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London Fintech Podcast
44 minutes | 11 days ago
LFP178 – Connecting Startups, Investors, NEDs/Advisors/Mentors w/Roei Samuel CEO Connectd
Way back in the day LFP002 was with matchi.biz who were creating a marketplace to connect innovative firms with incumbents who needed that innovation so the idea of a connection function or market has been around for some time. As matchi.biz were acquired by KPMG in 2017 they were clearly not only successful at creating such a marketplace but did it so well that like a hoover hoovering itself up they got sucked thru their own portal too. Can these concepts apply to enabling and empowering entrepreneurs? After all the most useful attributes for a founder are acquiring funders, good board members, advisors and/or mentors. Markets sound like a good idea, albeit one that crony capitalism is forgetting. Markets operate best when what they trade is fungible – eg US$ or gold bullion of a certain quality. However as every marriage broker knows people aren’t exactly fungible – indeed they are perhaps the least fungible thing going. But all these swipe left and right apps seem to make a living for themselves and entertainment for the swipers with some success in the dating and mating game. Roei and Connectd have set out to make a digital marketplace to add liquidity to the world of startups, investors and the hard-to-name yet super-valuable NED/Advisor/Mentor sector. This has naturally only been amplified massively in the world of lockdown. Historically the “well-connected” have had a head-start in life – can this change in the modern world and everyone be leveled-up? Topics discussed include: Roei’s and Connectd’s curious challenge with the letter “e” recommended viewing recently Seaspiracy , The Silk Road, Antarctica A Year On Ice, Tehran Taxi Roie’s journey from wannabe diplomat to diverting into a tech startup in the Sports/eSports market, gaining 9.5 million (!) users and a successful exit gaming is worth more than films and music combined leveraging his experience (including qua Mentor/Angel) and challenges to produce the concept and understanding of needs of the market that led to Connectd the two types of entrepreneur – those who immediately do the duck-to-water bit and those who first immerse themselves in an industry and then find the opportunities Roie’s experience in the round that only 3-4% of Angel Investors/NEDs-Mentors have requisite infrastructure for the best origination – leaving huge untapped resources out there unable to connect to the Startups who would benefit from connections with them “95-96% of Angels are making their investments based on tax benefit” [super-helpful but of course not the whole story] the original idea of Connectd was “Family Office as a Service” from which it developed to where it is today the game-changing impact of the response to Covid in forcing/accelerating the move to digital – “golf course” deals no longer being possible the “digital”/”square-peg”/”document” and “organic”/”personality”/”chemistry”/”round-peg” aspects of a human being and how they can be handled online comparison with CV-based search industry digitising psychometrics and relating to Corporate Creativity the challenge of really knowing someone can take years anyway… many Startups need specific skills/advice/knowledge and so can be very single-issue led the importance of engaging in many different ways – not just, as it were, as a Square/Triangle/Circle (and then of course this leads into getting to know the person in a professional relationship – ie dating/going on holiday fit in between “online meeting” and “long term commitment/relationship” in re above mentorship/advisory as intermediary steps Case Study of a FoodTech business that came onto the platform thinking it wanted a NED but actually meeting it’s needs in a very different and more pertinent way the challenge of marketing/selling mentoring without a specific way of connecting supply and demand looking into NEDs/Advisors/Mentors category Connectd was launched Feb20 20% m/o/m growth since ~1,000 paying customers right now, still very early stage value-adding tools plans pricing ~£20-30 p.mt and a transaction fee monetising people’s network, skills and expertise for the benefit of the Startup world UK-focused now although non-UK transactions have already taken place on the platform the essential role of entrepreneurs and Startups in rescuing the economy from governmental catastrophic economic actions And much more Share and enjoy!
43 minutes | 25 days ago
LFP177 – Fintech’s Success: Past, Present (esp re Kalifa Report) and Future w/Nigel Verdon Thrice Fintech Founder
The recent report by Ron Kalifa, for the UK Govt to identify priority areas to support the UK’s Fintech sector and maintain the UK’s global reputation in re, gives us an excellent opportunity to zoom out from that to discuss The Past: why Fintech so successfully started in the UK; The Present: how well the Kalifa Report advances UK Fintech and move on to The Future: what will make UK Fintech successful going forwards. There is perhaps no one better to discuss this long view with that Nigel Verdon who was at the centre of the digitisation of mainstream blue-chip FS in the 1990s and subsequently founded three UK Fintechs (Evolution 1997; Currency Cloud 2007, Railsbank 2016). In all of this sectoral focus however we should not forget that all sectors are part of an economy as a whole and a Government balance sheet. Huge increases in deficits and expansion of money supply is unlikely unless addressed to promote a strong and stable country as a backdrop to Fintech activity and this remains by far the biggest risk to all UK citizens into the future. In terms of the current Kalifa report however, unsurprisingly he wasn’t asked to come up with a fiscal and monetary approach but more bottom-up measures. Covering such a wide canvas of UK FS over decades this is more of a conversation than something to be precised. However major topics include: the vital core role of macroeconomic policies – not just fiscal/monetary but tax, light-touch regulation (disappeared over the decades in favour of what Lord Turner has called micro-supervision in much of FS) state-centralism vs letting entrepreneurs create – govt as “we know best” vs govt as setting the right climate the positive aspect of enforced digitisation of business from buying corporate assets (Railsbank acquired quite a chunk of failed Wirecard) over Zoom to fitting in more conferences the benefit of staring in strict engineering disciplines in creating solid Fintech – the tech vibe build, ~ fail fast, rapid development, fix it in the bug fix in the next rushed release does not work when one is moving billions of dollars around the world Nigel’s reflection as a participant and multiple-founder on what made the UK so successful in Fintech centuries long culture of innovation and celebration thereof historic principle-based regulation rather than rule-book regulation FS strength of London over a long time Fintech came out of banking and digitsation had been underway for quite some time 2008 as leading to loss of confidence in incumbents plus many digisiting-FS-ers were fired capital started to appear (eg Amazon) Amazon web services EIS/SEIS tax breaks FS-savvy lawyers/accountants et al Current challenge – Brexit leads to dislocation costs of change (build parallel infrastructure in Europe for many eg) – UK has to think of how to leverage the benefits side of the coin Kalifa has a lot of detail – we focus on some of the key themes at a governance level the reform of the old House of Lords has removed many businessmen from govt in favour of politicians. The House of Commons has very few business men in it but many lawyers “The question is how can the UK maintain it’s world leading position in starting Fintechs?” Minimal bureaucracy to start a company in the UK compared to say France, Germany, Lithuania – also re operating eg digital signatures accepted in UK how to attract and retain entrepreneurs? tax changes had been disadvantageous towards entrepreneurs – not clear govt understands that Founders do not pay themselves in dividends eg but mostly via liquidity events money from successes needs to be reinvested as per the West Coast – hence needing to retain talent post-success huge number of non-British founders of Fintechs support for international business – Nigel praises the commercial side of the Foreign Office and local diplomatic/trade missions in the help they quietly give leveraging long-established networks. This could be used more. Kalifa listing rules changes suggestions “a sticking plaster” – need to attract founders also cf LSE and NASDAQ – very different types of companies list on each structural issues for LSE Kalifa’s 5 key areas – Policy and Regulation, Skills, Investment, International, Connectivity discussing the Fintech funding ladder as a whole and re Kalifa – Nigel’s comments on each of the rungs macro-trend towards large US investors increasing their investments in unlisteds a digression re whether govt has any impact or not on the rates of flotation – for sure a multi-factorial issue with many root causes Nigel’s big picture conclusion: “UK needs to re-position itself, and this is a first step, as the place to start Fintechs and the place to grow international Fintechs.” UK has a lot of marketing to do to attract entrepreneurs high risk of Fintech and entrepreneurs disappearing somewhere else [re Kalifa Repor] “The key thing is its a step in the right direction but a small babystep. The real work [still] has to be done to move forward and there needs to be more engagement with the CEOs and the Founders of the companies concerned as a lot of the engagement was with lobbyists and PR people etc rather than CEOs” which brings us full-rcile – this process being archetypal state-corporatism (think Washington) rather than eg 19thC liberalism creating entreprenurialism And much much more Share and enjoy!
