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Yolo Investments Firm Makes First Portfolio Exit with 5.8x ROI

Investment firm

15th December 2020, Tallinn, EstoniaGaming venture capital firm Yolo Investments (formerly known as Vereeni Investments) exited its investment in Estonia-based online gaming and sports betting operator Coolbet for an impressive 5.8x return. The acquisition of Coolbet by GAN Limited marks the first start-to-exit investment in Yolo’s portfolio.

General Partner and Founder of Yolo Investments Tim Heath said: 

“This is a very significant milestone for all of us at Yolo. It makes us especially proud to have been the early investors for Coolbet, back when we started Vereeni Investments in 2017.”

The funds will be used to reinvest in Yolo’s growing investment portfolio, which spans 46 investments across four funds focused on fintech, gaming and live casino, as well as other related products and services.

Tim continued

“We wish all the best for Coolbet as it takes things to new heights with GAN, and look forward to achieving similar results with the rest of our portfolio, of which many are increasing significantly in valuation.” 

About Yolo Investments

Yolo Investments is a venture capital, focused on seed- and A-stage investment opportunities across gaming and fintech. Based in Estonia, Yolo’s mission is to invest in outstanding people with bright ideas, who are focused on innovating and disrupting the norm in all manner of tech startups. 

Founded in 2017 by Tim Heath as Vereeni Investments, Yolo has created a thriving ecosystem with ventures across a variety of industries, including fintech, gambling, media, software development, crypto and blockchain-related companies. 

Learn more about Yolo Investmentshttps://yolo.io

 

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Yolo is the source of this content. This Press Release is for informational purposes only. Virtual currency is not legal tender, is not backed by the government, and accounts and value balances are not subject to consumer protections. Cryptocurrencies and tokens are extremely volatile. There is no guarantee of a stable value, or of any value at all

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Indonesia Unicorn Bukalapak Considers Middle East Expansion

Indonesia Unicorn Bukalapak Considers Middle East Expansion

Indonesian e-commerce and marketplace platform Bukalapak, one of the few in Southeast Asia to have attained unicorn status by being valued over USD 1 bullion, is now considering to expand to the Middle East, according to CNBC.

Since its founding in 2010, it has already entered five other Asian markets (Singapore, Malaysia, Brunei, Hong Kong and Taiwan), but co-founder and president Fajrin Rasyid has his eyes set on farther horizons. He said:

“In the future, it is possible that we go to other countries and other regions, Middle East is one of them.

The primary driver behind that, according to him, is Indonesia’s large Muslim population. It is the world’s most populous Muslim country and that has given the company an extensive learning and experience that would allow them to leverage the merchants and customer base in the Middle East.

Rasyid said that expansion into fintech was a “natural growth” path for e-commerce platforms like Bukalapak. And because a large section of Indonesians have very limited access to traditional financial services, these kinds of fintech innovations made a lot of rational sense.

Especially because most of the population now owned mobile devices, the co-founder believed that these so-called unbanked populations can now be reached, and Bukalapak was well placed to offer these “easy financial services” to them, including opening bank accounts or buying insurance.

Rasyid revealed these insights at the recent Innovfest Unbound in Singapore taking place just this week. Bukalapak bills itself as the one stop shop for anything to sell and buy, with a company that can be trusted. It is one of the most popular marketplaces online in Indonesia.

 

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South Korea to Copy Global Models in Fintech Adoption

South Korea to Copy Global Models in Fintech Adoption

The government of South Korea has committed to revising current laws that would allow for more flexibility in fintech startups in the country to create new business models. This was a statement made by the Financial Services Commission (FSC), as reported by local English daily Korea Times.

Should this change come into effect, local firms will be able to use global models as templates and quickly adopt business practices and financial services, especially those developed by so called tech unicorns across the world.

The FSC used the example of fintech startup Kabbage that offered loans to SMEs as well as retail users on its platform, to show how useful that could be in the Far East country:

“We will consider whether to allow the adoption of overseas models by local startups beginning in July.”

As of now, the only entities allowed to offer such loans to clients are banks or financial units of non-banks such as credit card suppliers and mutual savings.

Prime Minister Lee Nak-yon said that the consideration of such sweeping changes represented the state’s desire to give a boost to its fintech sector, hoping to spur innovation and and the creation of new industries through deregulation. Lee announced at a recent policy meeting in the administrative city of Sejong:

“I urge all government agencies to move forward in relaxing rules after reflecting on the needs of the market so that new industries such as fintech, drones and hydrogen vehicles can be developed.”

