Connect with us

Top Stories





Magister Advisors today issues its forecasts for investment and M&A activity in the global technology industry in 2016.  The key points:

Valuation re-setting will slow the M&A market in 2016
At year-end 2015, Unicorns will have an aggregate valuation of $0.5 trillion. A read-through of Square’s post-IPO performance implies an aggregate over-valuation of the Unicorn stable of approaching $200 billion
At least one Unicorn will go to the glue factory in 2016 and the weakest businesses will see mass lay-offs as funding evaporates
¾In FinTech, Blockchain businesses will thrive and payment innovation will continue to disrupt

Victor Basta, managing partner at Magister Advisors, said: “The S&P 500 is ending 2015 pretty much where it started.  Yet all is not stable in the technology industry. 2015’s extremism is setting the stage for a turbulent, and unstable, 2016.”

Magister Advisors’ key 2016 predictions for the global technology industry are as follows:

1.    The vaunted IPO market will be distinctly quiet 

Victor Basta said: “IPOs come in waves, and all signs point to a quiet sea next year.  Interest rate rises coupled with macro/political uncertainty will give an already unsteady IPO market serious vertigo. Box, Theranos, and Square join a trend likely to continue.  In fact 2016 will simply reflect years of poor tech IPO performance; since Facebook’s May 2012 IPO, tech IPOs overall have returned only 7% in a period when the S&P500 delivered 60%.  Public investors eventually tire of poor performance.”
2.    Unicorn valuations will compress – The vast majority of the 150 unicorns are high quality, sustainable companies; the problem is valuation not quality. As 2015 ends, the aggregate value of the Unicorn class is half a trillion dollars.  Fidelity’s Snapchat write down and the Square IPO re-pricing are the valuation “iceberg tips.” Applying a Square-like adjustment to the Unicorn stable implies a disconnect in the aggregate valuation of approaching $200 billion.  Since many unicorns are funded to their next round, not to break-even, we expect a large number to be re-valued lower during 2016/2017 as they are forced to raise money.  This will hurt the Series B and C investors and founders in these companies more than anyone, as they get squeezed between original angels with low in-prices and last round investors with downside shareholder protection.
3.    Unicorns will raise less than they expect; layoffs are inevitable – Many unicorns have no choice but to begin managing to break-even, not to a next round or IPO.  This means a hard look at staffing, and inevitably the weakest 10-20% of their workforces will be looking for their next job unexpectedly early.
4.    A unicorn (or two) will blow up in 2016 – showed how to go from a $1 billion value to a $15m fire sale in 12 months. While the story since Fab has been of successful exits like Twitter, WhatsApp, Tumblr and others, we believe at least one Unicorn from the e-commerce or FinTech sectors will follow’s “exit route” into bankruptcy, either during 2016 or shortly after.
5.    The financing chill will cascade down to the mid-tier.  Unfortunately market downturns are rarely contained, and the biggest losers of a decelerating market will be the “Unicorn aspirants” aiming to raise $15-50m at $100-500m valuations.  As IPOs go quiet and Unicorns get marked down, these aspirants will only raise a fraction of what they seek, and will do so at lower valuations than their investors ever expected.  If an aspirant hasn’t already raised enough money to see through the next 3 years, they may well get caught in the storm.
6.    Valuation resetting will quiet the M&A market temporarily – expectations take time to reset, and always lag reality.  Many investors will not accept a new (lower) normal, until at least 9-15 months have passed. Meanwhile there will be an imbalance between seller price expectations and what buyers are prepared to pay, taming the M&A market while price expectations re-align. Ultimately though more reasonable expectations will drive even greater M&A activity into 2017-18
7.    Safety and resilience will shift attention to B2B models and away from B2C. Scaling a B2C business has been the rage these last few years.  However, nearly all such businesses focus their first years on gaining audience reach, then deepening engagement, and only afterwards shifting to monetize their (significant) investment.  A harsher funding market means investor preference for stable earlier revenue, inevitably shifting attention to more “boring” B2B businesses.  Whether in e-commerce, fin-tech or SaaS, we expect a valuation shift towards B2B during 2016 and beyond.
8.    Within FinTech, payments and Blockchain will be the most active segments – 2015 saw large financial institutions accelerate their pursuit of blockchain initiatives, and we will enter 2016 in a ‘race to production’ with vendors and FIs alike, vying to see who can be first to reap the benefits in actual deployment.  Our views on the evolution of the space and potential investment opportunities are highlighted in our 2016 Bitcoin & Blockchain Landscape & Outlook.  Payments has gone from “boring” to “disruptive” in a very few years, and we see a range of larger players from PSPs to alternative payments giants continuing to broaden their offerings as they seek to capture margin and customers.
9.    Valuation compression will help drive SaaS M&A.  Many SaaS M&A deals don’t happen as a result of sellers’ expectation of 5-10x revenue (based on their last inflated round value) and buyers’ unwillingness to pay more than 3-5x.  We see that gap closing quickly through 2016 as money becomes tighter and loss-making SaaS businesses start to see the go-alone vs. M&A trade-off differently.  We believe there is high latent M&A demand for quality $25-100m revenue SaaS businesses, and the 2016 environment will catalyze many deals “waiting to happen.”
10.    Private Equity will represent 30%+ of tech M&A activity above $100m. The buyer group with $1 trillion of “dry powder” is the group of PE sponsors.  PE firms will continue to feature prominently in $100m+ deals, and we expect these sponsors to deploy their capital aggressively as valuations re-set.
11.    Far fewer VCs will raise $100m+ funds in 2016. It has become relatively easy for VCs in the US and Europe to raise $100m funds these last few years, as their investments have been re-priced up repeatedly.  A softening valuation environment inevitably causes LPs to rein back VC commitments, especially outside the US.  Perversely, this will happen in 2016 even as VCs enter a far more attractive investment environment where quality companies will look for money at reasonable prices.

