Every startup in the tech world is after a “realisation” – or put in other terms a point in time at which someone puts a real as opposed to notional valuation on your firm – when you sell out in whole via a Trade Sale or in part via an IPO. But how do you IPO? What is the process of IPO-ing actually like? How much does it cost? How long does it take?
Nic Brisbourne, CEO of early-stage VCs Forward Partners, is well placed to explain these topics and many more to us as he is a long-term VC and VCs’ funds rely of course on getting money from successful companies not just putting money in.
However this is merely his indirect experience. We have the great benefit here of not just one who has seen the process countless times as an investor but someone who has initiated and now gone through the process with himself and his firm.
is it possible to do Customer Service well whilst not going bankrupt employing thousands of PhDs in Customer Service at megabucks? And back to an old favourite of FS vs Tech why do we even need it if the tech quotes works unquotes? In retail FS or even FS as a whole Customer/Client Service is essential. However (a) we all have horror stories of dire experience whether its Ye Olde “we are experiencing abnormal call volumes” while you slowly age being held in a queue, on (b) online like my recent attempt to check out my ISAs only to keep getting error messages and when I called the phone number the automated system cut me off and (c) in Fintech where, as I moaned about some time ago, due to having done what I was told to do in their quotes help unquotes chat I was locked out of my Revolut card for weeks with no way back.
Payhawk combines credit cards, payments, expenses and cash into one integrated experience. Which must be A Thing as they recently raised $20m in their Series A. And they must be keen on this experience thing as when I asked Hristo to come up with a fresh topic that hasn’t been flogged to death and is often done badly he suggested Customer Service as his first thought and as we shall hear Payhawk’s business design makes it central not peripheral.
Currency Cloud are one of London’s oldest Fintechs being founded over a decade ago. As they recently sold themselves for £700m to Visa – in cash – they clearly know something about the entire startup-realisation process. Big time. One of the aspects whose importance grows along the journey which co-founder Richard shares with us is that of Corporate Culture, a topic we have touched on before but one which is no more ever fully-sorted than your relationships are. It might be tough enough to keep one relationship going well for a decade but imagine the countless relationships between everyone in your firm and you get some idea of the scope of the challenge.
When you and a chum start your Fintech you don’t need a culture – your culture is whatever and however you guys do things. For some time the vibe remains collaborative as you are quotes “all in the same room” and like any bunch of folk you develop a modus vivendi as well as a modus operendi.
Indeed it is these characteristics that give the new starter great advantages of speed and flexibility over incumbents.
One of the key challenges is – and this applies to us as people as well as at the scale of businesses – growing up without growing old. You want to mature whilst retaining the fun, experimental, playful, flexible aspects of childhood.
Naturally this is easier said than done both for people and for companies. For companies the increasing specialisation and physical scale leads to greater speciation and it is all too easy for oganogramitis to creep in. Naturally the challenges are only magnified when your colleagues become not just at worst a floor away but thousands of miles away.
In this episode we have an awesome deep-dive by Gert into what Network-based Finance is – a super-cool topic even Google doesn’t know about (within an hour of this LFP release it became the only example :-O). We cover how, in a sense, it inverts the whole “Open Banking” paradigm putting the opening of transactions first (which after all represent real business) with banking rails (open or not) below. And as Gert explains there are many reasons that this works smoother/better.more naturally in this space yielding superior information and hence insight and ability to offer more competitive products. Nor is it just a question of strategic sketches on the white board – there is a lot of devil in the detail about how one makes real digitsation work (cf just using the internet).
Gert and his two co-founders in Tradeshift have done an awesome job. Just check out these soundbites:
Tradeshift’s last round of financing in 2018 was led by Goldman Sachs
raised a cool quarter of a billion dollars
they have an amazing 1.5 million companies connected on their platform (currently doing supply-chain finance on top of being a transaction network)
they have done an astonishing over 3/4 of a trillion dollars in transaction value
This is an episode that even those who have spent a decade or more in Fintech can learn from.
I can think of very few UK Fintechs that dominate their sector as successfully as CapitalRise who have something of a monopoly of being the only independent prime real estate property finance provider. Not only that but to date they have an unbeatable 0% loss-rate on loans that have returned ~9%pa to investors. The Credit markets really reward detailed expertise – an obvious conclusion perhaps, and yet so many new Fintechs launch into a sector with relatively superficial expertise and just a desire to “innovate”.
In this episode we dive not just into the secretes of CapitalRise’s success but also generic lessons for Fintech and FS success as a whole.
CEO Uma Rajah shares what it was in her career that led to being able to deliver these results, including founding a Fintech which didn’t.
