All businesses employ people, generate salaries, products and services and sometimes even profits without which modern society could simply not exist, Thus all Fintechs “do Social Good”. However in addition some focus their profits and services on the most disadvantaged members of society. We look at this “social benefit” sector in this show along with income streaming which is relevant not just to the lowest earners per se but also to the gig economy.
Peter Briffett knows this equation from both sides having been a serial entrepreneur and now founder and CEO of Wagestream who “help eliminate the payday poverty cycle by giving employees the flexibility to stream their earned wages into their accounts whenever they need or want it”.
Wagestream are also a member of Finance For Good which is a collective of socially-minded companies in the finance industry.
Ten years ago Jeff and his co-founder came up with the idea for Equity Crowdfunding and seven years ago Seedrs became the UK’s (world’s?) first regulated Equity Crowdfunder. In this episode we revisit the origins of the concept, what it was thought to be then and how it has evolved with the person who can surely lay claim to be the father of UK equity crowdfunding.
As often everything takes time to evolve and build out. But ten years in much has been achieved – and not only much for Seedrs but importantly for the hundreds of companies who have raised vital capital on the platform. In the world of the now much forgotten “supply-side reforms” there is arguably nothing better that can be done for SmallCos than to have such an effective conduit to raising funds.
One thing that has taken time to evolve is for the rest of the world to catch-up with the UK’s lead. However as we shall hear there are promises that Equity Crowdfunding will finally become a Thing across Europe so plenty of exciting times ahead as well as behind.
Almost all investment has collapsed onto a simple idea of maximising your return. But what if you don’t want your investments to harm society and the world? What if you want to help the world and make a great return? What then? Into this gap steps ethical and impact investment.
Tom is CEO of Tickr which he co-founded to open up impact investing to the general public from as little as £5. As well as a career in this area he also did a masters at Oxford Business School on the topic so is well-placed to guide us thorough the maze.
Some of the first ethical investment funds were shariah-compliant Islamic funds. With these in broad terms ethical means not investing in alcohol and armaments and other such categories. At a more detailed level a religious authority rules on whether an individual company is or isn’t “ethical”.
Ethical investment is clearly A Good Thing but once it spread to more secular lands definition became problematic. Furthermore it turned out that between “all white” and “all black” investment lay a huge grey area.
More recently impact investment has appeared on the scene where the focus is not so much avoiding investing in “bad” companies but targeting “good” companies.
Once again though we have a problem that in the real world good and bad are not black and white. For example I might consider Brewdog to be a great company – ethical and impactful (as producing great beer responsibly seems to me both ethical and impactful). However for you this might be neither ethical nor impactful?
So if the principle is simple – ethical investment is clearly Good and impactful is clearly Good. But who defines? The challenge lies not in the concept but in the practical implementation.
As we heard in LFP069 Financial Advice costs a packet these days – for most folk it’s simply uneconomic. But FS is a complex topic for those who have spent a lifetime in it let alone those with no experience. We all have debts, assets, cashflow, pensions, and many tax complications swirling around in a landscape of ever-changing rules.
Can Fintech come to the rescue? Can an App help fill this gap?
Max Rofagha is the founder and CEO of Finimize a Fintech established to enable Financial Empowerment through content and community. Otherwise known as to help you manage your dough through educational means and the ability to crowdsource ideas/feedback/ratings.
As their website says:
““We live in an age where we can get all the information we want within a tap. Yet, when it comes to our finances, we remain stuck in an opaque world that few really understand. Finimize is a new beginning. We are building a suite of products that sets information free and puts valuable tools in the hands of the people. In a language we all understand.”
What is it actually like being an Entrepreneur? Despite being experienced and having an MBA Ruzbeh Bacha, CEO of personalised news aggregator/filter CityFalcon has found that the reality is very different from expectations. What is it really like? How hard can it be?
Media narratives are of some startups achieving amazing success with amazing amounts of work. Well the amazing amounts of work come to them all but the super-duper successes are perhaps less than 1%. And – like restaurants – most startups fail but one never gets to hear of those.
