The unicorn charge continues with 53 new companies internationally joining the $1 billion in value, privately owned 260-strong start-up club so far in 2018.
This adds to the 70 new unicorns in 2017 which represented a 60% increase over the year before, according to CB Insights. The present climate favours tech start-ups, especially fintechs, the biggest category with eight new entrants. The other leading sectors are internet software and services, and e-commerce.
A report on Australian fintechs compiled by the research division of Frost & Sullivan predicts sector revenue will grow by 76.3% and exceed $4 billion by 2020, spurred by
- reduced taxes in investments in start-ups
- increase in mobile payments
- demand by tech-savvy natives.
The research identifies the main areas of activity for Australian fintechs as
- digital payments
- personal and business finance
- financial infrastructure
- data analysis
with each activity using its own digital technologies that challenge and disrupt existing models currently in use by financial institutions.
The report claims the fintech start-up space is set to poach $10 billion in revenue from existing financial institutions and generate an additional $3 billion with the support of strong backing. In 2015 $438 million investment in the fintech sector was concentrated in Sydney.
“It is becoming more accepted that blockchain and other emerging technologies can be an economic enabler,” says Gallagher Account Manager – Professional & Financial Risks Brett Parnell, “but this innovation needs to be balanced with issues of regulation and insurance requirements.
“As a relatively new industry, insurers typically exercise a cautious approach with their underwriting for fintech ventures. Most insurers are hesitant to offer insurance solutions for start-up businesses due their high failure rate, and traditional product offerings are not meeting coverage requirements, as entrepreneurs continue to bring new ideas to market and the associated risks evolve."
Gallagher has the agility to work with these kinds of enterprises. Brett explains: "Our approach is creating tripartite relationships with our start-up clients and the prospective insurer, facilitating an open and honest forum where the risk details can be articulated in person to really understand their business and the risk profile.”
While the United States and China can claim the majority of unicorns at 46% and 26%, the United Kingdom (6%), India (4%), Germany and Israel (2% each) are the only countries with four or more. Australia has two (software outfits Atlassian and Canva) and the next entrant could well come from here.
See Gallagher Financial & Professional Risks Account Manager Kirsty Kennell-Webb explain the company's position on servicing the fintech sector, below.