A taskforce set up by FSC has reviewed 188 cases of potential financial services using new tech, for a possible revision, with a proposal to amend laws at the National Assembly in the second half of 2019. One such law will allow financial firms to fully acquire fintech startups — now they are only allowed a maximum of 15%.

 

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Fintech Watchdog Chief Testifies Before Congressional Committee

UK Fintech Watchdog Chief Testifies Before Congressional Committee

The Financial Conduct Authority (FCA) Director of Competition, Christopher Woolard, has just testified before the House Financial Services Committee Fintech Task Force.

In his presentation entitled ‘Overseeing the FinTech Revolution: Domestic and International Perspectives on FinTech Regulation’, Woolard touched upon some of the key work that the FCA and other agencies in the UK had done in the sector of innovation and open banking.

Several projects were detailed, including the Project Innovate in 2014, the regulatory sandbox in 2015, a feedback statement on supporting the development and adoption of regtech (2016) and a lessons learnt document from the sandbox published in 2017. Fresh details of the impact and effectiveness of the regulatory sandbox were also shared evidence that suggests its work:

“… gives firms the regulatory certainty they need to develop their innovations and deliver
them at speed; improves outcomes for consumers by firms we support bringing innovation to market and incumbents responding to compete harder and improve their own offerings; encourages positive innovation domestically and internationally.”

The newly formed Task Force was set up to investigate new solutions that would foster innovation in the financial services sector. Its announcement by House Financial Services Committee Chairwomen Maxine Waters last month was meant to hold hearings for legislators so they would gain better understanding of the upcoming innovations in financial services.

Woolard’s role as the head of a leading global regulatory body, and its significant place in facilitating fintech, was meant to provide the US committee members with a non-US viewpoint. The UK’s regulatory ecosystem is generally more organized and can come into stark contrast with that of the US, and is widely recognized as the benchmark for innovation.

Others participating in the hearing included:

  • Paul Watkins, Assistant Director, Office of Innovation, Consumer Financial Protection Bureau (CFPB)
  • Beth Knickerbocker, Chief Innovation Officer, Office of the Comptroller of the Currency (OCC)
  • Valerie Szczepanik, Associate Director of the Division of Corporation Finance and Senior Advisor for Digital Assets and Innovation, Securities and Exchange Commission (SEC)
  • Charles E. Clark, Director, Department of Financial Institutions, State of Washington, on behalf of the Conference of State Bank Supervisors (CSBS)

 

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Moody’s: Singapore Banks Can Fend Off Fintechs

Moody's_ Singapore Banks Can Fend Off Fintechs

A new report from credit ratings agency Moody’s Investor Services has given a sound backing to the three largest banks in Singapore, believing them to be well placed to withstand the threats from financial technology (fintech) startups.

The ‘Fintech – Singapore: Bank of the Future: Fintech threats are growing fast but large incumbents will hold their ground’, report has Moody’s VP and senior analyst Simon Chen praising the regulators of the tiny island nation as “highly supportive” of fintech innovation. Its policies and financial incentives have led to many expansions of tech firms, with Singapore as their base.

Chen added:

“While startups are facing increasing competition for funding, Singapore’s three largest banks have abundant financial resources to invest in technology, and have been channelling cost savings from efficiency gains through digitalization back into technology investments.”

It was in Singapore that the first regulatory sandbox for fintech opened in Asia, just three years ago. After a public consultation, last year they launched the “Sandbox Express” that allowed fintechs to experiment even more quickly.

Aside that, regulators have been trying very hard to improve the country’s digital infrastructure ensuring payment systems and real-time fund transfers benefited from interoperability.

The Singapore Quick Response Code (SQRC) launched in 2018 is now used by over 1 in 4 mobile payment services operators to consolidate different QR payment code platforms into a single one. Moody’s says this helps Singapore take its place as the “most advanced in implementing open banking globally”.

There are some protectionist measures however, that restrict fintech from expanding into deposit-taking and lending. The MAS (Monetary Authority of Singapore) is also monitoing fintech firms via the Payment Services Act. Fintechs aren’t allowed to use wallet funds to provide loans without a banking license either, even if they provide electronic wallets to store funds.

