We all know investing is a great way to grow your capital. Of course, that's why we're all here.
It used to be the case that access to the various investment markets was limited to those who spent time and resources learning how to handle a self-directed account or who had enough money to start an account with a brokerage firm.
Now, though, it's easier, cheaper, and more accessible than it's ever been for people from all walks of life to start building wealth. And thanks to the rapid growth of the financial technology sector, or "fintech," there are many companies we can turn to for guidance in earning, saving, and investing our hard-earned capital to generate the best returns possible.
It's also a sector where startups and new businesses have proliferated, building all sorts of different products to add to those already available and finding new markets to tap into.
One reason this is possible is because the potential client base for fintech services is hugely diverse, and there is no "one size fits all" solution. There are lots of different people in the world, each with very different financial needs, many of whom are underserved by the products that exist today.
With so many more people suffering the consequences of supply change shortages and inflation, this client pool is destined to keep growing.
The opportunities to serve these underserved customers are massive, and there are hundreds of billions of dollars of returns to be generated by building companies in this space. This is fantastic news for us startup investors.
Let me take you on a tour of some of the most exciting developments in this growing field and why it's such a fertile ground for innovation.
As a bonus, I've got details on an excellent fintech opportunity for angel investors that you can move on today - and I do mean today... the window to get in is closing very soon.
The Rise of High-Tech "Neobanks"
Everyone knows that having a bank account is critical. But just because you have a bank account doesn't mean you have access to the financial services you need. The reality is, there is a huge population of people who are "underbanked." Those are people with bank accounts who have to rely on alternative financial solutions because they don't have access to everything they need from their bank.
A 2017 FDIC report estimated that 25% of U.S. households are unbanked or underbanked. That's roughly 75 million people - a massive market opportunity! Since 2017 these numbers have improved somewhat, but not significantly.
This sizeable market has attracted a range of new startups trying to solve the problems of legacy banks. These startups have launched neobanks (also referred to as digital banks). Basically, banks with no physical branches.
Not needing to invest in brick and mortar real estate means these startups can invest even more in their services, build great user experiences, and create unique financial products catering to the needs of different customer segments. That's what the industry and their customers need: more disruptive technology that satisfies real-world needs... not more buildings.
One of the first breakout successes in the space was SoFi Technologies Inc. (NASDAQ: SOFI).
SoFi offers a range of financial services from auto loans to credit cards and savings accounts. Early on, it targeted college students with debt, having recognized them as an underserved segment.
Since launching in 2011, the company has grown to over 3.5 million members and hit $1 billion in adjusted revenue in 2021.
The company is public and has a $7+ billion market capitalization today. Not bad for a bank with no branches!
Another early breakout in this space is Chime Financial.
Chime realized that managing your personal cash flow can be a nightmare at times, and many in America pay exorbitant fees on overdraft costs and to loan sharks. Chime set out to counter these challenges by building a customer-friendly neobank with a range of financial services like SpotMe, early access to your salary, and other similar services.
It's estimated that Chime has over 12 million customers today and was last valued at a whopping $25 billion, more than 10% of the market capitalization of Wells Fargo!
SoFi and Chime are examples of the multibillion-dollar companies that can be built on offering financial products to underserved customers.
These Firms Make Investing Easy for Everyone
When it comes to growing your wealth, having access to savings and credit is not enough. The king of wealth creation is investing.
However, historically, investing in different asset classes hasn't been the easiest to do and has involved a lot of annoying and manual work. The good news is a bunch of startups have launched in the last few years making it easier to invest (and making their startup investors richer in the process).
One great example of this trend is stock-trading app Robinhood Markets Inc. (NASDAQ: HOOD).
The company has been so successful that it has turned retail traders and the "Robinhood Crowd" into a popular meme.
The company makes it easy for anyone to buy and sell stocks, options, and ETFs on your smartphone from the comfort of your phone. If you've ever used a banking application or other stock brokerages, you know its mobile experiences are - let's say - less than ideal.
Robinhood capitalized on these poor user experiences by designing and building an easy-to-use and appealing user interface. They also famously dropped stock-trading fees to zero, making trading on its app even more appealing to us retail investors.
These days, the company has over $100 billion in assets under management and 17 million monthly active users.
It completed an IPO in 2021, debuting at a $32 billion market cap. It's had a rough ride in the last few months in the public markets, but despite that, it is still a $11 billion company.
Another similar investing app that has had a lot of success is M1 Finance. The company launched to make it easier for investors to develop custom portfolios (using a tool it calls Pies) and over time has expanded to offer loans, credit cards, and retirement products.
The company has over $4.5 billion in assets under management and was recently valued at $1.45 billion.
Another avenue to make investing easier has come through the development of crowdfunding platforms designed to democratize access to different asset classes. Some of the best ones currently are Republic, StartEngine, and SeedInvest, offering the opportunity to invest in startups, real estate, crypto tokens, and likely more asset classes over time.
While companies like SoFi, Robinhood, and M1 Finance have been huge early successes, they have just touched the tip of the proverbial iceberg in terms of potential opportunities.
Here at Angels & Entrepreneurs, we've uncovered what could be the next big winner in the fintech space, from a solid team with a history of successful exits, a quickly growing user base, and strategic partnerships with major brands that boost revenue growth. Thousands of people are already using their platform to work on getting out of debt, saving money, and hitting their financial goals.
In fact, one of our board members has already invested his own money into the company, and you can get all the details on how to join him here. But you only have a few more days to invest - don't miss out on this chance.
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