45 minutes | a month ago
LFP176 – Sci-Fi Creeps Ever Nearer – Automated Detection of Emotion In Voice Audio w/Rana Gujral Behavioural Signals
Behavioural Signals aims to “turn your conversational data into actionable insights for your business” via the automated cross-cultural detection of emotions in the audio of conversations. This is a super-new front in machine language recognition and usage one which has to date been rather simplistically approached but one which as we all know every day is essential to real human interaction – witness all the confusion that for example emails can cause which would not occur if we saw people’s body lamguage and heard the tone of what they were saying as well as simply the content in Times New Roman. Indeed it is this deficiency of the latter which led to the invention of emoticons to crudely add back some disambiguation. Rana Gujral, CEO of Behavioural Signals, is a super-experienced veteran entrepreneur and CEO in Silicon Valley and in this episode he draws the curtain back on if not the final frontier then certainly a might important new one of man-machine interfacing. Alexa and Siri can do an amazing job today compared to their predecessors a decade or two back, yet neither of them have any sense that they are dealing with a human being – they simply detect “words in Times New Roman” as it were and have no concept that the person asking is a human being for whom words are at times a small part of the bandwidth. In this show Rana covers one Case Study of a usage of this technology in FS which ably demonstrated that when one is dealing with real technological innovation the use case innovation is itself also truly radical and requires large amounts of initiative and imagination to think beyond the obvious – after all if people already detect emotion how could a computer supplement that? Topics discussed include: mountain biking in San Francisco during lockdown Rana’s impressive career journey and interesting product journeys – a great reminder that the West Coast of the States has really led in deep innovation for decades California, tech, Texas and Elon Musk the challenges of extreme innovation huge unexplored potential use case domains how computer-voice innovation has developed in recent decades affect is relatively new given the tall order of getting computers to understand multiple speakers in multiple languages in the first place NLP and NLU in this quest tone of voice has historically been discarded despite embedding very valuable (sic) information emotions as ranging from visceral through to mental influenced and as often the most important undertone of a conversation – you cant understand or even hold for long a conversation without modelling the emotional state of the person you are speaking to the necessity as well as opportunity of being able to process this layer of the information parsing voice into words is a challenge but schematically simple how does one parse audio for emotion? Behavioural Signals exclusively focus on tonality – pitch and tonal variance – in order to extract the underlying sentiment/emotion – “it’s not just what you are saying it but how you are saying it” that conveys information Psychologists have produced models of how emotion is reflected in voice – factor analysis simplest model is a two-factor model: balance (how +ve/-ve) and arousal – and one can plot emotions on that two-D chart as a starting point for measuring core affect the heart of BS approach is along these lines to derive core affect the importance of having a whole pipeline of components that interact – cf a car engine is not a thing but a connection of things that together produce the desired result the various buckets that this process can derive from an audio of speech prior established products are based purely on linguistic analysis – eg use of a word “amazing” would lead to a positive assessment with no way of measuring eg sarcasm – hence affect detection is a huge leap forwards from that cross-cultural detection of affect/emotion – is this a huge challenge or is emotion more basic than language (after all babies around the world communicate core emotions in the same way from day one, even if social training will impact the outward display of inward emotion over time) how this is approached and why it works (cf GSR in lie detectors) Case Study of their “AI mediated Conversations” – AIMC – product to match appropriate call centre staff with debt collection conversations based on the emotional patterns in voice the amazing increase in debt collected of 10-15% as a result of matching not only do collections go up but the client satisfaction is greater too – most people seek to sort out their debt situation B.S. was founded in 2016 out of Uni Souther California HQ in LA, small team in SF and larger team in Athens, Greece active in Europe as well as US focused on banks and collection conglomerates right now And much more more Share and include!
46 minutes | 2 months ago
LFP175 – The Ever-Increasing Importance of Creating a Company Culture w/Keith Smith CEO Payability
Back in the day when business was more monocultural in many dimensions, and indeed today in more monocultural societies, “culture” was implicit and did not need explicitly defining. However in the modern, ever-more globalised, ever-more multicultural world binding together a group of people, possibly in different countries into one coherent entity is an ever-increasing challenge. Keith Smith is a serial Founder who created a Fintech first in 1992 (this sounds like the earliest the LFP has ever heard about…), followed by four businesses in other industries until returning to Fintech co-founding Payability. Keith thus has considerable experience of what works and what does not and a long track record in experimenting and finding ways to bind people together both within a company and at the same time “being able to think like your clients do”. Naturally the challenge of corporate culture has only increased with governments reactions to covid – onboarding people into a culture for example being far more of a challenge when people don’t meet in the flesh. Topics discussed include: the top LFPs for entrepreneurs re entrepreneurial skills Keith ate in a restaurant in New York – how novel and how nice… the importance of the small things in life – maybe we will appreciate them more going forwards… introverts as Founders along with the more obvious extrovert Founders the importance of meeting up to bond a group of people in all circs, business included building trust is much harder when business is “work from home/online” lessons learned from watching Monkey World “social glue” Keith’s career journey as a serial Founder – now on his 6th startup first startup was in 1992 – a Fintech (!) – Cyber Mortgage – long before Fintechs existed timing is everything – being too far-seeing and ahead of time is not such a blessing is one one’s own toughest possible boss when one goes indie/founds a company? the role of a harsh inner voice in entrepreneurs compare and contrast being a parent and founding a company the hierarchical structure of society and the need for asabiyyah, centripetal force, to bind it together what is the common attribute for a given corporate culture the greater importance in more multicultural/global societies/companies compared to more monocultural societies of creating a given corporate culture to bind together everyone – in the latter case culture can be implicit and implicitly learned globalisation vs localisation challenges – being able to have a central culture yet also be able to “think like your customers” how one enculturates new joiners to a company – especially in working from home times Keith’s three principles: be purposeful about the type of culture you are trying to create the culture of a company should be led by the CEO but not owned by the CEO – it’s a shared responsibility of every employee two important tests – “the best friend” test and the “Sunday night” test as barometers of success in creating an appealing culture handling corporate subcultures – whatever your core culture then eg tech team will have a different subculture from a sales team cultures as a prioritisation of virtues/values – eg “success” or “teamwork” as a prima mota will deliver very different outcomes ” good culture provides an effective operating system for your company” Payability are ~100 employees about one-third of whom have joined in the last year during with work form home period deliberate techniques to improve onboarding in these circs – pairing, shadowing, buddying approaches/techniques international dimension Payability provides specialised Financial products to help ecommerce sellers selling into the US (eg Amazon/Walmart/etc sellers): daily working capital help to buy advertising help to buy inventory they have invested over $3bn into this are to date shoutout for what Payability needs more of and their big mission Payability have offices in the US and Poland And much much more Share and enjoy!
