Finance has always been a lucrative industry to work in. From the time of the first banks and insurance companies, it always paid off to manage other people’s money. Offering an annual average wage of $ 100,000, finance allowed millions to study a respected profession and find an attractive job, depositing cash, transferring money, authorizing a loan, underwriting insurance, investing in securities, equity or commodities or just managing all of the above.
But with the age of big data and AI a significant portion of these jobs can become obsolete, or at least transformed. As predictive analytics, computing power and granular personalized data are converging robots can achieve more and more tasks, challenging their human counterparts. After all, finance is all about taking hundreds or thousands of factors into account and then predicting the chance a customer will pay a loan back or the return a stock will create in exchange for investment – and what can be a better task for a robot than that?
That is why Opimas, a consulting firm, predicts that 230,000 jobs in the finance sector could disappear by 2025, and Oxford academics claim that 54% of total lost jobs will be in American finance industry.
Market Research Analyst
Market and company researchers and analysts can be found in most of the consulting branches in banks, or in firms such as Mackenzie, Gartner and Forrester. Their work is rather manual, going over detailed research papers, interviewing key executives, and writing dozens of pages per report. However, their service is considered to be expensive, ranging from tens of thousands of dollars for a simple task to an average of a few million for an annual subscription.
Company analysis may be the last kind of job you’d imagine would be automated. Yet, it can be done by harnessing NLP and AI algorithms that crawl over dozens of structured or unstructured data sources. Digital analysis startup Zirra had built an automatic process that delivers insightful outputs on private companies, including a list of possible competitors, level of competition, web traffic, a map of meaningful events during a company’s life, and an automated list of risk and success criteria. Its proprietary technology allows it to create high-level analysis insights within seconds.
Zirra collects and aggregates data from a myriad of public and private information sources, including structured directories, semi-structured databases, and completely unstructured text. It then utilizes Natural Language Processing (NLP) techniques to process large volumes of unstructured text, to detect companies and their semantic context, to model their interrelationships, and to derive dynamic indicators.
Zirra recently released a first of a kind AI-powered analysis bot called Emmet. By using simple English, Emmet answers company analysis with outputs within seconds. Take for examples this output when asked about the risk and success criteria for ride-hailing app Lyft:
**Try Emmet here and invest in Zirra via SeedInvest to make private companies accessible**
Stock, Commodity, and Equity Analysts
Since robots are great at aggregating large amounts of information from various data sources, as well as at employing predictive analytics techniques from an even simpler data set, it is only natural that they can compete with a flesh-and-blood stock and equity analyst. What highly paid analysts to take hours to prepare, robots can do within minutes, even when talking about sophisticated predictions.
Serving hedge fund and bank traders, Kensho looks at real-world events and analyzes their effect on financial markets, and particularly on asset prices. For instance, Kensho can answer questions such as “what will happen to cement stocks when a Category 3 hurricane hits Florida?” Or “what happens to the currencies of oil-producing countries when oil trades below $45?” Following the iPhone 8 and iPhone X launch earlier this month, a Kensho study for CNBC found a pattern behind Apple’s shares after each iPhone announcement: the stock is flat on the day of the event, and then up 1.2% one week after the announcement, and up 2.6% three months later.
Kensho’s systems crawl through 90,000 financial and governmental reports and sources, searching for correlations between geopolitical and natural world event and financial assets. Backed by Goldman Sachs, JPMorgan Chase, Bank of America, Merrill Lynch, Morgan Stanley, Citigroup and Wells Fargo, the company serves trading desks at S&P and some of its investors.
The insurance industry is also facing a challenge from robots that are evaluating risks and compute actuarities. Insurance brokers are now being replaced by AI-based apps that sell insurance using chatbots. Startups such as Lemonade in the US, ZhongAn in China, and hibob and Gryphon in the UK have raised hundreds of millions of dollars each.
ZhongAn, backed by Ant Financial, Tencent and Ping An Insurance, partnered with the largest e-commerce, mobile, travel and insurance company of China to offer personalized insurance for their customers. ZhongAn sells insurance for web-based actions, such as shipping return policy to Alibaba’s shoppers, flight delay insurance to Ctrip’s customers, and cracked screen insurance to Xiaomi’s customers.