 

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B2B Fintech Startups Most Attractive to Investors

Roubini_ Nothing Crypto or Blockchain about Facebook's GlobalCoin (1)

The Economic Times has published new findings that suggest that investment funds are now most interested in business-to-business (B2B) fintech startups due to their strong foundational metrics such as profitability, unit level of economics and customer acquisition costs.

Fintech startups apparently understand the tightening requirements for those with funds to invest, and that investors no longer are willing to pump capital into big ideas, but are looking for more solid business fundamentals, so have tweaked themselves to cater to these requirements.

In the past two years, significant investments have been made into B2B fintech and now, more are looking to tap into that type of funding. Online credit startups have been the big winners since mid-2018, but there are now others in the sectors of treasury management, supply chain as well as corporate pay roll.

This urgent need for startups to scale up are also timely, as the non-banking financial crisis (NBFC) in India creeps into online lending companies, while digital payment solutions eat up into fundings without clearing a way to profitability.

According to treasury management firm IBSFintech‘s founder CM Grover, Indian B2B startups take longer to scale, have niche business sectors and do not grow exponentially, but are very attractive to investors because they have taken the time to develop strong technology platforms, can scale faster globally and can turn profitable with less funding than consumer startups:

“Within the B2B space, fintech is transforming into a lucrative area for the investors community and Indian startups are attracting global funds.”

Others like NiYO Solutions CEO Vinay Bagri echo these sentiments, saying that fundamental metrics are what pulls investment now, which B2B startups are typically good at:

“Venture capitalists and other investors are focused on the rate of addition of new businesses, revenue growth from existing clients and their stickiness.”

 

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Fintech Deals Hit Record $117 Billion So Far This Year

The last five years have seen a rapid increase in global fintech-targeted mergers and acquisition volume, leading to a record high of USD 116.6 billion in 2019, according to research firm Dealogic.

Business Insider quotes Dealogic associate Chisa Tanaka who says that 87 deals this year have resulted in a four-fold increase from the USD 31.8 billion from 89 deals at the same time in 2018:

“Clearly, technological innovation is causing intensifying consolidation in the electronic payment services market, while the acquisition of data on customer’s purchasing and behavior trends further drives fintech acquisitions.”

Three fintech acquisitions from the USA have been the driver of this year’s record-setting period: Fidelity National Information Services’ USD 43.3 billion March purchase of Worldpay, Fiserv’s January acquisition of First Data for USD 39.4 billion, and Global Payments’ USD 26.2 billion May buy of Total System Services.

All of these feature a cashless method with electronic payments at the heart of their solutions. But while they are growing in use and popularity, experts think we have a long way to go from cashless societies, especially in emerging economies.

The Bank of International Settlements (BIS), for example, published a report in March that shows flat growth for ATM withdrawals in advanced economies but rising trends in emerging markets. Overall, it said, global consumers were relying “more and more” on e-payments:

“The use of e-payments is booming and technology companies as well as financial institutions are investing heavily to be the payment providers of tomorrow… [but there is] scant evidence of a shift away from cash… As the appetite for cash remains unabated, few societies are close to ‘cashless’ or even ‘less-cash’.”

France and the UK are not far behing the US in terms of fintech deals. Tanaka did say that the latter half og 2019 will make clear the “financial ability of the different players”.

 

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IMF Talks Up Fintech’s Disruptive Potential

lagarde, IMF, fintech

Reuters reports that the International Monetary Fund (IMF) Managing Director Christine Lagarde has issued warnings over the increasing impact and presence of global tech giants who are using big data, artificial intelligence (AI) and fintech, possibly disrupting the global financial system.

Lagarde, in her address to the G20 finance leaders meeting in Fukuoka, Japan, specifically pointed to the rapid development of financial technology (fintech) resulting in cheaper payment and settlement systems for emerging economies where traditional banking networks are bare.

She said that this development could force policymakers the world over to reconsider the way they see banking and financial settlements should be regulated and made to comply:

“A significant disruption to the financial landscape is likely to come from the big tech firms, who will use their enormous customer bases and deep pockets to offer financial products based on big data and artificial intelligence.”

She admitted that financial markets would benefit from innovation but they could centralize and make vulnerable a small system controlled by a few tech giants: “This presents a unique systemic challenge to financial stability and efficiency, and one I hope we can touch on during the G20, and address in a cooperative and consistent fashion.”

