Introduction
At Fiat Ventures, we’re provided with a unique vantage point given our hands-on role as operators, advisors and investors at the center of fintech innovation. Our market leading growth consultancy, Fiat Growth, has worked with 175+ clients over the past 5 years helping them drive $1bn+ in revenues. We’ve also launched our marketplace of 150+ advisors, Fiat Advisors, who have helped dozens of companies at the earliest stages.
Both these groups give us access to information and founder relationships prior to writing an investment. Our ability to work and invest across stages and sectors provides us with insights on where the market is heading over the next decade.
One ongoing trend we’ve seen is that financial innovation isn’t just siloed within financial services, but is on a collision course with most every industry.
This is a trend we refer to as “Fintech+” where financial technology collides with every business unit of most all industries, especially those that have become recently digitized. Entrepreneurs who see opportunities to improve inefficiencies in these adjacent verticals will find themselves building in green spaces within legacy industries.
When most people hear “Fintech” they think neobanks, investment apps, credit products (e.g. BNPL) and other traditional verticals. While these were certainly included in the most recent wave of financial innovation, most of these markets are largely over-saturated. Increased competition from emerging and incumbents drive customer acquisition costs up, while creating a “race to the bottom” for both pricing and acquisition costs. Today, entrepreneurs are building solutions beyond the bigger, more traditional sub-verticals and moving into adjacent markets like:
Healthcare
Climate and Mobility
Vertical SaaS
eCommerce and Rewards
“Fintech+” is quickly defining the next wave of emerging startups and will be a key driver of opportunities over the next decade.
You can read more about the future of financial technology and innovation in our 2024 Market Trends Report.
The Intersection of Healthcare and Fintech
One of the fastest growing sub-verticals in fintech is at the intersection of healthcare market and financial services. Historically, healthcare as an industry has been slow to change due to heavy regulation and cumbersome data protection laws. Today however, technology advancements are quickly digitizing this legacy industry, and creating space for embedded services, like fintech, to thrive.
Over the past decade, propelled by the Affordable Health Act, an increasing number of carriers and healthcare providers have updated their systems, introducing new forms of underwriting and embedded financial solutions. The healthcare services and technology sector is projected to grow to an $81 billion market by 2026 given the accelerated rate of technology adoption by providers and bill payers.
High growth in this sector is also driven by rising costs and continued inefficiencies with current systems, especially in the US market. A recent Gallup poll showed that 38% of people surveyed said that they or a family member postponed medical treatment in 2022 due to prohibitive cost, the highest mark in 22 years. This represents an opportunity for new fintech operators to make financing for healthcare needs accessible and affordable for Americans.
Emerging Fintechs Leading the Charge
Given the breadth and complexity of challenges facing US consumers, there is a wave of founders who are focused on tackling every aspect of inefficiencies within healthcare. The following are a few examples of early stage (Seed, Series A) companies that are leading the charge.
A first example is Sunfish, a startup focused on providing better lending solutions and guidance for families seeking fertility treatments. The company is also the first to offer a “guarantee” for aspiring families so that they’re able to recoup some of their finances if treatments aren’t successful.
The U.S. market for fertility clinic services was estimated at $7.9 billion in 2022 and is forecasted to reach $16.8 billion by the end of 2028. A recent study in lower-income countries found that a single cycle costs between 50% and 200% of people’s average annual income. In the past decade, the birth rate resulting from assisted reproductive therapy (ART) grew around 6% annually as more aspiring families seek alternative treatments for building their families.
By providing modern fintech solutions, not only does Sunfish provide access to fertility treatments that would otherwise be unavailable, but the company is also developing unique datasets and paving the way for more financial tools to be developed using ML/AI. And, as these families grow, Sunfish can continue supporting their growing financial needs.
“I spent years in the Bay Area as an investor and former founder, and I was shocked that there were no solutions to help new families navigate this incredibly important but costly journey,” says Angela Rastegar, co-founder and CEO. “I left my role in venture capital; I dove into the world of fertility care. This is one of the fastest growing industries, and yet so many family building costs are paid out of pocket, leaving the burden on women and families to figure out how to afford care. Sunfish was created to allow everyone to build their family.”
