Tala

Overview

Tala is a fintech startup using mobile devices in emerging market countries to generate credit scores and grant micro-financing to those who don't have traditional access to banks.  They use more than 10,000 data points (not a typo) from a user's mobile phone behavior to generate credit scores in emerging markets.  With this credit score users are able to get instant short term loans in 5 minutes underwritten by Tala, all from their mobile device.  The company then tracks customer repayment over time and can offer better interest rates and more generous loans to users that show good financial behavior.  They report they are highly profitable.

Tala launched initially in Kenya with its HQ in Santa Monica, California.  Its product offering is available in Africa, Southeast Asia, and India at this time.

Why I like Them

This is the most innovative product I've seen in FinTech in a very long time (enough to get me over my instinctive app company skepticism).  The algorithmic ability to instantly generate a credit score from someone's mobile phone data is light years ahead of the standard FICO score model and a brilliant idea all on its own.  By all reports their credit models are far more indicative of someone's financial behavior than traditional FICO score models which are not nuanced enough and uses few data points.  It makes sense since in today's world nothing knows you as well as the mobile device that you engage with constantly.  The obvious question is why traditional banks aren't doing more here as it would help them control their risk pools much better.

Beyond there is a huge untapped market here.  There are an estimated 2 billion people on the planet that do not have a credit score or any sort of financial identity but would leap at the chance for micro loans.  Tala is brilliant to offer this product in emerging markets only for now - they know exactly who and where their customers are.  More than 90% of first time customers fully repay loans with 95% coming back for additional loans after they repay the first.  It is easy to see how this creative approach could become dominant even in the developed world since it gives a much more nuanced and detailed financial profile of a potential borrower.  

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.

EquityZen

Overview

EquityZen is an online marketplace for buying secondary shares of private companies.  Private company shareholders can sign up with what they are offering.  Accredited Investors can then browse EquityZen's platform and offer a deal for the shares they are interested in.  EquityZen handles all the transaction details including getting the private company's permission.  As they scale the firm has lowered the minimum investment size from millions of dollars to thousands.  They have to date worked with several dozen Unicorns including Cloudera, Lyft, SquareSpace and AppDynamics.

Wait you say, this has been done before by SecondMarket (acquired by NASDAQ in 2015).  The difference with EquityZen is they structure the transaction as a derivative to transfer the economics of the shares without transferring legal ownership.  Basically it makes the transaction company friendly as no strangers gain control rights and no change to the cap table.  This fundamental difference gives them a leg up on SecondMarket.  The founder's like to refer to this as Secondaries 2.0.

Why I like Them

I like them because I think there has been a heavy unmet need for this type of product that continues to grow, especially as the number of unicorns soars.  It's no secret that there are fewer companies going public today than in the last 30 years for a variety of reasons.  As private markets become the new public markets, platforms like EquityZen allow employees to take some money off the table.  Simultaneously, it opens the door to accredited investors not able to invest in venture capital firms but seeking higher returns in more "exotic" asset classes like startups.  It also allows easier portfolio rebalancing for institutional investors.

Where you will really see a platform like EquityZen take off is in the event of a financial crisis or recession.  As shareholders seek liquidity for otherwise illiquid pre-IPO stock, supply will jump on the platform bringing more savvy "value" style investors to the table.

They have a lot of competition with several other players in the space so it will be interesting to see if there difference in deal structure is a strong enough differentiator.

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.

Inturn

Overview

Inturn is a SaaS marketplace platform for brands to sell their excess inventory to retailers.  For sellers, it allows brands to organize, price, and sell excess inventory quickly through privately controlled channels (vital in allowing brands to protect their image). Underperforming products can quickly and easily be sold off to make room for better selling inventory.  This is especially helpful to retailers after holidays when they face high amounts of merchandise returns.  Buyers (such as discount retailers like TJ Max or Ross) are able to search for a brand's excess inventory and easily negotiate.  They are also able to discover inventory they would not otherwise have known about or have access to.  

Inturn earns revenue through subscription fees to its platform and takes a small percentage of each transaction.  The company was founded in May 2013 and is based in New York City.

Why I like Them

As retail becomes more competitive, faster paced, and business models like fast fashion continues to dominate the clothing industry, the ability of a brand to quickly get rid of its excess inventory for the next set of merchandise is vital.  Inventory management is critical for retailers, especially as turnover is faster with consumer taste becoming ever more fickle.  Inturn is the only firm out there offering brands modern software tools for excess inventory management, allowing for a much more efficient market.  Prior to Inturn, manual tools and processes  were used that were slow and created an inefficient market.

On the other side of the transaction, the retailer benefits as off-price merchandise is one area physical retailers are holding their own against eCommerce sales.  Discount retailers saw foot traffic grow in the last several years and forecasters expect discount retail to grow at a much faster pace than the rest of the industry for the next several years.  The trend seems to be that off-price retail is becoming the core business for many retailers such as Nordstrom.

This is an underserved, inefficient B2B process that will continue to grow, positioning Inturn nicely, especially as it expands its platform to other types of consumer products beyond apparel.   

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.

Granular

Overview

Granular does cloud software and analytics to help manage farms.  It focuses on farm operational and financial management.  On the operational side Granular offers crop planning, inventories, farm equipment data collection, and worker schedules.  Customers have access to a mobile app that workers in the field access to get schedules and task lists.  It also tracks and calculates farm land values in real time based on market changes.  Granular integrates with farm's existing digital hardware and machines.  On the financial side Granular does profit analysis and forecasting based on the farm's contracts and crop yields.

Granular has an interesting history starting off as a tiny spinoff from a soil testing company called Solum.  The company makes revenue via a SaaS subscription model priced per acre managed.  The team is based in San Francisoco, California.

Why I like Them

Granular is tackling a large, deeply underserved market ($3T globally) that still uses paper and excel spreadsheets to manage its business.  In the US alone there are an estimated 40,000 farms.  The world's population is expected to grow by 1 billion in the next 9 years according to the United Nations - there will have to be leaps in agriculture efficiency to meet this demand and feed all these people.  As a SaaS business with a huge market, Granular has many years of growth ahead of it with few competitors.

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.