In between the great triumphs and the failures is a large limbo land. The reality is that for the majority of Fintechs that started say five years ago and are still going they have scored some successes (otherwise they wouldn’t be here). But, rather like swimming in a gloopy soup, there is much friction along the way be it the crazy times it takes to raise funds (every year being the rough rule of thumb) or crazily long purchase processes and buying decisions for BigCos or even with App Banks that boast millions of users (and so get into tech print as being “worth” billions the difficulty of actually doing the making money thing.
Creativity springs eternal. Here is yet another new topic, one that no one could have imagined even a couple of decades ago. Litigation crowdfunding gives litigants a new source of funding and investors a totally new investable asset with non-correlated returns. Cormac Leech CEO and co-founder of Axiafunder walks us through this complex landscape.
Litigation Crowdfunding investment is definitely not for the unsophisticated. Barristers rarely assess even the best of cases as having more than ~75% chance of success such are the vagaries of the legal process. Vice versa though, for reasons we shall come onto, investment returns are super-normal and a portfolio of well-managed litigation crowdfunding loans has the possibility of very high returns indeed.
Cormac was last on the show some three years ago, appropriately talking about innovating in P2P. Well here he is having done that big-time.
Today the super-important topic of “What VCs don’t know about Entrepreneurs; and what Entrepreneurs don’t know about VCs”. Steve Findlay is a great guest to have to discuss this as he has been a long-time VC and now founder/CEO (Bond Mason and AAA Reserve). How can this culture divide, objective divide be best managed? How can the tribes get along better? For sure having a successful board is definitely a win-win proposition.
There can be considerable “challenges” in Fintechs between these two tribes – investors and founders/management. This challenge of “two tribes” is centuries old. In my interviews with now over 60 folk on the management of the unlisted board the most vitriol by far has come from founders/CEOs about VCs. Equally as you might imagine VCs biggest pain can be the management of a firm.
Steve spent 12 years investing and advising in technology VC and mid-market private equity, including co-founding Fidelity’s $500M technology buyout fund. He had a coding sabbatical in 2012-13, is an angel investor, along with BondMason who enable clients to invest in loans secured against UK property he has cofounded a stablecoin startup.
So as well as our topic du jour we also have a dive into #StableCoin – a first on the show.
App Banks are all the rage and you can go round the world on their cards. However move to another place and you soon find you need a bank account. Norris Koppel founder of Monese is on a mission to build a Global App Bank that will enable you to have local bank accounts at the touch of the button. How is he doing this? Probably easier having recently raised a $60m round 🙂 Listen and learn…
It is important to understand what has been said on the show in the past about the nature of existing “Global Banks” (q.v. Railsbank, GoCardless).
Global banks are just brands, just umbrella companies sitting over a whole bunch of national banks all of which have different procedures around account sign-up, KYC, AML etc procedures. Despite the marketing BS there are no global banks just businesses that own and co-ordinate a plethora of local banks. This will be very familiar to any of you who have changed country and need a new bank account.
Norris moved back in the day from Estonia to what is now the Disunited Kingdom and had just this problem and one day set about it solving it.
How are the changing tides and winds in newFS vs oldFS lending? How are the incumbents and newbies doing? How is the balance of institutional funding of P2P and retail going? What’s the best way to succeed? When does accepting institutional funds turn into just being a front-end for oldFS?
Landbay only do buy-to-let mortgages and since their first loan four years ago have done nearly one thousand loans with a total lent of over £200m and an astonishing 0% loss rate which is a tribute to their strict credit criteria (average LTV 70%) as well as operational efficiency.
They recently won the 2018 Best Buy-To-Let lender of the Year award ahead of Barclays, Lloyds and – well – all others 😀
They were also placed #20 in Deloitte’s Fast Tech 50
We all know that investing in the top P2P has been a good plan. But do corporate bonds offer better risk-adjusted value? Historically you had to have megabucks to buy bonds, or invest in a unit trust. However now WiseAlpha are Finteching the Corporate Bond Market and making direct investing available from as little as £100. Yields from high quality corporates can even exceed unsecured consumer debt on P2P platforms and the industry is far older and more solid.
We are joined today by CEO Rezaah Ahmad to discuss corporate bonds in the Fintech Age and WiseAlpha’s platform.
The corporate bond market is literally huge – $11.7trn and in a sense an amazing omission for Fintech so far in its mission to digitise and revolutionise the world of FS.