Forbes - USA (2020-03)

THE FORBES FINTECH 50

Money Moves 2020

TURN YOUR HSA INTO AN INVESTMENT FUND

One of the best-kept secrets about Health Savings

Accounts is that they can be used as investment ac-

counts. If you’re covered by an eligible high-deduct-

ible health insurance plan, you can contribute up to

$3, 550 for an individual or $ 7 , 100 for a family to an

HSA for 2020, reducing your taxable income by that

amount. Of course, HSA withdrawals are tax-free

when used to pay for medical expenses. But healthy

or wealthy HSA holders should invest and grow the

stash tax-free to be used for medical costs in retire-

ment. Fidelity and Fintech 5 0 member Lively offer

investor-friendly HSA platforms. Fidelity offers mutual

funds plus commission-free trading of U.S. stocks and

ETFs. Lively provides no-fee access to TD Ameritrade,

which also offers free online trading. —A.E.

MARCH 20 20

fry speculators would pay 90% less, but they’d be

dealing with a firm that mostly inhabits the shad-

owy world of offshore finance. Malta-based Bi-

nance has only a small presence in the U.S.

Serious traders get a better deal. They use

Coinbase Pro, a different platform that replicates

the bid-and-ask order book of a stock exchange;

here the combined buyer and seller commission

ranges from 1% for small trades down to 0.07%

at the $100 million level.

Somewhat more than half of Coinbase Pro’s

trading volume comes from algorithmic trad-

ing. Furious trading doesn’t look socially produc-

tive, but it lubricates the capital markets. Bid/ask

spreads on bitcoins, now worth $9,300 apiece,

are measured in dimes. In percentage terms, the

crypto spread competes with the spread on the

very liquid SPDR S&P 500 ETF.

The trouble with commission income is that

it’s extremely sensitive to crypto prices. When

bitcoin collapses, as it did in 2018, trading vol-

ume shrinks and the dollar revenue from each

coin goes down.

So Coinbase is trying to create stable revenue

streams to balance out the commissions. A big

one, says Alesia Haas, the company’s chief finan-

cial officer, is coming from a custody operation

for institutional clients. This digital warehouse,

greatly expanded by Coinbase’s acquisition last

August of Xapo’s institutional business, holds

$8 billion of bitcoins and other cryptocurrencies.

A new revenue source is “staking.” Here, the

holder of certain coins, such as tezos and EOS,

collects fees for confirming transactions on the

network. There is no electricity-gobbling busy-

work calculation as with bitcoin, but some fi-

nesse is needed, because messing up the recipe

causes the player’s stake to be confiscated. Coin-

base handles the details and splits stake revenue

with its customers. It’s rather like a stockbroker

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DIVVY HOMES

Ì

SAN FRANCISCO

REAL ESTATE

A digital take on rent-to-own,

Divvy buys homes that clients

select and becomes their land-

lord, allowing 2% upfront fee

and part of rent to be turned

into a down payment later.

Now in six markets.

FUNDING: $66 million; latest

valuation of $163 million^1

BONA FIDES: Receiving 10,000

applications a month

COFOUNDER & CEO:

Adena Hefets, 33

ETHOS

Ì

SAN FRANCISCO

INSURANCE

Uses predictive technology to

quote term life insurance rates

in about 10 minutes via app.

It verifies data with medical

and pharmacy records, requir-

ing no exam for most buyers.

FUNDING: $107 million; latest

valuation of $450 million^1

BONA FIDES: Licensed in every

state except New York

COFOUNDERS: CEO Peter Colis,

30; CTO Lingke Wang, 29

EVERLEDGER

Ì

LONDON

BLOCKCHAIN & BITCOIN

Has developed a blockchain to

track goods from raw-materials

source to sales.

FUNDING: $20 million; latest

valuation of $100 million

BONA FIDES: First application

tracks 2 million diamonds

FOUNDER & CEO: Australian

Leanne Kemp, 47

FATTMERCHANT

Ì

ORLANDO, FLORIDA

PAYMENTS

Bundles online and in-store

credit-card processing and

sales analysis into one monthly

subscription service that it says

costs small businesses 30% to

40% less than traditional per-

transaction charges.

FUNDING: $18 million; latest

valuation of $140 million

BONA FIDES: Processed $2. 3

billion in transactions in 2019

COFOUNDERS: CEO Suneera

Madhani, 32; president Sal

Rehmetullah, 30 (Madhani’s

brother); CTO Jacques Fun, 34;

chief strategy officer Lyndsey

Lang, 27

FINIX

Ì

SAN FRANCISCO

PAYMENTS

Gives companies more control

over their payment processing,

which helps them to keep more

of the processing fees mer-

chants pay.

FUNDING: $55 million

BONA FIDES: More than

50 customers, including

Lightspeed, a Canadian

company that processes $17

billion a year in transactions

COFOUNDERS: CEO Richie Serna,

32; Sean Donovan, 37

HIPPO

Ì

PALO ALTO, CALIFORNIA

INSURANCE

Using public data, satellite

imagery and smart home de-

vices such as water-leak and

motion detectors, home insur-

ance agent Hippo streamlines

the application process and

minimizes claims. It’s currently

licensed in 21 states and aims

to be nationwide by year’s end.

FUNDING: $209 million; latest

valuation of $1 billion

BONA FIDES: Premiums grew

fivefold last year

COFOUNDERS: CEO Assaf Wand,

45; CTO Eyal Navon, 39

ADENA HEFETS

ÌNEW^ TO^ LIST

(^1) According to PitchBook