Victor Basta concluded: “We exit 2015 with an overall flat but worryingly cautious tech market. We expect to exit 2016 with valuations having reset, greater instability, and the key tech companies and investors being far more cautious about where they place their bets going forward.  In other words, 2015’s reality distortion field should dissolve back into plain reality – and not a moment too soon.”

Top Stories

Beyond the bottom line: why brands must show they care to connect with customers



Beyond the bottom line: why brands must show they care to connect with customers 1

By Vadim Grigoryan, Partner, Lunu

Over the past few years, we’ve witnessed an ever-growing activism among consumers, with public opinion demanding that their concerns be heard and addressed. No industry has experienced this more than the retail sector, with brands regularly slammed by NGS or consumer-led initiatives for violating legal requirements or moral principles. Moving one step further in the experience economy, brands are not only required to provide a first-rate customer experience, but also a conscience. The product must be good quality, as should the experience of purchasing it. But now on top of that, consumers should feel positive about where they’re spending their money. This is particularly true in the crypto community, with cryptocurrencies regularly pointed out as too speculative as a product, or to energy-intensive. Is this really a surprise coming from a generation whose top concerns are collective ones such as the environment and global warming? The answer is a straight no! Brands have to face this new reality and embrace it accordingly.

This next step in the experience economy, that can be called conscious consumerism, provides an opportunity for brands to reinvent themselves and bring to the top of their agenda something that has so long been kept at the bottom, or on the side. Brands need to stand for something bigger than themselves. If they fail to do so, they will also fail to make an impact in the consumer’s mind, ultimately disappearing as a brand altogether.

