Fintech Horizons was founded by veteran journalists. We cover fintech startups, with a focus on insurtech, payments and blockchain/distributed ledger. Our articles highlight company technology, people, competition, and fund-raising, while also looking at how a company was founded.
Andrade is the CEO and co-founder of LISA, a company whose software automates the process of both buying insurance and resolving claims. The Madrid-based company was founded in February 2018 and is one of six started by Andrade. Andrade discusses the origins of LISA, her experience building companies in insurance, and LISA’s plans for future growth. The interview has been translated and condensed to fit an article.
What has it been like as a female entrepreneur in insurance?
I was 22 when I started my first business in insurance. They asked me if the business was my father's and things like-what is my father's name, have you inherited the business? I started young and alone in a world that was very male. In fact this year, it seems ironic, but I got an award for Insurtech Woman of the year.
But at the time I started, I saw that it was a complex world—that it cost me to have credibility. I dressed very masculine at first. I had to have a lot of courage. They debated with me on everything, and would say, “you do not know this well." I learned very quickly and forcefully a way to say to them, “yes I do.”
Is it more common to see men than women in insurance?
The industry is practically all the same, and it is not that I am a feminist, that is really just how it is. Women have spent the last 20 to 25 years developing professionally and the industry hasn’t really adapted to this fact.
I do not favor discrimination in favor of women, but I also think that is fitting that companies that have not incorporated women into their businesses have lost out in the marketplace. They ultimately must walk in front of all of their customers, including women.
Do you think opportunities are growing for women in this space?
I do not see large companies in Spain or in other countries including women in administration. I think they should just try to bet against me.
Would you consider an investment?
We are getting contacted. If we do something, it will be because we think LISA can expand internationally, that it can solve similar problems in other markets. That is something that is pending.
Do you see an opportunity for growth in the U.S. market, or in Mexico and other parts of Latin America?
Yes, of course, leading a change is complex, and we believe we can make insurance faster and work better in other markets.
You have started a number of companies, what do you enjoy most about these ventures?
I have six companies, including one focused on IT connectivity. All were started with partners and have their own highs and lows.
What are the top priorities for LISA this year?
When did you start LISA and what motivated you to do so?
LISA started a year and a half ago, but I have been building companies in insurance for 22 years.
I started very young in insurance. I realized early on that I could not compete with the traditional insurers in the same way. They were very consolidated and very close to their customers. I decided that if I was going to succeed, I would need to make my company very professional or I could not compete with people who had 50 years of industry experience.
We insure about 2,000 policies a year for new companies. These companies are already digital. They typically are not in industries like aluminum or carpentry or tooling, but in areas like genetics, AI and web design. I said, if they are digital, the insurer needs to be digital too.
So that's where LISA was born. The idea was to get our own business in line with how our customers were already doing things.
We didn’t start LISA to be fashionable. Right now, I see that this idea of “Insurtech” is taking over Spain. We are overwhelmed now with talk about Insurtech, it is madness. For us though, we took this approach to adapt to the needs of our customers.
What is the most interesting or unique experience you have had at LISA?
The moment that was the most interesting was telling the insurance industry in February of last year that we will transform insurance into something “sexy and agile!”
Really though, there have been many interesting moments. When we started last February, and then went live in July, we were working on a complete idea for marketing insurance.
We did not set out to take the offline world and bring it online, rather we decided to create processes for the online world. We mapped the key moments of truth for our clients—whether they were freelancers, architects, lawyers or small business owners.
From there, we created a solution without the need for a consultant behind it.
Our intent was to make the process easy, to deal with people with closeness, attentiveness, transparency, and agility.
What are the advantages of mobile over traditional approaches?
We came out with our mobile app a few weeks ago. The process has to be simple and available from any device.
Do you have any role models in the industry?
I have very ambitious references. For me, the companies I admire are the ones accomplishing new ways of doing things. In insurtech, I admire companies like Lemonade and Oscar Health- they are good models.
That's why you talked about some companies that start offline and eventually take the same approach online?
Our competitors ask endless questions, it's like a questionnaire. The insurance industry has a big problem, it has not thought about its users when developing processes, not in hiring or in subscriptions, not in completing a policy or when managing a claim.
This has to change. The customer is at the center for us. To me this motto is critical, the customer is the focus.
Christensen’s company, MakerDAO, is the creator of Dai, a stablecoin whose price is kept 1 to 1 with the US dollar. Dai has successfully maintained its peg since it began trading on exchanges in December 2017, even as Ethereum, which it uses as collateral for its smart contracts, has seen its price fall by more than 80%. MakerDAO is well-regarded in the crypto community, due to this stability, and because its stablecoin does not derive its value from outside holdings of gold, dollars or other physical assets. Instead, its peg is kept via a complex system that includes collateralized debt positions managed with Ethereum-based smart contracts and a decentralized community of actors who are incentivized to take actions that keep Dai’s price stable.