Lemonade has sold dozens of thousands renters insurance so far, claiming to be the fastest growing insurance company among New York millennials. Lemonade built a chatbot called AI Jim to provide insurance policies handle claims, thus replacing brokers. The chatbot can check the claim, validate it with the policy, approve the claim (or deny it), and detect fraud. Among others, it uses the location of residence and a video of the customer via its app as criteria in the process of authorization.
**Try Emmet here and invest in Zirra via SeedInvest to make private companies accessible**
Loan officers, Credit Analysts, and Risk Managers
Let’s face it: risk is already calculated by robots. Whether it is the potential risk of not returning a loan or the risk entailed in making a fraudulent e-commerce transaction, robots are doing the jobs at the expense of banks and credit card companies.
Startups such as Riskified, Forter and Signifyd use machine learning to review credit card orders in e-commerce, evaluating the risk behind the orders and guaranteeing them so that any fraudulent orders that do pass through are reimbursed by them. Other startups, such as Fundbox, C2FO, Behalf, and BlueVine, are offering invoice financing for businesses, allowing them to expand and pay their payroll while waiting for third-party payments. In addition, Funding Circle, Lufax, Zopa, EZbob, and Blender operate peer to peer lending platforms, allowing individuals and businesses lend money from their peers.
Most of these platforms belong to small startups that have not shown any profitability yet, one has to admit. Further, they serve mainly small or medium businesses and haven’t yet penetrated into the 500 Fortune club to make a more significant change in the industry.
Personal Financial Adviser
The age of robo-advisers has begun. Financial advisers and planners are already being replaced by programs and chatbots that automatically manage money and wealth for individuals, mostly millennials and those with average wealth and investment needs. Robo-advisers bring an empirical methodology to financial advisory, and also offer cheaper fees than human advisors. Companies such as SigFig, Betterment, Hedgeable, WiseBanyan, Wealthfront, Futureadvisor, and Personal Capital manage together almost trillion dollars, according to Business Insider.
SigFig, for instance, uses algorithms to track several metrics in the portfolio and provides investment recommendations based on this technology. It also takes into account the customer’s risk tolerance and automatically diversifies the investment accordingly. An average investor could save up to $5,000 in fees each year, according to the company, or 4-5% of the average portfolio. The company has partnered with UBS and Wells Fargo to offer their customers the service.
Another startup, Personetics, is calling itself a “cognitive banking technology company” and uses predictive analytics and AI to provide timely insights to bank customers – or “nudges” as the company calls them. Customers will receive alerts about duplicate debits on their credit cards, that their cards have been used at new merchants, or that an important birthday is about to come so that automatic savings will temporarily stop. Other apps, such as Digit, Acrons, Chip or Qapital provide a similar service.
**Try Emmet here and invest in Zirra via SeedInvest to make private companies accessible**
The moment after the British parliament ratified Brexit, it seemed that the separation of the UK from Europe was a done deal. Fortunately, Great Britain has a thriving startup scene that still attracts immigrants from all over the world and is starting to create a living ecosystem for giant global tech services. Some of those startups surpassed the clutter with a higher valuation and market share. Companies such as Deliveroo, Global Switch, and Anaplan have been acknowledged as tech giants only a few months ago, due to larger than ever financial rounds.
Zirra, a startup that has developed AI and machine learning technology to effectively analyze the private tech market, has already mapped the 5 highest valued automotive startups, and built a list of the top 100 most valued startups in Israel, today’s second largest startup ecosystems. Now, Zirra is proud to present you with a brand new and updated list of the 10 highest valued startups in the UK. Using 85 different data sources. Zirra has estimated the valuation of the startups in the list, marked success and risk factors and rated the leadership of each company.
Here are some insights we picked from the list:
*UK tech has a sense of style and fashion, as expected. Two of the ten companies are offering high-end consumer products: Deliveroo is branded as a delivery service for restaurants meals, including some chef restaurants, and Farfetch runs an online marketplace that connects high-end fashion retailers with customers.
