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.
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.
Cuvva have some hundred employees, 400,000 UK clients and 5% of the short-term UK car insurance market which is a phenomenal achievement for any Fintech in any sector. In this episode founder Freddy Macnamara joins us to discuss how price comparison websites have changed the insurance industry, the regulatory review of pricing in re and how to go beyond such websites to, schematically, re-invent the model of a broker who is looking after you for the 21stC insurance markets.
At a higher level this is another delayering play. In the LFP157 we discussed how direct bank to bank payments for merchants would massively delayer the conventional credit card payment chain which has lots of mouths to feed. In the case of insuretech it is simplest to quote from Cuvva’s about page:
“But we soon realised insurance isn’t just lacking. It’s completely broken. It’s built on layers of middlemen and outdated systems.”
One reason that as the Fintech revolution proceeds Fintechs can do more ambitious things is that there an increasing number of back-end service providers that they can plug into. In this episode Joanne Dewar, CEO of back-end payments services provider GPS – who work with 40 issuing banks globally, and operate programmes with 90+ APIs for over 100 clients (including Revolut, Starling Bank and Bo) in 60 countries in 150 currencies – joins us to share her experience of what drives success in this sector for both the B2C front-end companies and the B2B back-end providers. GPS is furthermore a rare example of a profitable Fintech – which are always good to talk to.
Back-end providers have been with us for a long time – Currency Cloud, who executed most of Transferwise’s FX transactions for quite some time were back on the show years ago.
Time moves on though and by now we have plenty of data where partnering/outsourcing worked well and plenty where it did not.
What are the key factors of success? How is it done well and why is it done badly?
As we have repeatedly heard profitability is a major challenge in Fintech. In this episode Tim Nicolle CEO of Trade Finance Fintech Primadollar describes his journey to working out the necessary building blocks to profitability. As someone who has had his own businesses for some 30yrs he has had more experience than most with these challenges.
Despite only being founded in 2015 Primadollar already has an astonishing 12 offices around the world so is well placed to also talk to the globalising of Fintech in this Brexiting year (albeit temporarily (?!) on hold due to a well-know virus of course).
Staff numbers are around 50, one-third in the UK and around two-thirds abroad.
Today the LFP has Dan Kiernan as guest host and instead I am in the guest seat to discuss my long in the making recently released book on the Unlisted Board The Realpolitik Of The Unlisted Company Board – Making Your Board An Engine Of Growth. This is a behind the scenes account based on interviews with some 80 SmallCo Boarders – mostly founders but including Chairmen, NEDs, VCs, Angels and other SmallCo Boarding surround.
Done well the Board can turbocharge the SmallCo’s success – done badly it can end up in company failure or the sacking of the founder who created the company in the first place.
Company Boards are a mysterious and remote thing for most people – only a tiny percentage of any company serves on the topmost, legal Board. If you are in MegaCo they will generally be so remote as to be irrelevant to your day job. Even in a SmallCo you may know little of what they do other than matters such as signing off on fund raisings, certain large expenditures et al. You will have read about the obsession of recent decades Corporate Governance and think that Boards are just paper pushing.
However no matter how inexperienced and naive all founders sooner or later find out that it is the Board that governs the Company not the founder. For some time the founder might have voting control on the Board but as bigger and bigger raises come and go the founders control slips away which creates a whole new dynamic.
In this show we discuss the background leading to the book, the motivation and some key takeaways as well as the thing that serial entrepreneurs know about the Board that the first time founder does not. Topics discussed on the show include: Continue reading →
Do you known that William Russell’s – the 692nd Lord Mayor of London – first trip was to the US to promote Fintech and that he is perhaps the first Lord Mayor of London to have visited all the regions and is well up-to-speed on regional Fintech? No me neither before we spoke. However his mayoral theme is “Global UK – Trade, Innovation and Culture” which is super-important in this Brexited year.
What actually is The City – a phrase we all use? What is the Lord Mayor and what is his role?
How does the geographic district relate to FS as a whole – much of which is in Canary Wharf and spread around the UK?
How does the CIty’s soft power work and what have some Fintech’s already found out about the influence it can bring? What is US investors’ attitude to UK Fintech at present?
Also a small prize for spotting a splendid ancient Clock chiming away in the background of this recording in Mansion House 🙂
In this show we review a decade in Fintech. Although the earliest Fintechs were formed around 2004/5 (WorldFirst, Zopa) many big names formed around 2010 (Funding Circle, Ratesetter, MarketInvoice). The LFP formed started covering the scene in mid-2014, the year of the first London Fintech week and the year that the Fintech word first hit the broadsheets. Using the shownotes at the time as a diary I trace the evolution of the promises, the hopes, the disappointments, the old innovations and the new innovations. Where did it all go?
No long show notes this week – it is a podcast podcast and in listening you can draw your own conclusions – indeed that’s the point of using dozens of real world examples as seen at the time not as seen through the dark glass of memory.
Congratulations to everyone involved in the London Fintech scene and wider UK Fintech scene and to all listeners. Want to know what the next decade might hold? Check out the previous decade and join the dots…!
Michael conducts the most in-depth analysis of Companies House data on UK Fintechs that I am aware of. That earlier this year he partnered with KPMG and Google on his Fintech Funding and Financing study says a lot. So what can we learn from a decades’s data on UK Fintechs?
Well first that only five are making a profit!
Michael recently updated his study which includes nearly one hundred Fintechs.
In this episode we focus on trends in profitability – which are not all as you might expect – although the report covers many more parameters especially around fund-raisings.
After a decade for the longest running Fintechs we should be able to start to draw conclusions. What are they?
Today Shameer Sachdev founder of Growth Gorilla and I have a wide-ranging conversation about marketing. I’ve done it for over 30yrs and Shameer runs a growth marketing agency who help innovative start-ups, scale-ups & established businesses catalyse growth.. So between us we cover most angles, oldSkool and newSkool 🙂
You may have noticed that “build it and they will come” ain’t how the world works in the 21stC unless you a building a fountain of liquid gold but you’re gonna’ have a hard time making a profit with such a business even if marketing takes care of itself.
However, like everything in life we can all improve in all aspects and so this kick-around conversation is less to give you an A-Z encyclopedia on How To Market than to discuss various ideas and angles and for you to pick out whatever resonates most with you that you might work on in your business tomorrow.