She also pointed to China as a glaring example of fintech’s various benefits and shortcomings, showing how tech growth there has been extremely successful

Lagarde said China presents an example of the trade-off between benefits and challenges posed by financial technology, where millions now benefit from access to financial products and high-quality jobs, but where only two firms now control over 90% of the mobile payments market.

The IMF has had its past run-ins with the global community with its views and stance on fintech and emerging technology such as blockchain and crypto. It has its own quasi-crypto called Learning Coin but has warned the Republic of Marshall Islands over plans to launch their own crypto and told Malta there were significant risks of terrorism with blockchain.

 

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Crypto Over Cash: US Congressional Research Service Take A Look

Crypto Over Cash_ US Congressional Research Service Take A Look

Recent research by the Congressional Research Service (CRS) in the US has revealed that there is a migration away from cash in retail transactions, adding to the possibility that alternative methods of payments including cryptocurrency could gain traction moving forward.

The May 10th report by the CRS indicates that alternative non-cash payment systems, including bitcoin or other digital assets, in the purchase of goods and services, is fast becoming the mode of settlement for the future.

The current alternative to cash, the report found, is what is it called “traditional noncash payment systems” such as credit cards and debit cards and even included mobile payments in the same category. With lawmakers around the globe now looking at inclusive legislation for cryptocurrency as a payments system it may not be too long before the CRS include crypto in this traditional non-cash category.

Amy Zirkle, interim CEO of the Electronic Transactions Association, a Washington-based trade group for the payments technology industry, had her own view of this progression away from cash:

“While cryptocurrencies may not supplant traditional payments aggressively in the near term, the value of blockchain and innovative approaches to the payments industry extends beyond fiat currency replacement,” commenting that there may be added value for using cryptocurrency and blockchain in solving cross-border payments, streamlining communication between financial institutions, and better securing data.

There is a sign that diminishing in cash’s integrity is worrying some state legislators with New Jersey, Massachusetts and Philadelphia have enacted laws that largely prohibit cashless stores and more recently the San Francisco Board of Supervisors passing legislation that requires walk-in retailers to accept cash.

A possible comforting observation by the CRS for such cash friendly state legislators is the Congressional Services comments that cryptocurrency is still a long way off being able to handle current volumes of transactions handled by cash:

“At present, the systems underlying cryptocurrencies do not appear capable of processing the number of transactions that would be required of a widely adopted, global payment system.” but that said, the CRS concludes that cryptocurrencies nevertheless “have the potential to significantly affect the usage of cash and traditional systems for payments.”

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Banks, Easy Target for Fintechs

Banks Easy Targets for Fintechs

The University of St. Gallen lecturer Matthias Weissl has pointed the finger at traditional banks as being easy prey for fintech companies, by being slow and unhelpful in crucial financial services such as settlement times, access and adoption of change.

Writing in Fintech Times, Weissl says that the way forward for banks should be to embrace automation, as it has obvious benefits for customers as well as businesses, not least in reducing manpower costs without the increase in software costs, reducing delays in processes and getting rid of human errors. For the user, it’s a simple proposition: faster, simpler, cheaper experiences.

But he admits that banks do not deliberately dally on adopting automation, as regulations and their increased importance have sometimes caused banks to derisk entirely by choosing to stay safe by sticking to old infrastructure that is already legally compliant.

The time it takes to migrate is another problem he says, citing Switzerland’s Credit Suisse, which will only completely migrate to a new IT infrastructure in four years at quickest. This is something that many banks will loath to consider as they want to remain competitive with growing volumes. He writes:

“Internet data is almost doubling every year and is projected to exceed 400 Exabytes per month by 2022.”

However, Weissl says banks have no choice if they want to survive because they are already lagging behind in terms of efficient profitability. He uses the example of UBS, the largest bank in Switzerland could earn USD 100 million in 2017, but needed 210 employees to do so. On the other hand, China’s Ant Financial needed fewer than half of that headcount — 100 employees — to earn the same amount.

He also said that the hours, days or weeks to open a bank account compared badly to several minutes on a fintech account like Revolut or N26. Transactions are not any better, with banks and clunky codes needing days, compared to a fintech transaction which happens in the app and instantly.

However, Weissl believes some banks are realizing this, and that a wave of change is coming with smaller institutions considering blockchain-based tokenizations to adapt:

“Small banks already express high interest levels… regarding the tokenization of physical assets and funds in order to increase their liquidity.”

 

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