*Even though the UK is a pioneer in technology based financial services, only two of ten UK unicorns are in financial services: Funding Circle, a peer-to-peer service that matches retail investors with small business and TransferWise, a peer-to-peer money transfer service. UK is abundant in fintech services, but its tech industry is mature enough to offer giants in a variety of services such as pharma, AR, fashion retail and consumer services. A big chunk from the list are companies that avoid being active in the US, where the market is already crowded. Deliveroo, for instance, wants to take over Europe, the Middle East, and Southeast Asia. Global Switch, a cloud computing service, partnered with Chinese investors to expand into China and new Asian markets.
*In nine out of the ten UK unicorns there is at least one immigrant or a child born to first-generation immigrants in the founding team. Of those nine, seven companies have at least one immigrant in the founding team from the following countries: India, Estonia, Portugal, France, New Zealand, and the US.
1. Global Switch
Global Switch is one of the largest data center providers on the globe, with centers located throughout Europe and Asia-Pacific. Data center management doesn’t sound too complicated for a tech company, but remember that Amazon’s cloud management platform makes Amazon about half its revenue. Now Global Switch is going global, with a new Chinese investor, promising to give higher reliability and better service for China’s industry.
Global Switch owns, operates and develops large scale, carrier, and cloud neutral data centers. It is a Tier 3 status (a reliability of 99.982%, second in the industry, inferior to Tier 4 with 99.995%) scrutinizing all key components like power, cooling, security, and connectivity. The company owns and operates more than 3 million square feet of carrier-neutral data centers space for global system integrators, telecommunication providers, enterprises, financial institutions, government organizations, and other hosting businesses.
Global Switch is a newcomer to the unicorn’s zoo. Reports of a $3 billion valuation went out only last December when the Chinese consortium Elegant Jubilee bought a 49% stake in the company. Aldersgate Investments owned by the Reuben brothers who sold the shares, stays with ownership of 51% , in Global Switch. The Chinese consortium that includes steel maker Jiangsu Sha, AVIC trust and Ping An, was assembled by Li Qiang, a Chinese telecom entrepreneur, who aims to bring a higher reliability service to Asia. Shortly after the funding announcement, Global Switch announced it will expand with two new data centers in Hong Kong and the second one in Singapore.
The largest unicorn in the UK, though, is not free of troubles. Back in September 2016, Global Switch’s center in London suffered its second power outage in three months. It is quite possible that the Reuben brothers looked for an investment partner to improve the technology and take it globally. Zirra estimates the valuation of Global Switch to be $5.8 billion, almost three times the original valuation at December’s financial round.
Deliveroo sells and delivers restaurant meals to households or offices. It was founded by William Shu who moved from the US to the UK and didn’t find proper higher-end meals to order beyond junk food. After raising abruptly $275 million six months ago, this British delivery service became one of the highest valued worldwide on-demand startups. It became popular among customers who seek for a higher class meal, delivered directly from a premium restaurant. Despite this fact, most of the recommended offers in the homepage offer burgers, pizzas and pasta meals, which means that they are the most popular on the site.
The technology platform optimizes food ordering and delivery by integrating web and mobile consumers with restaurant tablet-based point-of-sale order management terminals. Deliveroo promises its logistics optimization algorithm will make the business efficient for both sides, and in the end will allow the company to profit from a standard fee of 2.50 pounds per order. Already today the company boasts a few cities to be profitable but does not mention them by name. It said in the past that building a loyal customer base is the key to profitability: The drivers, who are paid by the hour, will deliver more meals. In the near future, the company wants to build more kitchens that restaurants could use exclusively for providing takeout.
The giant financial round at August prized Deliveroo with a $1 billion valuation according to the press, but as for today, Zirra estimates the delivery service’s valuation between $1.2-$1.3 billion.
Deliveroo is expanding throughout Europe, and eastward towards Hong Kong, Singapore, and the United Arab Emirates. Even though, the company said it is unlikely to enter the US market, a decision that marks the overwhelming competition in the country and the fact that Deliveroo will not be the “Uber” of restaurant delivery service.
