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Fintech Horizons was founded by veteran journalists. We cover startups in insurtech, payments, alternative lending, capital markets and blockchain/distributed ledger. Our articles highlight company technology, people, competition, and fundraising, while also looking at how a company was founded.

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Featured Article

CyberFortress planning to seek capital in 2H 2019, CEO says
05 Jun 19 Tags: 2H2019 Expansion capital raise Cyber Insurtech City: San Antonio State: Texas Region: South Open: PDF

By: Ben Koconis

CyberFortress, an insurtech that is planning to offer a business interruption policy, will be looking to raise capital in the second half of this year, CEO Huw Edwards said.

The San Antonio-based company will probably target $4m-$5m in a Series A round later this year. Eventually, CyberFortress will likely seek a larger Series B growth round, the CEO said. Series A round investors could potentially include traditional VCs, corporate VCs, and/or family offices, he said.

CyberFortress, which is structuring itself as a managing general agency, is planning to launch its “business interruption policy” for small businesses this year. The company is now holding conversations with insurers and reinsurers who will be needed to back the policy, Edwards said.

CyberFortress currently has access to $2m in seed funding from Porthcawl Holdings, which is enough capital to fund the company until the end of the year, the CEO said.

The company is now participating in the Plug and Play Insurtech accelerator.

Within weeks, CyberFortress is planning to launch a risk score product, which will offer small businesses an assessment of how at risk they are for downtime, Edwards said.

When a small business is hacked or has a service interruption they could be “done” if they can’t generate revenue, make vendor payments and payroll, Edwards said. CyberFortress is going to offer a business interruption policy that will begin paying out within 24 hours of a cyber incident, so policyholders are able to weather the immediate storm, according to the company.

The company will first look to launch its policy in Texas and then branch out into other states, Edwards said.

CyberFortress was founded in 2018 as a spin out from Jungle Disk, a San Antonio-based cybersecurity software firm, where Edwards was previously CFO and is still a shareholder.

Edwards has a background in finance and technology and has also held positions at Goldman Sachs and Bridgewater Associates. He is currently a partner at Porthcawl Holdings, Texas-based private equity investment firm.






Featured Article

A Q&A with Powwi’s Armando Fonseca Sierra and Fintech Horizons’ Emilio Perez and Berenice Caballero.
02 Jul 19 Tags: partnerships capital raise Payments OpenBanking City: Bogota Country: Colombia Region: LatinAmerica Open: PDF

By: Emilio Perez with Berenice Caballero

Armando Fonseca Sierra is the CEO of Powwi, a trademark of GDE Payments. Powwi is headquartered in Bogota, Colombia and was founded in August 2018. Powwi has created a mobile app that lets individuals and small businesses deposit money, pay bills, and send money. In the Q&A, Fonseca Sierra discusses Powwi’s product offerings, its interest in raising outside capital, and the possibility of expanding beyond Colombia. The interview has been edited and condensed to fit an article format.


What is Powwi and how did the company get started?


Powwi lets people make electronic deposits and payments. The company was made possible as result of changes to the laws of Colombia in 2014, that allow for the creation of SEPDEs (Specialized Companies In Electronic Deposit and Payments)

The company was built with agile principles and a focus on innovation. In Colombia today, people have a hard time sending and receiving money, and the fees to do so are high.

Powwi was started last year and its goal is to increase financial inclusion, to reduce informality in the economy and reduce the dependency on cash.

The company offers financial products for both individuals and small businesses. For individuals, we have two products, known commercially as Powwi Agile and Powwi Más. Both products let people make deposits, put credits, make payments and send money orders.


Can you tell us a bit about those offerings?


Powwi Agile is a demand deposit similar to a simplified electronic account. It can handle up to three legal minimum wages currently, which is close to 2,500,000 pesos per month. About 80% of the population of Colombia has an income in that range.

If a person exceeds that amount, they can use Powwi Más. Powwi Más is a deposit with similar characteristics, but there are no caps and the customer is given additional information and monitoring capabilities.