  1. From the experience to the conscious consumerism. Today’s economy is as much about giving people the opportunity to feel good while purchasing the product or service, as it is about the feeling after the purchase. Environmental, social, and moral concerns are increasingly at the top of consumers’ minds and on the front pages. Brands need to realise this and adapt, but also accept this as an opportunity rather than a constraint. Profitability isn’t the number one priority anymore and they now have the chance to fully develop their CSR programmes without facing many of the internal/external constraints they would traditionally have faced.
  2. Having a meaning actually means something. Modern brands have to stand for something and if they do, they will also stand out in the consumer’s mind. Your brand won’t just be a jewellery maker anymore – it will be one that aims to make diamonds cleanly and ethically by creating them in a lab instead of digging them out from thousands of meters below the ground. Standing for something will also give you a voice and help you break through the noise, reaching out to ever more consumers.
  3. Having a purpose provides a valid reason to exist. By this we mean existing in the customer’s mind, as well as in stores and shops – because the truth is, both are now linked. To truly connect with your customers, brands need to go beyond their bottom line. They also need to show that this bottom line serves a purpose and isn’t a finality. Don’t be scared to embrace a cause if you want to keep a place in consumers’ hearts and minds.
Continue Reading

Top Stories

The largest event in e-commerce history? ‘Tis the season



The largest event in e-commerce history? ‘Tis the season 2

By James Booth, VP Head of Partnerships for EMEA, at PPRO

Sometimes, change happens slowly. Other times it chases you down like that boulder at the beginning of Indiana Jones. In 2020, change is fully in boulder mode. And the holiday season is when it either catches up with you or you leap triumphantly from the temple entrance, golden statue in hand.

The shopping season kicks off on 11 November, with the 11.11 Global Shopping Holiday (formerly Singles’ Day). According to analysts, Alibaba and its merchants are on track to rack up $45 billion worth of sales on Singles Day alone [1], up from $38 billion last year [2]. And if last year’s results are anything to go by, a large proportion of those sales will go to non-Chinese companies. Last year brands such as Bose, Estée Lauder, Gap, Levi’s, Nike, The North Face and Apple all made over 1 billion yuan ($143 million) on Singles’ Day [3].

Increasingly, US and European consumers are also participating in Singles’ Day. However, both markets shift into proper holiday mode with Black Friday on 27 November. And there is every indication that this, too, will be bigger in 2020 than ever before.

Adobe Marketing Insights predicts a 20% increase in e-commerce spend over the Black Friday to Cyber Monday weekend [4]. Looking at the holiday season as a whole, Deloitte forecasts that seasonal e-commerce — online spending  is expected to grow by up to 35%, compared with just 14% last year [5].

But that doesn’t mean you can just relax and wait for the holiday season sales to rack up. As well as driving customers online, lockdown has also disrupted brand loyalties. During lockdown more than two-thirds of customers in some markets have tried a new product or service and of these, a quarter do not plan to return to their old habits once lockdown has ended [6].

Old shopping loyalties have been upended, and that means their holiday-season shopping is up for grabs.

For instance, 43% of over-65s are now shopping online compared to just 16% before lockdown [7]. For online merchants the grandparent present budget just became accessible. But to win your share of it, you have to provide a customer experience that this demographic will love.

Making the checkout page a priority 

The question then, is how to prepare your merchants’ or your own e-commerce site for the holiday shopping season. It’s only a few weeks until Black Friday, so there’s no time to lose. You need to find out where gaps are in your customer journey, and plug them, before those customers run away to someone else.

The customer experience at checkout is particularly crucial. One of the surest ways to lose customer trust at the checkout, is by not offering shoppers’ preferred payment methods. According to research by PPRO, up to 50% of customers have abandoned a transaction because the merchant did not offer their preferred payment method [8].

It’s a question of localisation. Except in this case, you’re not necessarily localising for customers in a particular geography. Instead, you might consider localising for consumers in a particular age group who are now shopping online for the first time. Or customers from a range of demographics who have never shopped online for a particular category.

No one size fits all when it comes to global payment preferences

If you want to succeed in global e-commerce, you must offer the preferred payment methods for every market and demographic you want to win over.

Worldwide, consumers use alternative or local payment methods in more than 70% of all consumer transactions [9]. These are the payment methods whole markets and demographics grew up with online and trust. Fail to offer them and you can have the best possible customer journey, but you’ll still lose basket after basket at the checkout.