A leading meal delivery such as Deliveroo is dependant on yearly multi-million financial rounds. It has raised so far close to $500 million in order to maintain the fierce competition within a crowded market, to subsidize deliveries, and to expand to new territories. Deliveroo competes with incumbents such as UK-based Just Eat and Germany’s Delivery Hero, and other giants penetrating the food delivery business such as Uber and possibly Amazon. The latter has just tested its first drone delivery on UK soil last December.
The whole on-demand industry is on the hold, with smaller startups in the field having hard times to raise money. In recent months, several companies have shut down, while others have been acquired. Recently, Take Eat Easy filed for bankruptcy.
In addition, the company will have to deal with potential legal actions and protests from drivers claiming to be underpaid. Recently, the Independent Workers Union IWGB has been pointing towards Deliveroo, claiming it underpays the drivers and that it over-hires drivers, creating a spare time with no work for the rest of them. There are many bodies who seek the same ruling last year that Uber drivers are employees and not contractors.
2016 was a bad year for many of the peer-to-peer lending companies such as Lending Club, Prosper, and Wonga, bringing them to re-shuffle their business strategy and in some cases to cut their workforce. But for the British P2P lending scene, and especially for Funding Circle, a company that matches lenders and governments with small businesses and cut out banks and other middlemen, the business was the best ever. After a hard start during the first six months 2016, the year as a whole ended very well, with almost 3 billion pounds in loans with quarter four higher in 90% than the year before, casting optimistic spirit as for the post-Brexit UK. Funding Circle took 35% of the market, and is close to overtaking incumbent Zopa.
The company reported on lending total of $1.3 billion in 2016 globally, with the last quarter lending as much as $500 million of it. This a 90% year-on-year growth, the company told TechCrunch. Last year’s total equals about a third of the money Funding Circle had lent since being founded in 2010.
Part of the growth is coming from the company’s new markets such as the US and new territories in central Europe. This achievement awarded Funding Circle a financial round of $100 million in the beginning of 2017, the largest European fintech round since 2015. According to Zirra, the valuation now stands on between $1.3B-$1.4B, a little above the $1B valuation the company got after raising money in 2015.
The giant financial round was raised not only to expand geographically but also to supply governments around the world with the confidence that the company is on stable grounds.
The company is lending money around the world, but its base is still profoundly British. Out of its 60,000 investors, 55,000 of them are UK-based retail investors. 2017 will be the year that Funding Circle will be tested upon its success to bring US retail investors to its platform and acquire more local companies.
After taking over the p2p lending scene, topping Zopa, the popular lending service, Funding Circle will have to tackle quite a few challenges abroad. It will have to address regulatory issues of each market it enters, and may need to solve it by acquiring local companies. In the US, and already in Europe, Funding Circle will find crowded market and will have to display a strong differentiating factor in order to surpass the clutter.
And finally, after a hot year, the British p2p lending is on the verge of cooling after FCA’s announcement on the “evidence of potential investor detriment” that demands “strengthening rules in the area.”
Shazam is one of the single favorable consumer apps that are still making it to our phone screen and stays there for the time we’ll need it on the road or while watching a movie at home. It allows as much as 400 million users to identify songs, as well as TV programs, movies, and advertisements. Adding about 10 million downloads per month, Shazam is still one of the leading iPhone apps of all time – when it comes to downloads. A veteran service, founded in 2002, Shazam is estimated by Zirra at $1.2B-$1.3B. In case Amazon or Apple would like to acquire the company, the price can go up to $2.2B. According to Zirra, Shazam’s chances of going to an exit in the next 3 years is high and estimated at about 70%.
After partnering with entertainment companies such as Spotify, AMC and A+E, and artists such as Coldplay, One Direction, and Usher in order to sell more advertising spaces on the Shazam apps, the company now wants to identify products found on retail stores.
However, Shazam is not free of trouble: First, Amazon is becoming a competitor with is in-store computer vision based detection of products. Amazon, with its popular Echo voice recognition device, can also detect content home as efficiently as Shazam. Other companies are growing today in voice detection industry, making Shazam obsolete.