48 minutes | 2 months ago
LFP174 – The Huge Success of Digital Wallets and their Future w/Bjorn Goss CEO Stocard
Stocard are perhaps Europe’s most successful Fintech measured by numbers of users – they have over 60 million users of their App (which gets 4.7* on Google Play) and process an amazing 2 billion transactions per annum – a phenomenal achievement. Their users save some 2-5% on average on their shopping and in some countries up to 20% of the population use Stocard for their daily shopping :-O But what are Digital Wallets? What are their use cases? Where are Digital Wallets going in the future? Will they keep encroaching further into retail Financial Services as a whole? There is perhaps no-one better placed to address these questions that Bjorn Goss, co-founder and CEO of Stocard who has roughly a decade on the case and, along with explaining shopping to me (which I clearly don’t understand as I am not getting these available savings) lays out a clear and credible ambitious vision for the future of the Digital Wallet. Topics discussed include: Bjorn’s journey from music studios to Stocard Bjorn’s first venture selling T-shirts the relationship of early entrepreneurial experiments and later entrepreneurialism the need to connect childhood experimentalism and adult responsibility in the creative process “As long as you don’t stop you haven’t failed” the history of the digital wallet – whence did it arrive confusing usage of terminology – is Paypal a wallet? Is a browser autofill-in a digital wallet Digital Wallets’ origins as the digital version of a Physical Wallet extension of the functionality in particular to automatically handling store loyalty cards and offers (being the element that generates the savings) challenges in general of relying on smartphones given that their reliability is not 100.0% the value of having two digital banking provides in case one app fails Stocard’s gender split of users is roughly 50:50 men:women the average Stocard user has 13 loyalty cards :-O model of Asia – Wechat, Alipay… Over 6,000 retailers are listed on the App these retailers provide added-value offers via the app increasing savings discounts vary per vertical – furniture retailers eg may give 10-30% off in such a way most usage of Stocard is offline I fail to realise that the “tap and pay” contactless limit only applies to cards not to one’s phone if it includes digital biometric identity verification the ease of use of Stocard “if you can use WhatsApp you can use Stocard” up to 20% of the population use Stocard for their daily shopping in some countries founded 2012 where do coupons come from? the future of Digital Wallets – continuing to expand further into consumer FS eg financing – By Now Pay Later Digital Wallets as the daily first point of contact for potentially all retail FS the far richer data on the customer that Digital Wallets will have to help assess credit risk compared to Banks some European Banks are waking up to this and starting to get involved in elements of the sector Robinhood launch of a card as demonstrating the value of being the daily point of contact with customers Stocard have offices in Germany, Paris, Rotterdam, Milan, Sydney, Toronto, London Stocard’s expansion plans Stocard does not monetise user’s data but makes money from fees for in-app adverts by retailers you can use the app without even creating an account And much much more Share and enjoy!
42 minutes | 3 months ago
LFP173 – The Blockchain Digitisation of Tuvalu & Implications of Digitisation At Large w/Dave Washburn CEO nChain
nChain are part of a small consortium are working on a project with the Tuvalu govt to put all of its records on a digital ledger – aka Blockchain, thus becoming the first country to do so. Tuvalu, comprises 9 islands, has a domestic revenue of $60m (a chunk of which comes from its ownership of the .tv domain), has a ca 11,000 population but does not have an electronic banking system. The plan is to move the country’s national register to the Blockchain, will be followed by an exploration into digital currency, a huge feat of technological leapfrogging. In this episode we are joined by Dr Dave Washburn CEO of nChain who discusses not only this landmark project but the broader and wider implications of digitisation as a whole. Digitisation is neither good not bad in itself – like a knife it can be wielded for good or for ill. However as digiitsation of everything continues apace what simplifying criteria, what simplifying metrics are we to use in particular cases of digitisation? Topics discussed include: the amazing possibilities that digitisation and the internet brings to explore an infinite amount of teaching and training let alone information shoutout for French Cooking Academy (on YouTube) digitisation is not about technology but about socio-cultural consequences Dave’s career journey the amazingly wide semantic range of usage of the word “Blockchain” – how Dave sees it now nChain’s choice of type of Blockchain why Tuvalu decided to digitise its records Tuvalu, cash, and small islands trends using technology to meet their challenges “how hard is it to digitise a whole country’s records?” challenge is making data interoperable not siloed unlocking value for stakeholders cf “Just” “info on a computer” challenges of rolling out new technologies – cf railway history as per Chris Tarrant’s “Extreme Railways” series building to be highly scalable and transferable two key metrics – whose data is it and “who gets empowered by a particular digital transformation?” empowerment can have multiple dimensions – the citizen or the State, the consumer or the corporate who monetises the data? transparency and accountability is a further dimension that can be empowered Czech Pirate Party comparisons with credit card schemes – it is often the scheme surround rather than the technology which tilts the benefit one way or another permissioned-access Tim Berners-Lee and his concerns over the direction the web has gone monetising other people’s data – the major model of some of the largest companies in the world was never envisaged case study of a Health Care project prior examples of huge technological change and the slow response of society to reign-in the negative side-effects the future of digital transformation – Dave’s summary of key aspects what nChain does – enterprise grade Blockchain-based solutions for business now over 200 employees and one of intellectual leaders worldwide (patents etc) about to roll out a new API-able platform which will hide the blockhain details from a client’s use-case the fractal complexity of digital transformation and exciting future – good and bad and unforeseen consequences that lies ahead And much much more Share and enjoy!
40 minutes | 3 months ago
LFP172 – The Multiple Dimensions of the Challenges of Digital for Incumbent FS Projects w/Tony Clark CEO NextWave
Little more than a couple of decades ago IT was a very back office function in large FS organisations. Now it has completely inverted to become centre-stage in roughly every dimension of being in business, FS included. Tony Clark, serial entrepreneur, founder and CEO of NextWave Consulting has over thirty years experience of large City FS projects and takes us on a tour of the all-encompassing challenges facing all large incumbent FS players in not just reacting to but in leveraging the digital technologies and digital ecosystem to ensure they are at the leading edge not the trailing edge of the 21stC digital revolution so changing business right now. Tony’s premise is that FS institutions need a phase change of approach to successfully leverage change. Topics discussed include: losing weight – Intermittent Fasting and the importance of insulin – see short (02:40) YouTube from Dr Jason Fung the value of personal trainers in delegating the need for willpower – which is necessary in so many dimensions esp during lockdown – and responsibility for your own fitness the importance of self-care in the long term career of an entrepreneur or indeed anyone in a stressful job, FS or otherwise Tony’s career journey from starting as a Cobol programming at Anderson Consulting (the predecessor of Accenture) iterations of consulting firms a great tale about organograms, submarines and City Consulting a brief history of CIty IT projects and major phase changes from Cobol and Client-Server as being the leading edge “the sector is continually reinventing itself” the amazingly rapid pace of the introduction of new computer technologies parallel changes in organisation and organisational practices and challenges cascading these across the organisation “the environment has completely changed” the importance that the market is also changing in parallel – eg and esp customer expectations re interactions with companies FS or otherwise but also Fintechs being competitors/suppliers/customers often all at the same time the new IT tools lead to the ability to create new products and distribution – therefore knowledge of technology is now essential to understand the basics of buying and seeing that comprises business how should FS MegaCos approach the multiple-dimensions of challenge that digital brings how to bring component technologies into the organisation’s stack onboarding innovation partners the first step is finding guidance and advisory to help one navigate this immensely complex landscape blueprinting roadmaps and models cultural change – the cascade effect of getting that right my shoutout to listeners on how to get 30mins of free mentoring on Boards, FS/Fintech, Business Mentoring the exponential growth of insourcing of component technologies the dev shortage only likely to get worse – hence low-code future trends the “connected consulting” model will be necessary to help clients implementing their business model shoutout for NextWave as consulting partners And much much more Share and enjoy!
