Each quarter, Evolve Capital Partners takes an in-depth look at the market and transaction themes occurring in the sectors we cover.

  • Evolve Capital Partners // Q4:2020 Quarterly Newsletter

    • In our fourth quarterly Executive Research Note of 2020, we offer a close-up look at the Insurance Management System (IMS) space, which has been attracting a sizeable proportion of InsurTech investments. This area does not usually attract as much attention compared to the marketplace and underwriting aspects of InsurTech, but the opportunities are extremely sizeable. These IMS providers have attracted ~40% of InsurTech investments in recent years. We can expect total deal amounts to grow healthily, given a strong upward trajectory of 142% CAGR since 2012. There has been significant M&A activity in this sector as well, with two huge deals in recent months: Roper Technologies’ $5.4 billion acquisition of Vertafore and Thoma Bravo’s $729 million purchase of Majesco.
    • Within alternative lending, the effect of COVID-19 is felt differently among sub-sectors. Some areas, like the Buy Now Pay Later (BNPL) providers, have done reasonably well, while online P2P lenders need to overcome challenges that could threaten their survival. We see a slow recovery in the public markets, led by consumer lending. COVID-19 has contributed to greater demand for attractive financing plans, boosting BNPL companies as they collectively raised over $2.3 billion in 2020 thus far. Klarna received $650 million in funding in September, one of the largest amounts this year. On the other hand, online lenders have found themselves in a difficult spot. Many of these provide P2P loan services, but with a challenging business model, they do not become profitable easily. With the pandemic situation and potential regulatory hurdles, some prominent lenders have started to pivot away from P2P lending.
    • Another COVID-19 impact is the surge in retail trading, as many stay-at-home Americans get acquainted with online platforms. This trend has staying power into the future as Work from Home is extended and online brokers make trading easier than ever. Tech-enabled leading education platforms targeting retail traders, most noticeably Tastytrade and Simpler Trading, play a significant role in the increased popularity of retail trading. Robinhood dominates trading activity in the sector, taking up market share by significantly cutting trading fees to appeal to retail traders. Financial and technological innovations have pushed down fees drastically, adding to consolidation pressures. Both E*TRADE and TD Ameritrade got acquired recently by larger asset management firm.

    Download: Q4 2020-Newsletter

  • Evolve Capital Partners // Q3:2020 Quarterly Newsletter

    • In our third quarterly Executive Research Note of 2020, we focus on the revival of IPO markets after an initial period of lull early this year. Tech IPOs have led the rebound, including the highly anticipated offering by nCino in July. We provide coverage on nCino’s banking solutions, offering a glimpse as to why the IPO was so well-received. In addition, Ant Group’s upcoming $30 billion IPO, at a $200 billion valuation, is set to be the largest deal in history.
    • Quicken Loans has grown extremely quickly, becoming the market leader merely a few years after launching its flagship Rocket Mortgage product. The company’s market share of mortgage origination exceeds the share of the long-reigning leader Wells Fargo, just as it prepares for its imminent IPO. With plans to raise over $3 billion, the IPO could lead the wave for more mortgage tech companies to go public in the near future.
    • Historically low mortgage rates are a boon for prospective homeowners. However, over the past decade mortgage-related laws have faced a series of revisions and have become increasingly complicated. Companies like DocMagic are tapping into the demand for technology solutions to automatically generate mortgage documents, considering the nuances and complexities at the federal, state and local levels. Auditing solutions also help to flag out inappropriate financing terms offered by lending firms.
    • The Enterprise Software / Data & Analytics sector continue to grow at a healthy pace. Last quarter, we reported a 4.7% growth in the price of stocks for this sector since the start of the year. By the end of July, stock prices for these companies have surged, leading to a 26.2% growth compared to early January. SaaS companies like DocuSign continue to take advantage of the work-from-home trends by acquiring companies that can help to scale essential products. To acquire new capabilities to support these efforts, the company acquired Liveoak technologies in July for $38 million.

    Download: Q3 2020-Newsletter

  • Evolve Capital Partners // Q2:2020 Quarterly Newsletter

    • Our second quarterly Executive Research Note of 2020 discusses how FinTech lending platforms and RegTechs can better process PPP loans for SMEs, followed by an overview of our nine coverage sectors, then dives deeper into the performance of the Enterprise Software sector in the pandemic.
    • SMEs need capital more than ever, and traditional lending sources are generally incapable of providing loans in a fast and efficient manner, as evidence by the first PPP tranche. On the other hand, FinTech firms are built for scale, speed and bring to the table a new level of accuracy not previously tested. We also believe these types of firms can do the job at a lower cost than convention players. Lendio and Accuity are two such examples.
    • As we consider the performance of the nine sectors, we observe that technology investment is an extremely effective hedge against risk exposure. Most of our sector coverage has weathered the storm better than the broad market indices. Transactions are still closing with investors competing for providers with solid technology infrastructure.
    • Within Enterprise Software, verticals with practical adoption of cloud technology will weather the pandemic well. AvidXchange, HyperScience, Zoom, and Slack are some of the success stories. Private equity and investment firms will start paying a lot more attention to these types of firms due to their resiliency. AvidXchange raised $128 from 52 investors from its latest funding round in April 2020.