A store that wants to increase sales can offer Powwi and those customers will return to the store to add money to their account.

There are also a large number of microenterprises in Colombia. These are businesses with less than 10 employees and sales of less than 65 million pesos per month. For these businesses, Powwi has a corporate portal to make payments, investments, and other inquiries.


What are your top goals for this year?


It is a very interesting year, one with important challenges. We are going to market and are expectations are high.


Growing the ecosystem is critical. Many people already use Powwi and a number of stores now offer it. This year, we would like Powwi to go viral. We want people to understand that having money in Powwi provides a greater return. That it is not the same as paying with a ticket. We have developed new ways for transferring money, which remove the operational costs that today are born by the consumer.


What activities does the company do as a team?


Each team member acts as an ambassador for PowwiWe want to speak about Powwi at every opportunity, so we get the word out.

We have not done a formal product launch. When we do launch, we want Powwi to already be well-known from events and from digital marketing. We want people to automatically associate Powwi with the topic of financial inclusion.


How can Powwi help companies with payroll?


We have Claro, a corporate portal for small businesses. Through the portal, a small business owner can make payments, manage payroll and view transactions.


Do you see Powwi expanding to other countries in Latin America?


All of Latin America has something in common and that is the idea of intuition. I will take Brazil out of the exercise, but none of the countries in Latin America has a situation where financial products are widely available. But when people anywhere in Latin America see something that is easy to understand, and innovative, it spreads rapidly.

The difference between Colombia and other countries in Latin America, is that Colombia is highly regulated. Our platform, therefore, has a regulatory component. So if we take out the regulatory component, we can expand to any country where a need for our services exists.

An important point regarding expansion is the need for partnerships. We believe we cannot do this alone, and if we try to, we will fail. We have a great opportunity to expand in Central America and Latin America. What is important is to have a model that works, that is scalable, and that can be customized for each country.


What has it been like to be a leader in the growth of Fintech in Colombia?


I worked 18 years at financial institutions in Colombia. These institutions have a certain way they do things. Regulation is always part of it.

At Powwi, we do things differently. We tell people we are a financial entity, but we are also a Fintech. We say we are a financial entity that also looks to innovate and follows agile methodologies. And of course people at financial institutions look at Powwi and ask—"what is it?”

That is because of the way those financial institutions operate. Any time you need to do anything at a financial institution you are asked to make a hundred photocopies. The procedures are implemented in a way that leave you scratching your head. You are left asking “Why? Isn’t there a better way?”

Obviously doing things in an innovative way while complying with regulations is a challenge. But for us, that is the exciting part. When we find an obstacle, it gives us an opportunity to apply our creativity to solve it.

In the end, you need more than a good idea, you need to set it in motion. When something is in place and you take steps to improve it, then you are innovating! That is part of the culture we are creating at Powwi.


Have you raised capital?


To date, the company has been funded by shareholders. The shareholder group has more than 38 years of experience at financial institutions in Colombia. This group provided Powwi with its initial capital. Apart from that, we have not received an injection of capital .


Where would you like the company to be in a year?


We have a clear vision for the future, one created through operational, tactical and strategic planning. On the strategic side, our goal is to introduce at least one new innovation per quarter to improve the customer experience. The customer does not know  we are at work on these changes, but we do not expect the product to look the same next year. We have a plan to improve and expand all of our products and services.


What do you like to do when you have free time?


I enjoy spending time with my family. I also like to look every few months at what innovations are being developed in other parts of the world, not just in finance, but in other verticals as well. On weekends, I enjoy going on a walk with my dogs and clearing my mind to get ready for the week.


Are you interested in attracting funding from the US or Europe?


Yes, as I said, we cannot do this alone. To accomplish everything we would like to do in the next five years requires capital. We are looking at options to see how we can bring in outside capital .We are working right now with an investment bank that is helping us see what avenues exist to obtain a growth investment.