55 minutes | 4 months ago
2021 New Year Special: The Elite’s Governance & Cultural Revolutions – Key Insights from Spengler, Nietzsche, Lasch
2020 has been crazy and 2021 doesn’t seem to be breaking the trend. The LFP New Year Special is traditionally an occasion to looks back to the prior year and forward to the next. However given the seismic changes in Governments Governance of the people and the ongoing cultural revolution I thought we should take a look at what historical authorities said that would go some way to understanding the roots of our current situation. If we don’t understand the causes of our current predicaments we will not be able to develop a regular antidote. Thus the 2001 New Year Special is a very special episode that steps out of the usual Fintech stream and instead goes off to the library to see what we can learn from prior centuries. So if you want to hear details of Fintech tune in to the rest of this years shows and skip this one. If however you are interested in the future of your society and civilisation then you might be interested in particular in three themes I will cover. First Oswald Spengler’s the Decline of the West written a century ago. Without a doubt the centuries long rise of Europe and European ways has utterly changed the whole world. In the same way the decline – in absolute or relative terms – or even some revival that we cant currently see of the west will be the major factor over the coming century. Second all successful civilisations as the first historiographer Ibn Khaldun describes need a centripetal principle. What happens when this disappears? In the 19thC Friedrich Nietzsche accurately foresaw that the Decline of Christianity would inevitably unravel European society with problematic consequences. Thirdly I will talk about an under-rated and not so widely-known 20thC thinker Christopher Lasch who wrote on many topics but I focus on two of his books in which he outlined problematic major cultural trends in America – the rise of emotionalism and elitism – which so dominate current discourse on all topics. By zooming out from the short-term noise and stresses to three meta-topics I hope I can enable you to visit some deeper ideas that you can pick and choose from and incorporate in your own maps of the world. I also announce at the end of the show a giveaway for those with the stamina and interest to listen that far Links to articles mentioned: Lord Sumption on the definition and actuality of a Police State Telegraph article on population adjusted deaths for over a century Covid19 and the world of work – ILO Oxfam “The Inequality Virus” Report John Grey “The Woke Have No Vision Of The Future” Delingpole w/Patrick Wood – Technocracy and the Great Reset Ed West “The Book That Predicted 2020” Christopher Lasch “The Revolt Of The Elites Have they cancelled their allegiance to America?”
44 minutes | 4 months ago
LFP171 – The Past, Present and Future of Venture Capital w/Josh Bell Dawn Capital
Venture Capital is nigh-on essential for many ambitious, big-build, fast-scaling Fintechs and Techs in general. Fund raising is essential. Thus how the VC market is evolving is of the utmost importance to ambitious firms and founders. In this episode Josh Bell one of the founding partners of leading London-based European-wide VCs Dawn Capital who have raised over a billion to invest in growing businesses joins us to look back, look around now and look into the future. How can you best raise funds? Plenty of learn… Topics discussed include: sitting in an office :-O Airbnb’s flotation and sudden rise to being worth over $100bn Y combinator’s 100,000x return on a ten year investment :-O discussing major turning points in history from railways to tech – what are the characteristics of such how long will mega-opportunities continue? “software today is a trillion dollar opportunity” tech companies are “hoovering-up” what was previously done offline Josh’s career journey founding Dawn with two partners in 2007 the importance of specialising in VCdom to become a good VC experience leads to better ability to spot the patterns inherent in what works when Dawn were founded 13yrs ago there was 1/30th of the amount of capital going thru VCs in Europe as there is today… US firms now coming to Europe looking for opportunities and co-investing – again a very different world from just over a decade ago the importance of pattern matching in FS/business in general the most important VC in the world is the Welsh-by-origin Sir Michael Moritz Chairman of Sequoia – a huge portfolio of investing in and being on major firm’s Boards VC evolution in the 20thC – Bessemer the first VC fund over a century ago the importance of the silicon and then dot com boom in accelerating growth of Venture Capital the importance of money rolling over from one success to be re-invested in the industry the 21stC evolution of European VC making huge strides to follow-along the US trajectory from a decade or two earlier VCs connecting supply and demand for a particular type of capital Dawn has to cap the size of the funds they raise – a nice problem to have but one essential to do in order to be able to find enough excellent investment opportunities in order to keep returns high the industry as a whole performs poorly – the power law in performance and potential shakeout within VCs the power-law applies – a few investments deliver most of the returns; ditto in the industry a few companies lead to most of the industry’s returns the virtuous circle and vicious circle within VC and how the survival of the fittest works the best proof of Dawn’s added-value above and beyond the capital provided is by referring to founders who have worked with Dawn in the past topology of the VC market – three dimensions cheque size of investments eg seed cheque $1,2,3,4m all the way to big growth cheques $50,60,70-100+m (Dawn starts at around $10m and goes up to $100m) y-axis – degree of specialisation – eg generalist at C stage to specialist funds (Dawn – enterprise software geographical coverage (Dawn across Europe) best way to get traction with a VC firm? “Try and find the warm intro – the cold email rarely works” match your need with the VC forms in that space in the 3D map the future of VC and major trends speciation of funds keeping firms in the stable longer even after IPO platform support – case study of Dawn’s Director of Talent who works with portfolio companies to help them build their C-suite “flywheel of talent” – co-investment by successful founders spinning round again co-invest themselves where their prior firm was a great success Dawnw’s specialised focus within FS/Fintech area of enterprise software for large corporates Share and enjoy!
0 minutes | 5 months ago
LFP170 – Three Major Indicators That Insurtech Is Making Demonstrable Progress Changing An Industry w/Andy Rear
Andy Rear was until recently head of the innovative Digital Partners, MunichRe’s London subsidiary which pretty much invented Reinsurance (/Insurance) As A Service (which he covered way back in LFP074). In this episode he rejoins us to present evidence that Insurtech is actually changing an industry. Andy himself is off to do Non-exec-ing and a PhD in Pensions behaviour and so this might well be his swansong podcast on the topic of Insurtech and as such an industry leading figure it’s a must-listen! Has Insurtech changed an industry – Andy lays out the evidence and you decide… Topics discussed include: going to a pub :-O rubber sandwiches in New York during prohibition secret underground churches Andy’s career journey how to succeed in BigCo Digital Partners – an Insurtech investment and partnership vehicle – by end of 2020 it has written ~$500m in insurance premia through insurtechs and had invested some $400m of venture equity goats and sheep as divergent career models – process creators and process executors entrepreneurs/intrepreneurs as goats able to leap from one crag to another – how this is achieved non-metaphorically reviewing reinsurance/insurance as a model which helped Insurtech leap forwards – reasons why insurance stack and how it has been innovated, deconstructed and reconstructed where platforms fit into this brands and insurance – is Tesco eg an insurer or a broker? Insurance worldwide is a $2trn industry – premia ~$5trn of which cost of risk is ~$3trn “Clock speed” as an important model of how fast industries change Indicator 1 of serious change – capital going into the industry has got bigger and more serious – 3 IPOs in US in 2020 expectations are of at least 3 more IPOs in US in 2021, 1 in UK and 2 or 3 in Europe Indicator 2 – Lloyd’s Blueprint 2 of it’s IT change – what it is and why it is likely to succeed when all prior initiatives have not the Ki Lloyd’s syndicate which will do algorithmic underwriting – three or four other such syndicates in the pipeline modelability of FS – in short “possible” in the short- to medium term, over longer-term unpredictable discontinuities always end of breaking any model at some point the difference between IT development in companies and in a marketplace the opportunities Blueprint 2 offers providers geo-imaging providers as a Case Study Indicator 3 – changed behaviour of the insurance market in buying-in ecosystem services Case Study of Comply Advantage (see LFP146 episode with them) the future of insurance Case Study of John Lewis approach to insurance – in partnership with Digital Partners and following a full ecosystem model leveraging Insurtech specialties how to reach Andy what Digital Partners is looking for by way of partners (especially distribution) the greatest entrepreneurial opportunity in London going forwards.. And much much more Share and enjoy!