    Download: Q2 2020-Newsletter

  • Evolve Capital Partners // Q1:2020 Quarterly Newsletter

    • Our first quarterly issue of 2020 discusses trends and observations occurring in the public entity insurance arena (an overlooked area), low-code environment and we revisit the SME lending space which is showing signs of promise that is sticking.
    • The insurance space is rapidly innovating but an area overlooked by investors is the public entity space. The current addressable market has more than 90,000 public entities, with 80% in one or more out of a total of approximately 450 risk pools. The space is starting to evolve with big data being a trend as pool executives realize the need of data mining and analytics.
    • Low-Code, despite being a relatively new concept, has established its importance in creating enterprise solutions that improve efficiency and productivity by a large margin. Front-runners in the space (e.g. SalesforceMicrosoftTemenos) actively evolve their technology infrastructure by acquiring smaller, visionary companies (e.g. AppSheetKony)
    • Until recently, SME lending was largely ignored by big banks post-financial crisis. The $5 trillion gap between SME’s financing needs and the available financing creates opportunities for FinTechs to emerge and disrupt the market. Following the success of digital lenders (e.g. KabbageIOU FinancialBlueVineOnDeck), SME lending is finally regaining attention and interest from the bigger players. Deal activities are picking up with growing deal size.

    Download: Q1 2020-Newsletter

  • Evolve Capital Partners // Q4:2019 Quarterly Newsletter

    • We share our perspectives and observations on B2B Payments (with a focus on payment automation), Healthcare Technology in Latin America and the evolution of Mortgage Technology.
    • We expect to see strong growth of B2B payments technology in the middle market to fill in a gap between companies’ priorities to embrace automation and the current situation that the $22 trillion B2B market in the U.S. which still largely relies on analog processes. Bill.com and MineralTree are two of the market leaders.
    • Healthcare Technology in Latin America is becoming more relevant with the rise of healthcare expenditures from a quickly aging and obese population. Larger hospitals are mostly served by international and North American healthcare solution provider such as Cerner and Allscripts. Smaller hospitals and clinics have been largely under-served until the emergence of local service providers (Huli, TNH Health, etc.) and smaller North American companies (ecaresoft, Kareo, etc.)
    • The Mortgage Technology market has been steadily growing since the housing crisis with the emergence of players with disruptive technologies. We think that the next stage in the revolution of technology will surround compliance. Asurity, DocStar and ComplianceTech are some of the forerunners.

    Download: Q4 2019-Newsletter

  • Evolve Capital Partners // Q3:2019 Quarterly Newsletter

    • We dive into the evolving and growing crowdfunding sector, which has over 600 platforms globally. The traditional players (e.g. LendingClub) dominated in the early years but there is strong growth of platforms catering to alternative investments across multiple asset categories (e.g. GroundFloor, Roofstock or YieldStreet).  We sense consolidation around the corner.
    • Dental billing shines in a fragmented medical billing space. Dental practices, while exhibiting a level of stability and growing at rates well beyond GDP growth, have diverse needs that are unmet. The recent HIG investment into Medisund is a possible bellwether of activity to come.
    • Finally, the InsurTech space is nicely maturing, as are its transactions. The sector is no longer to be marginalized, as a slew of transactions (M&A and strategic investments) continue at a strong pace and probably won’t abate.  Hippo, a leading home insurance firm, raised a large slug from Bond.
    • In this issue, we pause our CEO interviews, but if you would like to be profiled in a future issue, please reach out to us, as our distribution list exceeds 5,000 strategic firms and investors.

    Download: Q3 2019-Newsletter

  • Evolve Capital Partners // Q3:2018 Quarterly Newsletter

    • We discuss the evolution of FinTech since the late 2000’s through today (we are in the Fourth Stage where AI is gaining acceptance), rising adoption of technology in financial services and return of intermediaries in insurance
    • Interviews with executives from these disruptive insurance technology companies:  Trov, Slice and Socotra
    • Financial services and technology have gone through four stages since the late 2000’s.  We are now into the stage where AI and machine learning are being rolled out across organizations to drive operational efficiencies
    • Insurance “intermediaries,” which can invoke up a love-hate relationship, continue to be integral in the insurance markets and are deploying technology to create “rich” digital experiences.  Two of our favorites are Bold Penguin and Swyfft (both are profiled)

    Download: Q3 2018-Newsletter

  • Evolve Capital Partners // Q2:2018 Quarterly Newsletter

    • Focus on Open Banking, Wealth Management Tech 3.0 (building on our Q3:2017 Newsletter) and Data & Analytics
    • Interviews with executives from these emerging companies PeerIQ and Pefin, and a detailed case study of N26, a mobile bank
    • Open Banking: APIs Ushering in a Sea of Change in Banking
    • Wealth Management 3.0: An Increasing Use of RPA in Customer Functions and the Rise of Hybrid Advisors
    • Exchanges diversifying revenue streams with analytics

    Download: Q2 2018-Newsletter

  • Evolve Capital Partners // Q1:2018 Quarterly Newsletter

    We adjusted our Exclusive Quarterly Research & Insight newsletter title from the end of the quarter to the start of the quarter; hence, this issue’s title is “Q1:2018“.