Another company at the intersection of healthcare and fintech is Parachute, which provides individuals an improved experience while donating plasma. The company uses high-end facilities to donate in, and donors receive a dedicated debit card that pays out on the spot while offering unique rewards for multi-donation users. Parachute has also been able to recreate broken payments infrastructure between plasma donors, clinics and the organizations they work with, driving meaningful value to the company.
Other companies like Brellium are focused on helping clinics automatically audit 100% of their charts utilizing AI technology. This provides clinics with audit speeds at 13x+ when compared to manual processes reducing chart review costs by 98%. US healthcare payers and providers spend ~$496 billion on billing and insurance-related (BIR) costs annually, an excess of $248 billion due to administrative complexities.
The team has now reviewed over 1m+ charts utilizing this technology saving meaningful time and capital on claim submissions, reimbursements and payment reconciliations. By utilizing emerging AI technologies, Brellium is able to help providers and clinics save time and money before payments are initiated.
Another example is Sheer Health, a New York based startup that strives at improving the broken financial relationship between individuals and the complex healthcare system. The team has built a personal financial management (PFM) tool to help consumers better navigate the broken system between providers, clinics and insurance carriers. The team has developed a platform to provide transparency throughout healthcare processes and hands on support to secure the best benefits, care and financing for healthcare services.
Sheer Health allows their customers the ability to verify bills before they’re paid, navigate benefits, assist with historical claims review, save on prescriptions and more through their mobile app. The product they’ve designed helps consumers, clinics and insurance providers by equipping all parties with transparency throughout a healthcare journey.
Another example is Dani who is building a novel solution at the intersection of media, healthcare and insurtech. The company provides access to free dental coverage in exchange for watching content while brushing your teeth. With over 68.5M+ individuals in the US going uncovered, Dani provides a unique solution that is both profitable and mission driven.
There are also platforms like Paceline that rewards its users with financial rewards for meeting health and wellness goals. They’re able to connect their customers with athletic brands that are trying to reach them with over $3.5m in rewards for 4.3bn exercise minutes logged by their users. Their platform isn’t just focused on rewards either, the data they collect can be used in offering other tangential products like life insurance to help their user reach their financial and fitness goals.
Incumbents at the Edge of Innovation
Innovation isn’t just held with companies at the earliest stages either. Groups like Optum Ventures, an investment arm with United Health as a backer, are investing in early stage companies leading innovation in the space. Similarly, Optum, an adjacent organization, is building technology solutions across traditional and emerging healthcare sectors.
Other incumbents like Experian Health have built out robust payments and connection services for over 60% of US hospitals and 7,500+ entities across healthcare. Their services focused on revenue cycle management, patient engagement and data and analytics are spurring solutions for the clients they serve. In turn, a lot of emerging healthcare and fintech solutions are partnering with Experian early in their lifecycle to tap into their robust network and technology solutions.
Conclusion
Complexities within the US healthcare market aren’t new and unfortunately aren’t an easy fix. However, recent breakthroughs are emerging that are largely being spurred by new technologies, like AI, coupled with the digitization of healthcare records and processes.
Like any newly digitized vertical, the opportunity to further embed financial products becomes a reality as well. Startups and incumbents are finding ways to offer better products and services at the right time to their consumers.
For consumers like you and I, this is a “win” because we’ll have more transparency and competitive pricing for our healthcare needs. For providers and clinics, this is a “win” because it’ll ease the administrative burden and reduce overhead costs. For insurance providers, this is a “win” because it'll create a deeper relationship with networks and consumers they serve.
Most importantly, for founders who are able to look around corners it’s a “win” for the companies and technologies they create that drive new waves of innovation. If you’re one of these founders, we’d love to get in touch.
You can share more on what you’re building by leaving us a note on our website. You can also keep up to date on this and other emerging sub-verticals across Fintech by subscribing to our newsletter via this link.