding their ecosystem.

“For one, companies are extending this business model into new areas, like real estate and insurance, but you will also get some interesting second-order plays,” Jegen offers. “For example, a company like Even Financial is addressing the lead generation problem for these platforms, and a company like Orchard Platform is helping investors access lending platforms. During 2016 and beyond we expect to see startups serving that ecosystem in a broader sense.”

Blockchain technology still poised to dominate

Venture investment is expected to continue to flow to companies engaged in blockchain technologies during this year and beyond. Two important segments sure to attract investment are capital markets and insurance.

“Blockchain tech will be applied to capital markets to enable improved clearing and settlement of various asset classes. Enhanced distribution channels and better decisioning via the application of advanced data analytics will help the insurance industry,” states Pascal Bouvier, fintech expert, venture partner with Santander InnoVentures and past general partner with Route 66 Ventures.

Enterprise companies to focus on leveraging big data Enterprise companies in the financial services space are looking more to automation and data to address costs, improve processes and open new areas of business. Many are focused on improving and leveraging their ability to handle large data sets utilizing Artificial Intelligence, machine learning, natural language processing, micro-targeting and micro-analysis.

This focus will continue to attract venture investment in 2016, according to Karl Antle, partner at New York-based ValueStream Labs.

“One of our favorite spaces is enterprise tech, and we love data and analytics. Not just tools, but proprietary sources of data,” Antle offers. “One emerging segment we're keeping a close eye on is marketplace lending infrastructure. Everyone is servicing in house and there are very few data companies in the space. There are no third parties doing processing or clearing – the infrastructure behind the industry just doesn’t exist, which we view as a tremendous opportunity.”

Beyond 2016

Facing the twin headwinds of possible consolidation and questions of valuation, coupled with the likelihood of increased regulation it won’t be surprising if 2016 fails to match the growth achieved in years recent — especially that seen over the past 12 months.

As for Xignite, we envision a few things; the Asian fintech gold rush has officially started and some major players will pop up in this space; the robo-advisor platforms will manage 25 percent of retail investable assets within five years; and large financial services companies will finally begin to adapt to technological innovation and invest in the cloud.

This is an exciting time for VC firms in the fintech space as the industry is facing incredible speed of innovation and change for years to come.


Stephane Dubois is the CEO and founder of Xignite. He founded Xignite as a wealth management software company but pivoted the company when he could not find any easy market data APIs to power his solution. Now, Xignite provides financial market data APIS to more than 1000 clients in 55 countries — many of them fintech startups in their own right. Before starting Xignite, Dubois was vice president of product management for Advent Software and product manager at Oracle. He has an MBA from the MIT Sloan School.

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Xignite Market Data Cloud Platform

Xignite Market Data as a Service was one of the first market data services built to run in AWS and they are one of the few vendors that is an AWS Advanced Technology Partner with a Financial Services Competency.

With more than a decade of cloud expertise in building, scaling and operating cloud-based market data technology, it is no surprise that leading financial services and capital markets firms rely on this company to empower their journey to the cloud. Their Metals API Service offers real-time prices and quotes for metals including Gold, Silver, Palladium, Platinum and other base metals. In addition to real-time precious metals prices, the service provides daily London Fixing prices as well as historical precious metal prices and metal news. 

Xignite Cloud APIs are sourced from leading providers such as FactSet and Morningstar as well as Xignite’s own curated, high-quality data.

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02/25/2021

Each year, Bobsguide asks the market to vote for fintech companies they believe stand out from the competition – those who have gone the extra mile in terms of development and servicing their clients. Xignite is proud to be listed as the "Best API Management" vendor on the Bobsguide 2020 Rankings.


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01/26/2021

Web services data provider Xignite captured the AFTAs judges’ attention on the infrastructure front with its release of Xignite Enterprise Microservices in July 2020, a suite of cloud-based microservices for data management, storage and distribution in the cloud, designed to help financial firms migrate from monolithic legacy data architectures to more agile and less expensive cloud services and data sources.

Requires subscription to read the article on WatersTechnology

01/25/2021

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 StockCharts, a leading technical analysis and financial charting platform for online retail investors. The collaboration involved a move from an on-premise market data provider to Xignite’s cloud-native technology hosted in Amazon Web Services (AWS). Download the case study containing the full results.

StockCharts requires vast quantities of financial data to power its visualization, charting and tracking tools, which investors use to analyze the markets to help with investment decisions. The company was frustrated by the limits of its on-premise market data center, which was forcing the team to make architectural decisions based on what its data center could handle in terms of speed and storage, not on their technology. Its previous market data provider was just starting to build out some cloud offerings, but they were far away from what the business required. StockCharts decided to migrate its infrastructure to the AWS cloud and partner with Xignite to gain access to endlessly scalable market and financial data delivered through innovative cloud APIs.

The collaboration made an immediate impact as StockCharts was able to expand its offerings and customer base by pursuing growth strategies enabled by Xignite’s cloud-based approach, which provides easy access to data and eliminates architectural limits on storage and speed.

The pandemic provided further validation. Seattle-based StockCharts was in one of the first areas hit by COVID-19 and was forced to quickly shut down its office. Pandemic-driven market volatility followed and StockCharts customers wanted to visualize what was happening. The company’s ability to scale quickly and accommodate a high volume of new requests would not have been possible without Xignite.

“The move to the AWS cloud and Xignite has unlocked tremendous new potential for us in a lot of architectural ways, and has given us a lot of data options that we could not even consider before,” said Grayson Roze, Vice President of Operations at StockCharts. “It relieved us of the burden of figuring out how to source things. Instead, we know exactly where we need to go to get the data and can access it instantly. That is a huge, huge benefit for our business.”

“We are proud to have played a role in transforming how StockCharts approaches data,” said Stephane Dubois, CEO and Founder of Xignite. “The events of this year unleashed a massive spike in retail trading and a host of other unexpected forces that reinforced the need for financial services firms to leverage the cloud. Despite the disruption of this year, StockCharts was positioned for success, and we look forward to continuing to deliver our financial and market data solutions to the industry at large.”

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-delivered modules to build efficient and cost-effective enterprise data management solutions. Visit http://www.xignite.com or follow on Twitter @xignite

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