42 minutes | 5 months ago
LFP169 – A Serial Entrepreneur’s Guide To Fund-Raising w/Peter Keenan CEO Apexx Global
Capital-raising is an absolutely core-skill for entrepreneurs and their growing businesses – and every tech business de facto needs to grow (margins low and intense competition). Peter Keenan, CEO and co-founder of merchants-payments provider Apexx Global, has raised capital in a total of five companies and thus talks to us from a position of considerable personal experience. Most capital raisings most of the time for most companies are challenging processes. Thus all can benefit from hearing experiences and case studies – whether one has never done it, or whether one has done it many times. Topics discussed include: Arsenal football club Irish school ball games Peter’s career journey and breadth of business experience Peter’s experience of many differently-funded businesses there is not one route of raising funds – it varies between different types of business how it works from day 1 – sweat equity and dividing the company ownership between founders the perversity of employee equity schemes in fast-growing companies Case Study re founding Apexx and how it worked out in the early days including initial raise early market feedback before raising from initial investors initial investors are backing the people as well as a initially market-validated plan the importance of key milestones in getting to the next raise and creating confidence super-important – how on earth to approach the question of what price to sell x% of the company in such early days?? Case Study thereof “naughty Angels” – caveat founder the importance to experienced Angels and VCs of the founders having enough skin in the game – even in later rounds this is vital especially in times of pain and difficulty – need founders lashed to the mast how to avoid being fleeced in early days – how Peter solves that challenge how to value your company when it’s super-young the importance in NewCos and also the biggest Cos in the world of “valuation” meets “marketplace” – this process key the importance of “leading” the market to a valuation how many potential funders does Peter approach in an early raise? having got the initial marker you look for at least 100% growth in the valuation p.a. every year after that “going in cold to Angels is very hard” the importance of using one’s network and warm introductions the importance of finding Angels/funders who understand your sector – “get an Angel who really understands your sector and [if they are on-side] then you are off to the races” lead Angels kicking tyres and their networks the value of someone on your Board with capital-raising experience the importance of employee share-schemes in retaining and incentivising key staff how this relates to easing internal management/team decisions – “does it make the boat go faster?” where to go as a noob if you have no idea about employee share schemes non-tech businesses and their very different funding profiles/approaches VC’s are only relevant to certain types of business VC’s modus operendi and how that affects their investing strategy strategic partners and the many complexities they bring – pros and cons the law of unintended consequences keeping the partner interested getting traction can be fart harder within your mega partner – internal dynamics in MegaCo and how they generally operate expectations/outcomes governments as a source of funds – increasingly due to the huge increase in the State seen in 2020 pros and cons of State grants EU grants timescales can be very long “Apexx Global – a payment gateway that connects large global e-commerce businesses [in 5 markets or more] into multiple payment acquirers” independent of any acquirer, connected to over 100 acquirers around the world, route payments to the best acquirer thus reducing fees and increasing acceptance rates “we can improve conversion rates by about 5% and lower your costs by about 20%” how their service works in practice founded in 2016 and have 75 staff split between London and India And much much more Share and enjoy!
42 minutes | 6 months ago
LFP168 – A Superb Guide To “Open FS” Progress Around the World w/Keith Grose Head Plaid UK
Open Banking started a far greater wave, The ability for people to share ever-more of their financial data – not just current account but *everything* from mortgages to investments to pensions data promises to revolutionise the world of FS and people’s financial lives. In this excellent conversation Keith gives us a tour d’horizon and a tour de force covering Case Studies of the progress of Open Finance in the UK, Europe, US, Canada, Australia and China. All of these countries have taken very differing routes starting from very different places but are all marching in the same direction. Open Banking itself in the UK started with a Payments Directive and is thus only aimed at current accounts so far from “open banking” is not even “open banking assets” (only payment accounts are included so eg no data on savings accounts) let alone “open banking liabilities”. Plaid are currently in the process of being acquired by Visa for $5.7bn which shows you their importance, is the largest Open Banking provider in the US and “the only transatlantic Open Banking provider” connecting Fintechs with all these diverse sources of customer’s financial data from their providers. Topics discussed on the show include: Working in Ethiopia and diving in coral reefs Keith’s career journey from maths via Google into payments and Plaid Plaid’s story including its major pivot which led to its phenomenal success Plaid support 3,000 applications and 80% of the largest Fintechs the tech starts to recede into the background and simply enable ever-greater use-case functionality the basic philosophy of “open” every country in the world has been doing it differently the strengths of the UK’s approach “miles ahead of the rest of Europe in implementation” this as a (rare) example of great regulation that creates business opportunities not simply bureaucracy the varying approaches around Europe has taken much longer in Europe and several differing “standards” have emerged different European markets have got further or not so far down the process US – market-based approach – only just started talking about legislation consequences is very painful to connect 12,000 banks as all do something slightly different with no standard – vice versa the API that “sorts” all this is of amazing value Canada similar to US Australia has leaped from Open Banking right to Open Finance – how they achieved this “every consumer has a right to their financial data” – how this is rolling out across types of financial data similar in Singapore draining moats, widening gates and prising open oyster shells differing motivations from banks and the karma thereof China‘s approach – skipped straight to the mobile finance world – Alipay et al the practicalities of an API that connects one to different banks in different countries yet with differing availabilities of data – eg open pension data is not yet widespread some implications on eg even renting properties the importance to peoples life of having one’s finances under control the principle behind openness is going to proliferate – it’s your data not the banks data “this is a global movement that is going to continue for a decade to come” thinking in the UK on how to go to the next level leaving EU and “smart divergence” from PSD2-driven Open Banking payments and open-payments And much much more Share and enjoy!
39 minutes | 6 months ago
LFP167 – Traditional Insurance Model Inverted, Community Insurance Reinvented w/Tobi Taupitz CEO Laka
The alignment of economic interests between buyer and seller is much spoken about but little done. Over two and half years ago when Tobi was first on the show he spoke about the idea of aligning Laka’s interests with their clients. Now we hear this narrative all the time but rarely is it deeply true. In Laka’s case they do not take payment for the insurance but rather earn money when they pay-out on an insurance claim – the opposite of the insurance industry. Its a “back to the future” approach – back to the origins of insurance as being collectives, co-operatives of say Swiss dairy farmers up an alp bonding together for mutual (sic) support. Well back then it sounded like a wonderful idea but one that would need careful paramaterisation. As with anything in life one needs to balance compassion for others with compassion for yourself – all too many teachers, doctors et al go into their profession to help people but come out of it decades later bitter and cynical. In the same way you can set up a company tomorrow that is totally focused on client-value (which many say of course but no-one really does) but if you are 100% on client-value then that’s zero value for your business and at some point you go bust. In this episode we look at truly aligned Insurtech. How has the model gone? Is it widespread? Will it catch on? What does the future hold? Topics discussed include: home exercise bikes esp the much-hyped Peloton establishing brands, trust and keeping that Tobi’s career journey to being an Insurtech Founder original idea was late 2015/16, 6mts working on it as an idea and validating it, summer 2016 speed-dating for co-founders (a mere 3mt speed-date :-D) – came together Nov 2016 first policy sold early 2018 when Laka went live the original idea of insurance and why the industry moved away from this – demutualisation and subsequent corporatisation leading to a more shareholder-focused than client-focused business model existing model – pay up-front, actuarial estimation of future claims Laka’s model – don’t pay up-front, no actuarial estimation, rather than risk to manage is the credit risk of customers not paying up monthly very little change in their model over the years not estimating up=front gives the advantage that you don’t need to charge more to cope with the uncertainty of your forecasts of losses taking money first and then having to give it back later creates friction in the journey widespread outsourcing of claims processing to third-party processors by mainstream – cf Laka who make claims the heart of their business Laka’s mission to build a win-win-win model Laka finds credit risk is easier to manage than the insurance risk consequent to up-front payment. 34mts track record of 99%+ customers paying-up monthly early comments on their model “too good to be true” – Laka having improved their ability to explain why it is not over time mutualising risk expected payments are shared with customers with a maximum price each month being the existing market rate accountability is put upon the community to keep losses etc low as in the collective’s mutual interest pay only pro-rata to the value of your bike long-tail risk is outsourced Laka just passed 10,000 bikes insured worth £26m this model is still relatively unique although the huge Ant Financial in China use a similar model (on a much larger scale) for critical health cover Laka’s plans for the future expanding into other bikes segments and e-bikes 2025 estimate of 150 million e-bikes sold in next 10 years, and 125 million active cyclists Laka is just about to launch in the Netherlands launched a personal accident policy – but will retain the focus on personal mobility sector Laka’s current crowdfunding on Seedrs increasing mutuality from their existing customers – over 50% of current customers have already signed-up shoutout for partners expanding in Europe and worldwide And much much more Share and enjoy!