With the acceleration of e-commerce and the influx of online competition, anyone who hasn’t optimised their payments offering will be desperately racing to catch up. Merchants need to think now about how they are going to maximise their revenue from what looks to be the biggest online holiday season ever. And payments is a crucial part of that conversation.


9. Original PPRO research.

Continue Reading

Top Stories

Why insurance needs Tesla’s autopilot too



Why insurance needs Tesla's autopilot too 3

By Christian Wiens, CEO of Getsafe

Digitization is the industrial revolution of the 21st century. What does this mean for a data-driven industry like insurance? The answer is simple: Turn everything on its head and reinvent yourself under high pressure- the future of insurance is digital.

“Hello Timo, nice to see you. I’ll be glad to help you.” Carla records claims 24 hours a day, seven days a week and takes less than two minutes to evaluate and process them. Carla works for a digital insurer and is a chatbot by profession. While she is answering Timo, she contacts the bank in the background, which pays Timo back his money – the same day. This is not a dream, but already reality.

In the digital age, intelligent machines are the new workers on the assembly line, and data is the new raw material. This applies to almost all industries and applies in particular to the insurance world as insurance is based on mathematical models and probability calculations – in short: on data. The more data on which the calculations are based, the easier it is to derive and price risk profiles. Data therefore changes the core of the product “insurance” in three essential areas; the offer phase, in the event of a claim and in the long-term customer relationship.

In the offer phase, we will experience long-term personalized product bundles that fit customer needs much better – away from standardized and inflexible policies. If the insurer can better assess the needs of the customer on the basis of his past history or behaviour, he is in a position to put together tailor-made insurance packages.

For example, it would be conceivable to automatically adjust the insurance cover as soon as the customer’s life changes, for example if the customer gets married, buys a car or a property or travels abroad.

Customer experience in the event of a claim will also change dramatically. Fraud is still the biggest problem in the system, with 2 percent of the customer base causing 40 percent of the system’s inefficiency. According to estimates by the Association of British Insurers (ABI), one insurance fraud is detected every minute – amounting to economic losses of £3bn every year. Of the estimated worth of total fraud cases a year, £2bn goes undetected.

But what if insurers are better able to assess customers on the basis of data and know which customers they can trust – and which not? Credible customers could then benefit from immediate payment of the loss incurred, while the few “black sheep” would not even be accepted as customers or would be checked more closely in the event of a claim being reported.

The computer does not act uncontrolled, but within certain parameters defined by humans. This is comparable to processes in the manufacturing industry: Here, too, people define the exact parameters that are to be checked – controls are implemented by machines that are significantly less prone to errors. The situation is similar when it comes to insurance fraud: people make value judgements and specify which indicators can point to a case of fraud. They retain sovereignty over the entire process. The smart algorithm, on the other hand, is only the tool for evaluating and linking the many individual data points. Smart algorithms will reduce  employees’ workload, but will not replace them.

Finally, digitization will also change the long-term relationship between insurer and insured. Tomorrow’s insurance will not only settle claims, it could even prevent them arising. A better database will not only make it possible to calculate the probability and amount of loss more precisely, it will also make it easier to calculate the risk of loss. Digital systems and sensors can also help prevent possible claims. Telematic tariffs in motor vehicle insurance are already moving in this direction by promoting a prudent driving style.

Sensors on washing machines and industrial plants or intelligent smoke detectors are one thing – monitoring people in the health sector is another. Some health insurers reward sport activities, for example, if the customer can prove this with smart fitness watches. It remains to be seen to what extent customers are willing to exchange this personal data for premium refunds. In the long term, the legislator will also be asked to take action to ensure that the solidarity principle is not undermined.

However, the danger of increasing surveillance is countered by a clear increase in customer service, individualised services and flexibility on the customer side: Digital insurers rely on  customer’s self-determination and a positive insurance experience in an industry that sometimes appears to be immobile and non-transparent.