All of these topics perhaps point to the continuing maturation of the sector. FS is super-specialised and so is it much of a surprise that sectoral-specialists and older wiser folks who have scraped elbows along the way are dominating most UK Fintech sectors right now?
How one engages with a Bank and how Banks engage have always been essential aspects of FS which is a complex ecosystem of specialists. This is – like much – all-changing right now. ClearBank have recently published a report entitled “How well are Fintechs served by banks?” which provides some depth to this topic.
Simon Jones, Chief Commercial Officer at ClearBank, has had a long and rich career in the world of wholesale/transaction Banking which provides an excellent vantage point to dive into this topic of how banks co-operate and compete and how the co-operation mechanisms, approaches and algorithms are being changed by the ever-evolving world of digital.
What kind of value-add most helps founders and their companies? Or if you prefer what sun, what rain and what compost makes founders trees fruit better and faster? It’s a vital topic for the economy. QED Investors is a leading VC firm focused on investing in early stage – hence their knowledge of growing seedlings – in the U.S., U.K. and Latin America. They have made around 140 investments including an astonishing hit-rate of some 19 eventual unicorns. Notable investments include Credit Karma, ClearScore and SoFi.
Yusuf leads QED’s investments in the UK & Europe with a focus on payments, lending, financial infrastructure and Proptech.
Richard has an astonishing 50yrs experience in investing in young companies and helping to grow them, starting with 3i in the 1970s when they were next to the only institutional provider of development capital through to being a former chair of the BVCA and this year having released a thoroughly updated version of his book on Angeling – “Business Angel Investing – everything you need to know about investing in unquoted companies”. Listen to the end for a 25% off promo code.
Angels – private individuals – are the most important source of equity capital for fund raisings of £1-2m. New business creation would be crippled without them. In 2015 alone in the UK there were 15,000 Angel-backed companies with a combined turnover of £9bn adding £4.5bn to GDP and 70,000 jobs
Virtually every megatech has started w/Angel funding. So whether you are looking to invest in SmallCos yourself and do it more professionally for better results (Richard’s own returns over the past 15yrs have been an astonishing 5x pre-tax and 10x post-tax) or you are a Founder wishing to know more about Angels and how to attract the right ones listen up as we have a rare opportunity to listen to the key lessons from a lifetime’s learning.
One must relate factoid from Richard’s book is that a monkey picking investments at random would have outperformed TV’s Dragon’s Den which like all TV gives an increasingly false and negative view of the world. As I have mentioned before in my extensive conversations with one hundred Boarders the Capital-A Angel as I call them is more than worth their weight in Gold – praise for such is almost without limit. Equally at the opposite end there is what I call the small-a angel who having given you a few quid then just clutters up the Boardroom and proves hard to shift.
As this show is more about wisdom than information it really is best listened to – notes can only sketch the topics of conversation which include: Continue reading →
Fintech is increasingly getting well beyond providing the simplest of transactions and deep into the complex end of FS. Supply@Me Capital are listed on the UK Stock Exchange and recently acquired Singaporean firm Tradeflow Capital. They provide inventory financing by securitising manufacturers’ and trading firms’ inventory in a very interesting fashion leading to a new investable asset class and better funding for the businesses.
The LFP has covered various forms of Trade Finance in the past from financing suppliers to financing purchasers – in effect financing goods in transit – and all sorts of invoice discounting. However we have never before had a Fintech who promises to finance unsold goods in the warehouse.
In this episode CEO Alessandro Zamboni guides us through the evolving structures that Supply@Me provides via it’s platform – the motivation of which is once again to expand the range of capital providers to business by making previously uninvestable asset classes investable thereby providing a good deal for both parties and a turn for the platform in the middle.
Two topics this week… What are the major trends in Insurtech in the US, UK, Europe and China? Secondly Small Business insurance, general liability professional liability insurance and so forth can be hard to acquire at commercially sensible terms and thus many contractors or home repair folk end up giving up on potential work as a result.
Jay is a great guy to cover both of these topics – not only is he a successful serial entrepreneur having previously created Hailo (sold to Daimler) and eCourier (sold to the Royal Mail) but Thimble has already done $175bn of coverage (which sounds like a lot to me). They were recently named as Fast Company’s 2021 #1 Most Innovative “Small and Mighty” Company. Which is impressive.
Insurance is being sliced and diced into ever smaller pieces something which can only help the little guy and small businesses who have been so hard hit by governmental policies which for a year titled the competitive table massively in favour of BigCos. Thus we have yet another example that the apparently dull world of FS and insurance is actually the oil in an engine without which the engine cannot function. Or put another way fixing this problem is a great way to increase economic growth and improve the lives of both suppliers and consumers.