43 minutes | 7 months ago
LFP166 – Progress On Scaling Identity Verification Across Europe & Globalising w/John Erik Setsaas Signicat
All Fintechs in one country will have long since sorted identity/AML/KYC and so forth. But what happens when they need to scale in other countries or even go global? Like many things in Fintech this was a hard challenge only a few years back. However now it is made much easier by the likes of Signicat who are physically in nine locations in Europe and alongside global partners such as Onfido can offer globally-scalable identity services. Which is a pretty amazing feat given how countries vary so much as we shall hear. Today we are joined by John Erik Setsaas VP Identity and Innovation at Signicat and who has 25 years of experience in identity and thus understands the long view, the challenges and also the more recent progress at cracking some of these nuts as well as what the future may hold. Tech never sleeps and every successive layer of out-sourceable services that are provided in Fintech mean that every new generation of Fintechs can provide yet more interesting and sophisticated services to customers and businesses. Topics discussed include: Norways great sanity as a country – oil to sovereign wealth fund and honesty with its citizens and lack of tyranny re Covid the challenges about being open with information – no simple message confuses some people “In general I think we handled it [Covid] pretty well in Norway” John Erik’s career journey from programming telexes and email systems the crucial importance of telexes back in the day and their strength moving into identity 25 years ago – well before the current waves of Fintech the social aspect of identity in societies where Governments love building panopticons – where does anonymity survive in such a world? the challenges of balancing anonymity with accountability the practical aspect of identity in Fintech – simplest being if someone is trying to pay you money you want it to go to your account not one pretending to be your account but owned by someone else a lot of organisations fail on identity by asking far too many questions that they don’t need to know the answer to Signicat’s research The Battle to Onboard research shows 63% abandon onboarding which shows the huge opportunity for making onboarding smoother, easier, and less intrusive comparison with online shopping anecdotes – efficiency of end-to-end process being key – why is the same principle not so well followed in other areas? how identity works in Norway – Bank ID and it’s uses in many other areas up to and including naming your baby and tanning salons (!) “one reason it works in Norway is the high degree of trust in society” including trust in banks how ID works across the Nordics and attempts to connect them Signicat provides an API to sit above all that EID similar to Nordics is rising in the Benelux area Germany has a national ID card but most people don’t know there is a digital equivalent or use it much Estonia – small population makes it easier to enforce an approach UK doesn’t have national ID yet most people have driving licenses or passports which have unique IDs and are official documents How Signicat operates in countries with half an ID scheme or no real ID scheme to ensure coverage limit cases to verifying videos of people – eg twins challenges identifying certain populations – eg Japanese compared to Europeans (where hair/eye colour varies far more) the future of ID the concept of a “digital double” biometrics – need to use multiple even way one walks, connection to say phone, wifi, patterns of behaviour Signicat provides entire customer journey via the cloud along with electronic signatures, seals and timestamping largest countries of EIDs in the world – one partner, one API primary customers are in regulated industries – banks, insurance, government, health Signicat are expanding in people and in country dimensions And much much more Share and enjoy!
39 minutes | 7 months ago
LFP165 – Relationship Banking – the Surprising Answer to the Needs of Growing Techs? Tom Butterworth MD Silicon Valley Bank
In a world ever-more focused on transactions and digitisation what place is there for relationship-banking? Apparently not a lot, yet the market-leader – SVB – wholly embraces this approach over the whole journey from Startup to FTSE. In this show we discuss what relationship banking means in the 21stC for one of the hottest sectors in the market. SVB is the commercial bank for high growth companies and the biggest banker for PE/VC firms. In the UK they have 4,000 clients, over one thousand of which are pre-series A. As we heard in LFP163 SVB are also the world leaders in Venture Debt. Tom Butterworth is the Head of Early Stage at SVB in London and joins us today to talk about the importance of relationship-banking, of looking after the customer and of viewing the financial aspect of the relationship across the whole life cycle of high growth companies. We discuss how serving a vertical can enhance the clients in many ways as well as produce the deal flow to make the approach commercially viable – knowing a single sector in great depth leading to, inter alia, a much deeper understanding of credit-risk than simply putting numbers in a spreadsheet. Topics discussed in this show include: lockdown-look through “back to the office” back to lockdown look? the business challenges of extended lockdown the staff challenges of extended lockdown ******SUPER-IMPORTANT for everyone – firms and folks – shout-out to look after your people’s/your mental/emotional/physical health****** Tom’s career journey how careers suddenly seem to take off and one is in a strong updraft Tom’s attraction to the entrepreneurial market leading to him being head-hunted when SVB was still small in London banking over the lifetime of a growth company “It is probably easier to be a Premier League footballer than to be an incredibly successful entrepreneur, it is one of the most difficult things one can possibly do.” lifestyle vs growth/innovation businesses switching banks is very tedious and time-consuming – case for choosing a bank that can support you over your whole life-cycle in this context one can view a relationship-orientated bank as part of your suite of professional advisers alongside accountants and lawyers what is the value-add from the likes of a SVB? how SVB help and support their clients above and beyond banking “you should give before you get” the complex needs and suites of products that more successful growth companies need complex specialisations in growth banking – eg lending specifically against marketing comparison with old-world Merchant Banks (pre-trading and stripped of investment management) the reason clients pick SVB is for the relationship-management and for the specialised suite of products cf MegaBanks which “do everything” – SVB is rather “an inch wide and a mile deep” the bad-name “relationship-banking” has as it is misused sometimes as a spin on product-push, sales-target-drive FS sales drive approach the role of the relationship manager “having someone to speak to is much better than a chat bot” SVB as a bank high-growth cos should check-out to see whether they are the relevant choice for a given firm or not And much much more Share and enjoy!
51 minutes | 8 months ago
LFP164 – A Deep Dive Into Ripplenet, A Key 21stC Global Payments Approach, with Marcus Treacher SVP Customer Success Ripple
Payments are being revolutionised. One of the most fascinating examples is Ripplenet – Ripple’s approach to inverting the old model of slow large payments to super-fast, immediate, small payments (the general trend) which will change payments forever. Ripplenet “an internet of value” is used by over 300 Financial Institutions in more than 45 countries, as a next gen global payments infrastructure. Marcus has over 30 years of experience in transaction banking and payment technology, including 12 years at HSBC, being a member of the Global Board of SWIFT and an independent non-executive director of CHAPS Co, the UK’s RTGS clearing company. In this show we start with the super-big picture of how payments have changed over the centuries, how the challenge is not simply tech but how people and organisations relate to this before spiraling in to a schematic overview of the three layers than amount to Ripple’s solution. the lottery that is organising foreign holidays from the UK these days Scotland being bigger than it looks the UK leading the world in chaos as well as Fintech bring live grouse to your Xmas party and you can entertain up to 30 people the benefit of booking holidays via credit cards – so much easier to get ones money back Marcus career history and journey through tech (including Cobol…), payments and consultancy how the change in globalising society as well as the internet has led to different use cases from the 18th/19thC use cases which essentially were the concept behind oldskool payments mechanisms cross-border payments are very difficult as the systems were built for times when they were rare the first companies in the 16th/17thC and how they handled global payments – the first iteration London money markets started with the need to source the global currency of the time Spanish Riyals which were widely accepted as a store of value comparison of internet technology (IP) with where payments need to get to – a protocol of value how human society and its stories (inc laws/regulations) always lag behind changes in technology dopamine and getting tough things done tech gets faster but in WFH mode the people go slower due to no physical adjacency and everything having a large overhead of organisation Ripple’s customer base Ripple moves billions of dollars using digital assets and direct connectivity “The big challenge in getting the next generation of payments right is to take people with you, take the ecosystem with you.” how many of their competitors of theirs failed islands of payments and interconnectivity cf computers pre internet – nothing to connect them “creating an internet of money, an internet of value” – will enable the financial world to catch up with the information world “that’s what we did … I genuinely believe Ripple is different” blockchain as confusing terminology used to mean different things to different people Ripplenet as three layers: The Scheme a set of rules and regulations to determine standards, duties and responsibilities of members as an example I got my holiday refund due to Mastercard’s scheme – not due to how it transfers money started about 4yrs ago a rethink of how to operate an open network (payments players can join – not closed to certain players only) Interconnecting ledgers provider buys Ripple software and connects directly to each other cryptographically payments exchanged between each two via simultaneous updating of their own private ledgers ILP – inter-ledger protocol Ripple do a few million such transactions per annum and are growing 10x per annum infinitely scalable and “doesn’t cook the planet” (none of this everyone recomputing all transactions which doesn’t scale – with ILP your effort is linearly proportional to the number of transactions) Liquidity provision a huge expense/hassle in current systems (as one needs a “float” or to fund while money slowly moving from A to B) a much more classic blockchain – using consensus methods to keep it current which is far more efficient than proof of work SWIFT uses different messages for moving payments and moving funding – similar parallel protocols within Ripplenet runs on digital assets – XRP so far delivered $2bn of liquidity into Mexico and Philippines with this approach now only need to keep the currency in your own base – automatic translation at the point of swapping – no need to hold the other currency “this transforms liquidity” – “on demand liquidity” customer challenges with old systems in transferring money fast enough – Ripplenet obviates all that what Ripple are looking for right now and the advantages for senders and receivers – take out huge amounts of costs And much much more Share and enjoy!