In the Q&A Christensen discusses uses for Dai for enterprise applications. He also talks about progress towards the company’s top goal for the year, to launch a Multi-Collateral Dai. Questions and answers have been edited and condensed to fit an article format.
Can you talk about enterprise uses for MakerDAO/Dai?
We are really at the beginning. Step one is simple, to have blockchain-powered remittances, then to use it for bank and interbank transfer. Then, the building blocks are in place to add more and more things, such as blockchain-powered accounting systems.
Right now, we are looking for low hanging fruit. What we have seen is that the world is split into two places. One place, the first world, which is mainly the middle and upper class, is more regulated. We don’t see Dai gaining as much traction there in the short run. That traction is harder to get.
The other place though is among the unbanked and underbanked. That is where we are most excited. In Africa for example, a large part of the population doesn’t have access to banking. Very soon, we will launch a new integration there.
Use of Dai within enterprise applications is also exciting. Anyone who wants, for example, to power a remittance engine using Dai, should talk with the foundation. There is an entire ecosystem of consultants that can help too with such integrations. Very soon we will also release an open source SDK that will allow any application to integrate with Dai.
How did you come up with the ideas behind MakerDAO?
The initial ideas came from Bitshares. Bitshares launched in 2014 and it was the world’s first stablecoin. The Maker team was really in to Bitshares, but Bitshares didn’t really work out that well. It tried to do too much beyond a stablecoin, and it didn’t really have focus.
What is a typical day like for you?
I always am doing something different. The only constant in my job is doing public relations. I am no longer involved day to day with the product unless there is a critical issue to resolve.
Do you feel a sense of fulfillment having started MakerDAO?
I don’t feel that it is done yet. The hardest part is ahead. We have built it, that is easy, the harder part is getting people to adopt. This year and next are very exciting, as we work to prove ourselves.
What are your goals for 2019?
Our number one goal is to launch the Multi-Collateral Dai. This will help us create a financial powerhouse.
I can’t say an exact date, but we are very close. All the code is finished, no new code is being written. Most of that code, about 90%, was released about four months ago. We are now in the last phase of testing for the Multi-Collateral Dai.
Beyond launching Multi-Collateral Dai, we have three main priorities for this year.
The first is to get greater adoption among the unbanked. We are seeing the start of this in Argentina, and we are looking to get even more adoption there and in other places.
The second is to increase use among institutions and in enterprise applications. It is 2019, and we think it’s time for blockchain to be used to provide real-world solutions to real-world problems.
The last priority is also critical—to have more regulatory dialogue. Dialogue with regulators will be important regarding the volume and types of collateral that can be used, and around the use of stocks, bonds, and security tokens.
What else should people know about MakerDAO?
We are really a decentralized stablecoin, and we are also an example of successful governance. MakerDAO is run and operated live by a community. The community makes everything work, taking the actions needed to change interest rates to maintain the peg. These are group efforts, and we vote on particular changes. We have been able to do this all securely. It is exciting, the way it is happening.
Alpaca, which provides an online trading platform developed by software engineers-turned-traders, may seek to raise between $5m and $10m in a Series A round this year, said Yoshi Yokokawa, co-founder and CEO.
The company previously has been funded by $3m from angel investors. The $3m was provided in early 2018, after Alpaca established a $3m pre-money valuation.
Alpaca was started as a database company in 2015 aimed at establishing a comprehensive solution for unstructured data, visual data and eventually time-series data that could be used by different industries. Through this work, Alpaca hit on the idea to create a commission-free, stock-trading platform to serve a growing community of software developers and technology-minded individuals. The tech-oriented software developers wanted to test systemic trading concepts.
Yokokawa said the company’s API trading platform, launched in the summer of 2018, has attracted 5,000 users, while trading volume on the platform continues to increase by 10% week over week. Alpaca has established a waiting list for users to access the Alpaca platform as it continues to expand the platform’s capacity.
With its proprietary API platform, and an individual API key, the company claims the Alpaca platform enables users to build and trade stock positions in real time – for free. The company asserts it can provide users better, real-time access to stocks than traditional brokerage houses because of its unique API.
Though Alpaca does not charge commissions, it does receive payments for routing user orders to market makers and exchanges. It also drives revenue from interest on cash deposits, margin financing and stock loan fees for Alpaca users who want to borrow stock to sell short.
At the start of 2018, San Francisco-based Alpaca formed Alpaca Securities LLC in order to become a FINRA member and registered with the SEC to provide securities brokerage services.
Yokokawa said the Alpaca platform has attracted quantitative traders, pointing to two of the largest, Quantopian and QuantConnect.
Alpaca’s investors include Global Brain, the largest Japanese independent venture capital firm and two of the largest Japanese banks, Mitsubishi UFJ Financial and Sumitomo Mitsui Banking Corporation. Angel investors include Joshua S. Levine, a former CTO/COO of E-Trade; Eric Di Benedetto, a fintech angel investor with more than 30 IPO and M&A exits; and members of Berkeley Angel Network.
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