In addition, the company is suffering from a significant turnover in founding team and key management. More than half the original founders are no longer with the company. They also have some IP issues: There are allegations of illegal actions, such as copying, plagiarism and IP infringement against the company. Shazam also sold the proprietary software on which their company is based, but re-acquired the rights later. However, the software is no longer fully proprietary anymore.
All that can complicate a possible fundraising effort. Shazam has raised only $150 million so far, a modest amount for a unicorn, and it has a significant cash repository which may allow for expansion and growth. But the company will need more cash to grow: It already has registered pre-tax losses on their taxes despite a high valuation due to rapid growth and expansion.
UK-based Blippar turned out to be one of the biggest and most promising AR tech and content companies on the globe, raising almost $100 million and serving dozens of brands, publishers, and agencies around the world. In addition to an augmented reality and computer vision technology, Blippar’s strategy was commercial from the beginning, offering a platform that allows its customers to create AR content themselves. The company had counted Coca-Cola, Pepsi, McDonald’s, and Walt Disney as clients.
Even though, one should note that Blippar is standing on shaking grounds. The company said its losses are widening and that it would need to raise new capital due to increasing investment in marketing and R&D, but numbers are still small are not adequate to a company that considers itself as a unicorn. Losses are estimated at $31 million while revenue is no more than $11 million. Last July Blippar closed its offices in Amsterdam after cutting staff in Japan a few months earlier.
The company has seen better days in terms of valuation. In 2015, the company was rumored to have been valued at $1.5 billion following a takeover by US-based mobile chip maker Qualcomm. Zirra, a company that analyzes startups using data from 85 public sources, estimates Blippar’s valuation at no more than $700 million. According to a report published by Bippars’ accountants, the company is in a need for another financing round, after raising about $100 million in two rounds together, the last one a year ago.
Despite being a leader in its industry, the whole AR market is still small and technology is considered as premature. In contrast to other leading companies such as Magic Leap, Meta or Lumus, Blippar is not involved in creating new headsets – a device that could be a ‘killer-app.’ Blippar is a member of the older generation of companies that merges reality and virtual objects on mobile phones, together with Pokemon Go (Niantic) and Total Immersion.
Blippar is different from most of these companies in its computer vision and deep learning technology that allows its app to recognize objects immediately and efficiently. Blippar creates the “Wikipedia” of the visual world, a byproduct of its technology that allows to get recommendations, definitions and more features about each object scanned. In that manner, Blippar is a unique startup, but largest companies such as Amazon, Apple and Google already have a similar ability to bring to market such an app. Until now they haven’t done so, which is good news for Blippar.
As an AR platform, Blippar will probably keep focusing on ads. That turns it into a company operating in the adtech industry which is undervalued today.
How does Zirra value private companies?
The Zirra Valuation Process uses AI and machine learning technology and it involves both Intrinsic and Relative valuation algorithms. The intrinsic data includes revenue and expense estimations, traffic trajectories, investment history, and velocity, based on aggregated sources. In the relative analysis, data is compared and benchmarked with a database of thousands of companies with correlation to stage, space, size, and trajectory.
It then produces a map of competitors based on the data set, rated in accordance with the degree of direct competition, its size, threat, and proximity of the shared customer and partner base. Results are sent to relevant experts in our 450 strong expert community. Experts comment on both quantitative analytics (scores and metrics) and qualitative analytics (risks, opportunities, competitors).
Where do we get the data from?
Data is extracted from 85 different data sources, regularly updated (daily to weekly). Sources include both open and licensed directories such as the company website, Bloomberg, Linkedin, SimilarWeb, and Adwords; It can be “derived data” such as Glassdoor reviews, consumer reviews, sentiment analysis from open web articles; or other data points such as academic researchers, stock indexes, and macroeconomic parameters.
Why did we do it?
The private tech industry is one of the most secretive and mysterious – yet it is rich and growing rapidly. Those who are working in the startup ecosystem themselves, entrepreneurs, venture capitalists, reporters, are suffering from serious disinformation regarding the economy that surrounds them. The result of this panoply of secrets, taboos, and mysteries is enormous disinformation surrounding the startups market. Here at Zirra, we decided to do something about that. We have made it our mission to bring transparency to the private tech market.