We have seen that it is easier to raise money from the United States or Europe, where capital can be brought into the region. There is a lot of innovation happening in Fintech in Latin America as a result of these investments.

Growth investors tend to have a different approach than companies. When companies invest in other companies in the same country, they wait for you to get to a certain size. So when they arrive, they ask me how many clients I have. I answer, “we have 2500 clients in two months.” They say, “Talk to me when you reach a critical mass.”


Featured Article

Chisel AI targets Q3 Series A raise, aiming for an eventual IPO, CEO says
19 Jun 19 Tags: 3Q19 IPO Expansion capital raise AI Data AI Insurtech City: Toronto Country: Canada Region: Canada Open: PDF

By: Ben Koconis

Chisel AI, which uses natural language processing to extract, classify and analyze unstructured insurance data, is targeting a Series A raise in Q3, CEO Ron Glozman told this news service.

The company, which was founded in 2016, has developed an AI platform specifically for commercial P&C insurance carriers, brokers and reinsurers. It currently has 3 products on the market, the CEO said.

Toronto-based Chisel is planning to raise about $20m in its Series A, targeting a raise in Q3 of this year, Glozman said. In 2017, the company raised about $5m in seed funding, led by Venrock, he said.

Series A proceeds will be used for onboarding more engineers, as Chisel continues to implement its solutions with new customers, the CEO said. The company has a backlog of about 22 companies waiting to use its products, he said.

Chisel is now offering 3 products to the commercial P&C market through SaaS contracts. Its core product is a data extraction tool which typically can pull about 500 data points from unstructured data sources such as Excel, Word, PDFs, or email, Glozman said. A second product, Submission Triage, can be integrated into a customer’s email inbox. Almost instantly, this tool can extract relevant data from submitted documents, apply business rules set up by the customer, such as decline or accept an application, and then route the information to the appropriate department. Policy Check, an error mitigation solution, is a third product the company is now offering.

Chisel’s products are aimed at increasing speed, accuracy and efficiency. First responders win business 56% of the time, Glozman said. Customers Chisel is talking to are only able to respond to 40-50% of the submissions or applications they receive. Chisel can boost response rates up to 80-90%, he said. Some of Chisel’s customers have been able to get a 30-50% lift on their net written premiums, without having to hire a single person, the CEO said. Chisel’s current customers include 2 of the top 5 carriers in North America and a couple of the top brokers, he said.

The company is eventually planning to expand outside of North America, but such a move will probably start after Chisel raises its Series B round, the CEO said. The EU, South America, and APAC are “calling our name,” Glozman said. As Chisel expands internationally, it wants to build out its new operations in-house and not outsource. Series B proceed could be used to hire local talent who speak the language and have experience in those regions, he said.

Eventually Chisel wants to go public, as it grows into a large company offering an entire suite of products, Glozman said. The company’s roadmap includes launching 9 more products in addition to the 3 it has on the market today. Ideally, the company would like to list on NYSE between 2022-2025, he said. Chisel aspires to become “the Microsoft of insurance.” Everyone uses Microsoft Office; Chisel wants every insurance professional to use its product suite, he said.  

The foundation for Chisel was laid about 6 years ago when Glozman was still a student at University of Waterloo. Hating to read textbooks, Glozman said he developed an app which taught computers how to read and provide a summary of the text. That product turned out to be very successful and was used in 33 countries around the world at some of the top universities, including Princeton, Stanford and Harvard, he said. In 2015, Glozman was invited to speak on a panel about AI and reading documents. Following the panel, he was sent an email from an insurance executive, who said the industry could really use a similar solution to what had been discussed. Glozman decided to transition from the student market to focus exclusively on insurance, specifically commercial P&C, he said.

Chisel won the Gold Award at the 2019 Zurich Innovation World Championship, and was crowned the 2018 ACORD InsurTech Innovation Challenge Winner. Glozman was recently named an Insurance Innovator to Watch by Digital Insurance.

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