    • Focus on RegTech + Blockchain, Remittances and Insurance Tech 2.0 (building on our Q3:2017 Newsletter)
    • Interviews with executives from these emerging companies North Capital, MatchMove Pay, and Insuritas
    • RegTech + Blockchain:  Blockchain is integral to RegTech as regulatory requirements increase
    • Remittances: Mobile wallets cashing in on explosion in global remittances
    • Insurance Tech 2.0:  Reinsurers sidestepping legacy carriers by partnering with TPAs and MGAs

    Download: Q1 2018-Newsletter

  • Evolve Capital Partners // Q3:2017 Quarterly Newsletter

    • Focus on FinTech and increased activity in the ISVs, VARs, and Integrated Payments; Wealth Management Tech 2.0 and Risk Analytics spaces
    • Interviews with executives from emerging companies Trizic, Rapid Ratings, and SwervePay
    • Wealth Techs shifting from customer acquisition initiatives to strategic partnerships for growth
    • Risk Analytics businesses redefining how companies assess and mitigate risk, including newest forms of cyber risk.

    Download: Q3 2017-Newsletter

  • Evolve Capital Partners // Q2:2017 Quarterly Newsletter

    • A look at InsurTech, WealthTech, and HealthTech, with in-depth valuation analyses, public valuation comparables and interviews with management of emerging companies StratiFi, TheGuarantors, and Vestwell.
    • Analytics and digitization revolutionizing InsuranceTech
    • Skyrocketing demand for wealth services from GenX to drive Wealth Tech adoption
    • Customer experience optimization driving healthcare investments

    Download: Q2 2017-Newsletter

  • Evolve Capital Partners // Q1:2017 Quarterly Newsletter

    • Increasing use of payment analytics to gauge consumer behavior
    • Focus shifting from Bitcoin cryptocurrency to Blockchain technology
    • Consolidation in sight for small and medium-sized Enterprise Lending Platforms
    • Interviews with Management of iovation, Cortera and Powerlytics
    • iovation is a leading provider of online fraud and abuse management services
    • Cortera is a provider of online based commercial credit ratings
    • Powerlytics is a market intelligence platform providing accurate and granular financial data
    • Public valuation comparables for Payment Analytics, Blockchain, and SME Lending platforms

    Download: Q1 2017-Newsletter

  • Evolve Capital Partners // March:2017 Special Issue on BPOs

    • Special issue following our LeaseDimensions/Genpact M&A transaction
    • In-depth analysis of BPOs and Third Party BPOs
    • Race towards automation, analytics and service-based models
    • Loan servicing, healthcare and life sciences emerging as key growth segments

    Download: March 2017 Special BPO-Newsletter

    Download: Genpact – LeaseDimensions M&A Deal Announcement

  • Evolve Capital Partners // Q4:2016 Quarterly Newsletter

    • Third Party BPO’s experiencing vendor consolidation amid expansion of offerings
    • The rise of the internet of things (IoT) and how data analytics can provide real-time optimization opportunities
    • Online and alternative lending platforms brace for consolidation

    Download: Q4_2016-Newsletter

  • Evolve Capital Partners // Q3:2016 Quarterly Newsletter

    • Focus on capital markets, financing platforms, operations & maintenance and IoT companies in the sustainability space
    • With green energy’s popularity increasing, alternative financing platforms experience explosive growth
    • The sharp rise in the number of companies that produce IoT SaaS applications continues

    Download: Q3_2016-Newsletter

  • Evolve Capital Partners // Q2:2016 Quarterly Newsletter

    • A look at energy storage solutions, market drivers, financing activity and successful business models in this space
    • Discussion and analysis of Chinese M&A opportunities in sustainability and technology companies given falling foreign exchange reserves

    Download: Q2_2016-Newsletter

  • Evolve Capital Partners // Q1:2016 Quarterly Newsletter

    • Factors behind the decline of Yieldcos
    • Impact of tax credit extension on solar financing activities
    • Opportunities and challenges in China’s sustainability space

    Download: Q1_2016-Newsletter

  • Evolve Capital Partners // Q4:2015 Quarterly Newsletter

    • Factors behind the increasing deal activity in the sustainability sector
    • Overinvestment in the LED sector results in recent market correction

    Download: Q4_2015-Newsletter

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