LFP185 – Network-Based Finance And “Open Commercial Transactions” w/Gert Sylvest co-founder Tradeshift

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.

Topics discussed include: Continue reading

LFP184 – A Fintech Dominating Its Sector – Prime Real Estate Lending w/Uma Rajah CEO CapitalRise

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?

Topics discussed include: Continue reading

LFP183 – How Engaging and Partnering with and by Banks is Changing w/Simon Jones CCO ClearBank

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.

Topics discussed include: Continue reading

LFP182 – What It Takes To Succeed In Early-Stage Investment w/Yusuf Ozdalga Partner, QED Investors

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.

As we have heard before *all* VCs claim to add-value yet – surprise, surprise – surveys show that founders/CEOs say that for most VCs all the value arrived when the cheque was cashed. As we shall hear in this show QED has found it essential to actually add-value in order to get good returns from the trickiest of all investments – the early stage startup. Those interested in this topic might like to compare this with the prior episode LFP181: Angels and Angel Investing Masterclass w/Richard Hargreaves, 50 years of Professional Unlisted Investing.

Topics discussed include: Continue reading

LFP181 – Angels and Angel Investing Masterclass w/Richard Hargreaves, 50 years of Professional Unlisted Investing

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

LFP180 – Ever-More Sophisticated Fintech Propositions – Inventory Monetisation w/Alessandro Zamboni CEO Supply@Me

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.

Topics discussed include: Continue reading

LFP179 – Global Insuretech & The Underserved Small Business Insurance Market w/Jay Bregman CEO Thimble

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.

Topics discussed include: Continue reading

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: Continue reading

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: Continue reading

LFP176 – Sci-Fi Creeps Ever Nearer – Automated Detection of Emotion In Voice Audio w/Rana Gujral Behavioral Signals

Behavioral 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 language 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 Behavioral 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: Continue reading