46 minutes | 8 months ago
LFP163 – A Deep Dive Into Venture Debt – An Important But Underused Funding Option? w/Alex Baluta CEO Flowcap
What is called Venture Capital is most of the time actually Venture Equity – the predominant funding model for Startups/ScaleUps. But in many sectors, Fintech included, some UnlistedCos are Very large – valuations in the billions. These are no small companies. Traditional corporate finance theory says (correctly) that equity is expensive and should always be geared with debt. After all it’s what most people do when they buy a house. So for larger Fintechs and other fast-growth sector Venture Debt may well be an important tool. Alex Baluta is CEO of Flowcap a listed Canadian provider of Venture Debt and with nigh-on thirty years of experience in investment banking as a whole is well placed to contextualise the use and abuse of both equity and debt. My simple takeaway is withe “small companies” getting ever larger that the equity:debt mix for their capital is a must-consider for their Boards – just as it is on BigCos, next to none of which fund with 100% equity. In terms of debt solutions for the growing firm Venture Debt is an avenue which must be investigated at a certain point/stage. Topics discussed on the show include: standing desks and insider secrets of how to use them Alex’s career an interesting conversation about equity analysts – big picture, practice, role, nuance the Venture Equity market is over 10x as large as the Venture Debt market in North America “Venture Debt is debt that supports the equity and provides you with an extended runway to another event specifically for venture-funded companies – so think of it as a bridge to the next round, a bridge to an IPO, a bridge to a sale” the reason the Venture Equity firm and management will take Venture Debt is as they have confidence over valuations and want to avoid immediate dilution classic corporate finance theory on debt:equity ratio for funding companies when does one start to consider Venture Debt? different Venture Debt firms have different criteria/focus “there is no hard and fast rule” the traditional Venture Debt market really piggy-backs on Venture Equity (Capital) firms who introduce them to potential deals in these cases the VD firm is really servicing the VC firms depending on the risks involved venture debt may come as low as Libor+1 to ~ 20% absolute rates Flowcap do $1-5m deals and Silicon Valley Bank , the largest in the sector $30-40m the role of taking warrants typically, as a rough rule of thumb, returns to the VD firm might come in at 12% net of defaults plus another 3% from warrants the types of VD that Flowcap do including perpetual debt they are a listed/patient capital model having a broad portfolio for the VD firm to dampen out the volatility venture debt is relatively unknown in the London market challenges over rates, returns, and terms and conditions of a raise problems when it goes wrong everyone loses if a firm goes down – management, VC firm and VD firm along with a pile of hassle for all – thus the motivation to avoid problems well in advance VD firms do not make much after a collapse so very motivated to avoid bad deals how lack of familiarity with VD affects perceptions Columbia Lake Partners in London how to best learn about Venture Debt its geographic spread base of capital versus range of investments – much more global the increase in complexity and innovation in VD structures how best to pitch for VD Flowcap’s focus the partners they are looking for And much much more Share and enjoy!
50 minutes | 8 months ago
LFP162 – The Past and Future of Fintech w/Vinoth Jayakumar Partner Draper Esprit
Draper Esprit are one of London’s longer-established VCs and with investments in the likes of Revolut, Transferwise, Thought Machine, Seedrs, Crowdcube and Freetrade might know a thing or two about Fintech. Draper Esprit, like Augmentum who we had on the show last year are also a listed AIM and thus also can offer finance not tied to the cycle of underlying funds – the so-called patient capital model. Vinoth not only leads Fintech investments at Draper Esprit but has had a long running interest in the sector being at a Zopa Party in around 2007/2008 long before almost every firm now on the scene existed. In this episode he picks out the key developments in Fintech over the past decade and a half, some of the takeaway lessons that all businesses can implement, some of the challenges and ends with his prospects for the upcoming decade. Topics discussed on the show include: why Vinoth has been suffering in Harrogate badminton in Malaysia the evolution of Kuala Lumpur being thrashed by the Japanese National Ladies team for about 20mins :-O Vinoth’s career journey Dragon Gate Taoism and 21stC innovation – an example of innovation across the board and synchronicity of innovation Draper Esprit’s portfolio operation – main focus is on B2B and B2C rather than being excessively siloed by sector, doing about 15-20 deals per annum a schema of Fintech milestones over the past 20yrs including Paypal, who Zopa structured the investment options way back, MPesa, Bitcoin, Google Wallet, Alibaba Face identification, Ethereum, Challenger banking boom, ICO boom, Apple-Goldmans faceless card, “not much in 2020” (?! :-D) virality and simplicity their two investments in London Fintechs each worth about £4-5bn, Klarna also has a similar valuation how these huge valuations arise and key points therefrom the counter-argument to the incumbent “no big deal” argument re challengers why people pay for what can otherwise be free banking stalactite vs stalagmite Fintechs/tech startups why P2P did not succeed anywhere as near as the highest hopes… the spin-off from the whole P2P revolution and how it changed attitudes in many dimensions the de facto nationalisation of SME lending right now lessons from Klarna – what worked really well small changes to formula leading to exponential changes in results Earl Nightingale’s Acres of Diamonds how VCs have to relate to this “small changes” challenge – a business can appear poor but be super-close to runaway success how company’s need to structure themselves to take advantage of this on the negative side – control issues – Wonga, Wirecard et al the balance between creativity and control on the Board and how this changes over time how VCs approach putting controls in place the importance of the founder/CEOs mindset re controls the relevance of regulation re controls VCs bring liquidity events pressure and controls – both of which are easily overlooked by other external investors who just focus on the capital raised broader lessons from crypto/Bitcoin decentralisation looking forwards what themes excite Vinoth? £10-30m is the usual range of Draper Esprit’s investment – longer term more patient capital And much much more Share and enjoy!