Digitalisation has reached the insurance industry, but has not yet shaken its foundations. That will change: Tomorrow’s insurance will have little in common with today’s structures and processes. The autopilot at Tesla will also come for insurance. Not all companies will be able to master this switch to become digital insurers.

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2020
2020 Global Banking & Finance Awards now open. Click Here

Latest Articles

5 steps for SMEs to budget properly for the coming year 4 5 steps for SMEs to budget properly for the coming year 5
Business43 seconds ago

5 steps for SMEs to budget properly for the coming year

By Fabio Comminot, Head of Dealing, Switzerland at Ebury, one of Europe’s largest Fintechs, has provided a five-step guide to...

Cash in the time of Covid-19: A tale of financial exclusion 6 Cash in the time of Covid-19: A tale of financial exclusion 7
Finance7 mins ago

Cash in the time of Covid-19: A tale of financial exclusion

By Matt Adam, company’s chief executive, We Are Digital Financial exclusion rates are on the rise thanks to Covid-19. But...

Track and Trace and Other Lost Data 8 Track and Trace and Other Lost Data 9
Technology58 mins ago

Track and Trace and Other Lost Data

By Ian Smith, General Manager and Finance Director at Invu  You, like me, were probably amazed by the now infamous...

Why ID verification is no longer a barrier to global growth in banking 10 Why ID verification is no longer a barrier to global growth in banking 11
Banking2 hours ago

Why ID verification is no longer a barrier to global growth in banking

By Barley Laing, UK Managing Director at Melissa Issues related to effective identity (ID) verification have restricted the global growth...

Digital Finance: Unlocking New Capital in Disrupted Markets 12 Digital Finance: Unlocking New Capital in Disrupted Markets 13
Finance3 hours ago

Digital Finance: Unlocking New Capital in Disrupted Markets

By Krishnan Raghunathan, Head of Finance & Accounting Services at WNS, explores how a digitally transformed finance department can give enterprises...

Beyond the bottom line: why brands must show they care to connect with customers 14 Beyond the bottom line: why brands must show they care to connect with customers 15
Top Stories5 hours ago

Beyond the bottom line: why brands must show they care to connect with customers

By Vadim Grigoryan, Partner, Lunu Over the past few years, we’ve witnessed an ever-growing activism among consumers, with public opinion...

O-CITY enters Kenya to drive contactless payments across Matatu bus service 16 O-CITY enters Kenya to drive contactless payments across Matatu bus service 17
Finance5 hours ago

O-CITY enters Kenya to drive contactless payments across Matatu bus service

Up to 10,000 buses to become cashless with O-CITY’s M-Pesa-based ticketing solution O-CITY, the automated fare collection provider by BPC,...

Nearly 14 Million1 UK adults more likely to spend on Black Friday than they were last year 18 Nearly 14 Million1 UK adults more likely to spend on Black Friday than they were last year 19
Business5 hours ago

Nearly 14 Million1 UK adults more likely to spend on Black Friday than they were last year

Yolt launches evolved app to help shoppers save whilst they spend Across the UK, consumers are set to spend £6.4bn...

Christmas isn’t cancelled: European shoppers plan to spend more online this Black Friday 20 Christmas isn’t cancelled: European shoppers plan to spend more online this Black Friday 21
Business5 hours ago

Christmas isn’t cancelled: European shoppers plan to spend more online this Black Friday

Half (52%) of European consumers plan to do Christmas shopping around holiday sales, including Black Friday, compared to previous years...

The largest event in e-commerce history? ‘Tis the season 22 The largest event in e-commerce history? ‘Tis the season 23
Top Stories5 hours ago

The largest event in e-commerce history? ‘Tis the season

By James Booth, VP Head of Partnerships for EMEA, at PPRO Sometimes, change happens slowly. Other times it chases you...

Newsletters with Secrets & Analysis. Subscribe Now