After thirteen weeks of fast-paced accelerator action in New York City, British multinational banking and financial services company Barclays announced today that it is signing contracts with eight fintech startups. Among them are two blockchain companies, Chainalysis and Wave.
“The announcement of Chainalysis and Wave today is fundamentally a game-changer for us.”
- Derek White, Barclays Chief Design and Innovation Officer
Powered by Techstars, a VC accelerator hub with a $4.4 billion market cap, the New York Barclays accelerator attracted an audience of more than 400 industry leaders, serial entrepreneurs, senior executives and corporate partners. Eleven innovative businesses were selected to showcase their proposals on how to shape the future of financial services, as well as investigate implementing new technologies with a variety of Barclays’ businesses.
This was Barclays third accelerator, following two previous events in London over the past two years. A fourth ‘cohort’ will start their 13-week program in January 2016, also in London. Barclays has also announced Tel Aviv and Cape Town accelerator programs, that will start in March 2016.
“Each of the 11 companies that participated in the program has significantly progressed their concept, and has contributed to shaping the future of financial services.”
During the last Accelerator, in June, Barclays picked seven startups to work with, including two other blockchain companies; the diamond industry-focused, fraud detection system provider, Everledger; and Stockholm-based bitcoin exchange, Safello.
The blockchain-based companies will all benefit from Barclays' support and guidance, whereas Techstars offer up to $120,000 in capital investment. While Techstars has not announced their investments in the latest companies, they invested $120,000 in Everledger, and $20,000 with Safello.
Techstars has funded a total of 660 companies, a total of $1.81 billion, and only about 10% of the companies have failed.
Winners also become a part of the extended Techstars network, benefiting from the business opportunities this presents. The Techstars community currently includes more than 1,500 mentors and over 500 alumni companies. In exchange, the selective mentorship-driven start-up incubator retains 6% equity, as common stock.
“The eleven startups in this class are each tackling a different part of financial services, providing further evidence that the category is a massive market opportunity.”
- Jenny Fielding, Managing Director of Techstars
Swiss-based Chainalysis was founded by three digital currency veterans; Kraken advisor and former COO Michael Grønager, former Mycelium engineer Jan Møller, and Coinometrics CEO Jonathan Levin. They will be working to provide Barclays with blockchain analysis solutions.
“We built Chainalysis to spot connections between digital identities. Our products allow financial institutions to develop trust lines between them as well as identify malicious actors. Our mission is to create tools that respect user privacy and prevent abuse of our financial system.”
Economist Jonathan Levin, Chainalysis' co-founder and Chief Revenue Officer, explained that his company provides investigative tools to analyze bitcoin transactions, in a recent 'Around the Coin' podcast interview. The company works with law enforcement, enabling them to identify and prevent criminal activities. This tool will help combat cybercrime as well as enable money service businesses to comply with Anti-Money Laundering laws and regulations.
Using the Chainalysis’ API, customers gain access to real-time blockchain transaction analysis, and will be able to determine which unique entity a transaction originates from. This will “facilitate good actors to make more open commerce,” stated Levin.
In addition to the API, customers will have access to a web interface, providing them with transaction route investigation, private annotation of entities and transactions, and automated report generation.
In April, the company's leaked roadmap highlighted the company's plans for upcoming features and pricing. There are three account levels, costing from $179 to $479 per agent per month. Unlimited investigations are included in all three types of account, with access to shared fraud databases with API access on a higher level of membership. Upcoming features include compliance reports, an advanced profiling API and lightweight watch-only accounts. There is even a cryptic line indicating that TOR and VPN profiling improvements will be added somehow, which privacy-minded bitcoiners will likely see as a threat.
“Barclays’ financial crime and transaction monitoring teams will be using Chainalysis to obtain information from the blockchain about their customer’s financial transactions, giving the bank more effective control in working with this exciting new technology.”
With his company relocating to New York City permanently, Levin is currently “fairly US focused” claiming strong revenue growth, great hires, great traction and feedback.
The other company to benefit from Barclays attention following the latest accelerator is the Israel-based financial technology startup, Wave, formerly known as OGY. The startup is focusing on supply chains, connecting carriers, banks, forwarders, traders and other parties through a peer-to-peer and completely decentralized network.
The Wave solution offers an electronic, paperless shipping records service on the blockchain. Its application manages ownership of documents, eliminating disputes, forgeries, and unnecessary risks. In conjunction with Barclays’ Corporate Bank, the aim is to create a safer, faster and more advanced supply chain.
“Due to its decentralized nature, the Wave network will not have any single point of failure and will not rely on any single entity.”
Barclays has repeatedly shown interest in bitcoin and the blockchain technology. When Barclays signed a Proof of Concept (PoC) with Safello, it was the first time a UK high street bank had done so with a bitcoin company. The PoC was to explore how blockchain technologies could be harnessed in the financial services sector.
“it is becoming increasingly clear that bitcoin is part of an even bigger story: financial institutions, including Barclays, are now considering how the technology underpinning digital currency – commonly called ‘the blockchain’ or ‘blockchain’ – could in itself revolutionise finance....the opportunities are so significant that it’s a question of when, not if, these applications [blockchain] will emerge.”
- Simon Taylor, Barclays Blockchain and Distributed Ledger Expert
Not only has the giant UK banking corporation established a leading FinTech accelerator, it has also established its own blockchain labs in London, and has directly invested in blockchain initiatives, including the New York-based group of trading and technology executives, R3CEV.