40 minutes | 9 months ago
LFP161 – Global B2B Payments & Multi-Rail Technology w/Marwan Forzley CEO Veem
Marwan joins us to discuss global payments for small businesses. He has been in payments for many years and was first a founder in 2002 so speaks from long experience of both. Veem is a global payments network used by small businesses around the world which allows them to pay their vendors, suppliers and contractors anytime, anywhere.They do payments to 110 countries in 50 plus currencies, and have about 200,000 B2B customers. One important way that Veem manage such a long list of countries is to use a unique “multi-rail” technology – basically having wired up a bunch of different conduits from bank to bank transfers at one end through the likes of card payments to via crypto currencies at the other. This enables them to have a broader range of options for any particular transfer and for the end-users enables them to have a much richer range of payments destinations. Topics discussed include: Marc Marquez’ instantaneous G-force in a MotoGP crash being over 25G :-O soccer in the US is one of the fastest growing sports Marwan’s career journey inc in telecoms/VOIP comparison/relevance of telecoms and payments – many similarities from a tech and regulatory perspective payments is very complex to engineer why “FX” Fintechs appeared to fade and “payments” Fintechs rise “FX is the smaller piece of the puzzle [compared to payment]” the workflow of payments end to end comparison of paying for your coffee in the morning with international payments – simplification long overdue waves of industry around payments: Banks Foreign exchange companies and remittance industry – slightly better value and sender-focused Paypal – P2P payments – payer and payee on the same platform – Venmo, Alipay etc etc Wave 3 was engineered around easy user experience rather than value Veem is an example of the third wave, P2P, but applied to B2B Multi-rail required to cover wide range of countries/values/pairs: transferring money over Veem’s own bank-accounts third-party payment providers where Veem et al aren’t allowed to operate freely – eg China Blockchain – crypto for an instant cross (not taking any risk on the value of the crypto) Real-time on credit cards – Visa/Mastercard rails SWIFT – long tail, large value payments the benefit of having the multi-rails available for any given transaction for most Veem customers they don’t care which rail just that the payment gets done efficiently so multi-rail is hidden how to judge value in FX rates given the challenge of what the FX rate “is” a case study of having a bunch of bank/app bank cards in one’s pocket in Thailand and the opacity around rates the nature of the FX industry and its design Veem’s approach clients are most focused on simplicity, transparency, reliability and not getting ripped off future: expect more simplification (back to coffee example), businesses more time to focus on their business and less on tracking payments transparency – right now you know where your ordered pizza is but not your $100k transfer! Veem’s shoutout globally for partners, integrations et al how they are growing their business And much much more Share and enjoy!
42 minutes | 9 months ago
LFP160 – Entrepreneur Masterclass: What Attributes Do You Need To Create A Billion Dollar Company? w/Clay Wilkes CEO Galileo
The Tech press is full of unicorns – but these are almost always “on paper”. Those companies that someone has bought for over a billion – be it a trade sale or IPO – are far rarer. Clay Wilkes has created both starting with just an idea. Galileo Financial Technologies which he co-founded, powers 95% of US digital banks and 5 out of the top 5 of UK digital banks and was sold to SoFI. Galileo was formed in 2000 and succeeded in growing without and external funding until raising a $77 million Series A round in October 2019 (from Accel). In the 90s Clay floated his prior startup i-Link which was a pioneer in VOIP, In this episode Clay shares the entrepreneurial values that he has found most essential in creating not one but two tremendous businesses and taking them from conception to successful trade sale/float. We also focus on the fact that many of these attributes are practices or skills rather than something that one can be – it is something we can work on and keep refining and improving. Few people are very strong without going to the gym and lifting weights, or as Clay has done, few can run marathons without putting in lots of hard work and going through pain barriers. But this is no mere “no pain no gain” “just keep slogging away and be brilliant” simple blog post level conversation. Clay is a great antithesis to the oft-promoted US model as entrepreneur as somewhat psycho model which exists but is over-emphasised. Clay’s entrepreneurship is grounded in family life – as he says “what really matters”. As a special bonus for the show notes I will share two aspects that we don’t emphasise in the show. First Clay came well-prepared – now of course all guests do but I would say that his was in the top 10% of guests. Would you – or I – prepare for “yet another interview” if we had sold our company for a billion the month before? I’d imagine that 99.999% of folks in such circs would, as it were, stroll along with their hands in their pockets – after all you don’t get to build a company of that size without being a good talker. Another example is that Clay referred to reading my book on the SmallCo Board. Again how many entrepreneurs who had successful created two hugely valued companies would read another business book when they could write several themselves? In both these cases I am reminded of a book I have read about but not read – “Relentless from Good to Great to Unstoppable” by Tim Grover, trainer of the likes of Michael Jordan and Kobe Bryant. But the real lesson here is not about a conversation with a remarkable man but that he models what we can endeavour to become too. We too can always go the extra mile to do our next task even better than we were going to do it. We too can always keep the beginners mind and always believe there is much more to learn not matter how much we know already. Finally I am reminded of another rare chap I knew who was the american head of an authentic Chinese lineage (which is super-rare). I recall him telling me that his pupils think he is further ahead than they are because he trained super-hard in the past. This he said is true. But, he said, what they don’t realise is that every day he is leaving them further behind as he trains more and puts more into his training. What would your life be like – in any any aspect you choose, business is just one – if you committed to seeing how good you could be? And not just that but when you had achieved more than you ever thought you could you remain humble, open, don’t coast and always assimilating more? The deeper part of this podcast for me is what is behind the words – however the words themselves point to the attributes that we can all practice and improve upon. Topics discussed include: when Zooming across the world do you say good morning/afternoon depending upon your time zone or the person to whom you are speaking’s? Clay’s record of guest on the LFP with most children – he and his wife have ten the importance of family to Clay – always godo to hear in the tech sector where one gets the impression that many entrepreneurs are actually married to their computer what factors drove/inspired Clay to found Galileo having been retired for 6yrs after his prior float Clay’s career journey and family background relevance to his journey – aversion but later attractor? how do people become entrepreneurs? absorption vs learning “I’ve heard it said that great entrepreneurs come from fathers who are failed entrepreneurs” watching bad ideas and poor execution growing up – Clay’s father being a Professor the realpolitik of attributes – “nice words” versus “life” putting it into practice is the art are attributes something that come from inside or something that one learns to do Steve Jobs “You are not going to be aware until you look back and connect the dots” – it’s not until backwards vision that you gate to understand some of these aspects balancing attributes – sometimes work really hard but other time holidaying is required to keep you fresh – the wisdom to know when to apply an attribute or its opposite single-mindedness as an entrepreneur versus what is truly important? putting attributes to one side – being a better version of yourself staying true to who you are tenacity – “stay with it” – and that is hard (cf marathon running) Case Study of industry conferences over the years. Galileo went form being an early star to one year Clay feeling the market had passed them by to years later a top-tier Private Equity partner telling him they were one of two stand-outs amongst thousands. Easy to say but that is some journey to live through over years force of will “being a potter of the unmanifest, shaping it and bringing into reality” the divine in all of us that enables us to create, just as in Genesis, with “the word” – businesses are spoken into existence the value proposition and economic model need to be well-defined vision and being far-seeing – is is a natural talent or can it be developed – but essential for successful for entrepreneurs First Data – US main banking platform is 480 million lines of Cobol :-O sales hat – converting people to your vision sales as an example of skills one can practice and improve Case Study of VOIP from Clay’s prior Company. AT&T were huge and yet it was VOIP delivering minutes at one-hundredth of the cost that eventually undermined them stay with your vision surround yourself with strong partners honest knowledge of your own strengths and weaknesses in order to chose partners that are complementary passion focus – Steve Jobs idea of “all the things we needed to say no to in order to succeed with our vision” flexibility show notes bonus making the world a better place as motivation “Starting a company is hard enough, but starting a company with the sole intention of getting rich, or ‘making it big’ is a recipe for failure. The reason I got into this business was to have a positive impact on people’s lives based on how they manage their money.” finally how do you cope when you are in pain lying flat on your face covered in bruises which inevitably happens in life? “there were 20 or 30 or 40 times literally over the twenty years when we should have stopped – and that’s why tenacity was the first attribute I talked about – when it felt so hard it would have been better or easier just to stop” staying with it is key in those moments comparison with 20/22/24 miles in running a marathon – “it’s hard, really really hard in those moments” Galileo’s future plans the thesis between partnership/incorporation within Sofi – can the wider range of products be made available through APIs geographic expansion And much much more Share and enjoy!
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