Where's my wallet?

The first edition of the VSQ FinTech newsletter

Over the last 2 decades a large US bank called Capital One has invested a huge amount of money into their signature ad campaign, "What's in your wallet?" They hired the likes of Jennifer Garner, Samuel L. Jackson, suburban moms and ancient vikings to continually reinforce a message that keeping the Capital One card close to you at all times was the best path to savings and convenience. Now that we're experiencing a long-term directional trend in payments, coupled with a global event that has completely upended our daily habits, this question is no longer relevant, and the tagline no longer usable. The new question to ask yourself now is "Where’s my wallet?" And the answer is: "Who cares?"

Many of us living in more developed economies haven't picked up cash or a credit card in months. If you remember the 16 numbers (or ask Google or Siri to) you can basically do whatever you want. You're stuck at home anyways. Even if you go out (before 8pm!) you don't actually use the card now that touch payments are available at almost every point-of-sale.

As some of us initially did, you may bring your wallet along for emotional comfort, but you don't actually use it. We're weaning off the psychological coupling of person-to-wallet just like currencies once weaned off of the gold standard.

How is this happening? The answer is a frequently cited yet misunderstood realm of development called financial services technology, translated into user-friendly startup jargon as ‘FinTech.’ It may still be a nebulous subject for many people, but that doesn't mean it's not highly  impactful to the way we live and the way we interact with one another as a society.

For matters like this that are both significant and broadly unclear, we're here to do what any sensible problem solver would do: read and write about it.

As investors, we have been "long" on MENA FinTech for a while now: customer and enterprise habits, global trends, developments in technology, speed of regulatory changes. "Thesis" is one thing in investing, but timing is another. COVID-19 hasn't really changed our thesis. What it has done is 1) injected it with steroids and 2) reinforced our sense of timing.

We have done extensive historical analyses of the FinTech space and can see that startups have outperformed legacy players during and immediately after downturns. We can see that the revenue growth for FinTech players is higher during these periods than during the good times. Many economists and commentators are anticipating a broad-reaching valuation "reset" that will follow the public market repricing that we’re seeing now.

So with thesis and timing converging, we believe we will have a once-in-a-generation opportunity in the FinTech space here in MENA. We intend to use this forum to share some of the information that we're using to make decisions and continue building on this conviction. We will also share companies that we think stand-out, and why. Our hope is this gives you a glimpse into our thinking, and also helps you take advantage of an emerging trend, however you best see fit.

Every company will be a FinTech company

Let’s first take a step back and examine how FinTech fits within the broader picture and why it’s such an essential component across sectors. Angela Strange, General Partner at Andreessen Horowitz, provides an insightful overview of this in her blog post and presentation. “In the not-too-distant future, I believe nearly every company will derive a significant portion of its revenue from financial services. Every company, even those that have nothing to do with financial services, will have the opportunity to benefit from FinTech for the first time.”

Image Credit: a16z.com

How Payments can Adjust to the Coronavirus Pandemic - and Help the World Adapt

Social distancing is our new reality and its disruptive ramifications will be profound. This McKinsey report provides a clear account of how the payments vertical, specifically, can and should adapt and act as an essential tool to resuscitate the global economy. “It is critical not only for the payments ecosystem but also for the economy as a whole to develop, today, the payment solutions that will allow economies to emerge from the current crisis efficiently and define the post COVID-19 future.”

FinTechs For Sale: Post-Covid, It’s Partner Or Perish For Many Startups

The last decade has produced a vast number of budding companies and promising technologies. Many are now ripe for the picking. In this article Forbes spoke with more than a dozen venture capitalists, bankers, entrepreneurs, consultants and professors about the outlook for FinTech acquisitions over the next year and identified 12 potential targets. “The FinTech boom of the last decade has produced a vast landscape of new companies and novel technologies. Many may soon need to find merger partners.”

VentureSouq FinTech Portfolio Spotlight

While hundreds of millions of Indians have come online over the last decade, most merchants are still offline in the country. They continue to rely on notebooks to keep logs of their financial transactions. KhataBook, addresses this by helping Indian SMEs record financial transactions digitally and accept payments online via an app. The company recently raised $60 million in a new financing round that included several prominent international investors.

Bengaluru-based FamPay is building a payments network for teenagers with a focus on personal finance, offering P2P transactions capabilities and a debit-like product. The company recently announced $4.7M of seed funding from Y Combinator, Venture Highway and Sequoia along with Twitch co-founder Kevin Lin, Robinhood co-founder Vladimir Tenev, CRED founder Kunal Shah and VentureSouq.

While not a traditional FinTech player Helium Health is an example of a HealthTech company that’s using a significant portion of their latest raise to focus on building out their financing platform. “The startup offers a product suite that digitizes data, formalizes monetization and enables telemedicine for health care systems in Nigeria, Liberia, and Ghana.”

Mamo Pay, a Dubai FinTech platform founded by former Google employees raised $1.5 million to revolutionize P2P payments in the region. Founded by three former Google employees Mohammad El Saadi, Asim Janjua, and Imad Gharazeddine, Mamo Pay is building a P2P payments app that will enable users to make or transfer payments to family, friends, and businesses with a few taps and zero fees. “Our vision is for Mamo Pay to simplify everything from sending money quickly, to splitting a bill at a restaurant, to speeding up payments for SMEs and entrepreneurs,” El Saadi shared.

Tune In

How the COVID-19 Pandemic will Accelerate Digital Financial Services

This FinTech Insider podcast explores the different layers of the coronavirus crisis and how it will lead to an acceleration of FinTech adoption worldwide. “Business as usual is over. The world’s economies have gone into reverse, we're on the precipice of a global economic recession and being truly digital is no longer just a 'nice to have'. So what does this all mean for the financial services industry? Will this be a time for reinvention and will established firms be able to keep up?”