Annie Lamont, Managing partner, Oak HC/FT
Please give us a bit of background on yourself, and how your organisation plays a leadership role in the financial technology space.
I have been a venture capitalist, investing and advising technology-enabled healthcare and financial services companies, for more than 30 years. Currently I serve as co-founding and managing partner of Oak HC/FT, a premier venture growth equity fund, launched in 2014 with my partners Andrew Adams and Tricia Kemp.
My first exposure to the world of investing came through a friend’s father who was a leading mutual fund investor. He had an enormous influence on me. I loved the excitement of talking about the markets and hearing about what he was doing. Then, in high school during the summers, I worked as a bank teller. However, I soon found that was the most boring job in the world and I vowed to never be bored again.
My career started at Hambrecht & Quist, a boutique investment bank in San Francisco – and the hub of most of the venture and banking activity in Silicon Valley at the time. I was one of only 50 people at the firm which allowed me to be involved in all aspects of the business. One day, I found myself carrying Steve Jobs’ bag for the Apple IPO roadshow. It was an extraordinary place to start my career. Despite this, I knew pretty early on, that I wanted to be in venture capital. To me, that was where the fun and innovation starts.
From there, I moved into venture at Oak Investment Partners. It was at Oak that I developed my expertise in healthcare and Fintech. Healthcare and Fintech went on to become two of the most successful areas of investment, and we established a great franchise. As the time to raise a 14th fund approached, the healthcare and fintech team, spun-off to become Oak HC/FT. And, after raising $1.1B AUM in just three years, we’ve never looked back.
When we founded Oak HC/FT three years ago, our mission was to build on our 15 years of experience and partner with world-class entrepreneurs using technology and data to tackle complex problems in Financial Services. That’s exactly what we achieved so far, having backed seven leading Fintech companies like Feedzai that uses machine-learning to reduce financial fraud; Poynt, Urjanet, and FastPay that are streamlining payment data and processing; and Trov and Insureon that are modernizing insurance delivery. And this is what we will continue to do.
How well are financial companies adapting to the coming of age phase of Fintech development? Where are the opportunities, and where are the roadblocks still?
The financial crisis launched an age of revitalization and innovation in financial services. It had to. That was a traumatic event that left many of the incumbents and legacy players debilitated and unable to effectively manage many of their core functions. This opened the door for new, innovative companies to come in, and grab hold of portions of business that are core banking functions – think lending with companies like Lending Club and On Deck.
This creates massive opportunity. We look at the financial services industries as a series of different technology stacks and ecosystems, lined up across the bottom – for instance, you have banks, payment processors, lending institutions, insurance carriers, mortgage originators or asset managers. Each of those ecosystems have legacy stacks and multiple platforms that manage everything from customer acquisition, onboarding, authentication, risk pricing and monitoring, transaction processing, and more.
The way we look at Fintech and where we see true winners is through the cooperation model. We invest in B2B and B2B2C technologies because we want to enable the financial ecosystem and financial incumbents to do their jobs better. To us, there is more to gain there.
Insurtech is an area that is generating a lot of conversation. Insurance platforms, like banking platforms are generally decades old, don’t make use for any real-time data, and are ripe for innovation. In 2016, nearly $4 billion, and this is globally, was invested in startups and growth stage companies in the space. To give you an idea, that compares to $650 million invested in 2014. We, for example, see opportunity in startups that are helping existing insurance companies use technology for better customer onboarding, account management, claims processing and other internal functions.
We are also seeing immense opportunities in the B2B payments space; fraud, security & identification; data & data analytics; financial infrastructure; and in regulatory & compliance.
How has the Fintech investment landscape changed over the last 5 years?
First of all, to set the stage, Fintech is a very complex, broad area – the sector encompasses companies that have created technology-enabled services or solutions to make the delivery and management of financial services more efficient and valuable for customers – be they retail consumers or businesses, incumbents or ecosystem providers.
It has only been in the last 5 years, where there has been real efforts at innovation. Investment in Fintech for US and Europe has gone from about $1.2 billion a year over the past decade, to jumping to $9 billion in 2015 and around $8.2 billion in 2016.
In the last few years since the crisis, financial services have started to rebound. Regulation is loosening, and Dodd Frank, Volker, etc. will be rolled back, encouraging banks to begin to take back claims, focus on the consumer and regain their power position in the business world. The most impactful way they are doing this is by investing in technology and infrastructure, rolling out partnerships and even creating CVCs because they realize, quite frankly, that they are behind.
And that was only the beginning. The Fintech investment landscape continues to change. Innovation is seeping and permeating beyond just payments and banking. It is happening for both the consumer and the business across the full stack, in payments, asset management, insurance, mortgage origination and so on.
Further, as witnessed over the last eight months, the global financial and political landscapes continue to change rapidly and the outcomes of these developments are producing opportunities for experienced investors.
The financial services sector continues to be one of the most dominant and compelling industries to invest in the U.S., and we believe that that digital transformation throughout the industry is still in the early innings. There will continue to be significant opportunities in financial services to invest in technology-enabled solutions, data or intelligence-driven models, and modern, cloud-based software.
Making financial services digital, personalized, user friendly and in compliance with the continuing regulations will be an ongoing challenge for the industry.
What will you be discussing at The Economist's Finance Disrupted Conference?
The panel I will be speaking on is titled “The Fate Of Unicorns.” Not to give too much away, but I will be discussing my outlook today on the fintech startup scene. Specifically looking at and opining on who I think is succeeding, failing, and where new seed and growth capital going.
To learn more about the Finance Disrupted event, please click here.