Transparency Missing From the Suppliers of Capital to Fintechs


 The #ReversePitch event organized by SwissFintech at Technopark, was a wonderful fusion across the ecosystem and it captured much of the emerging interactivity.

For those that didn’t hear about it, it was a mix of the typical pitching from Fintechs (5 homegrown Swiss companies – Biowatch, NetGuardians, Fractal-Labs, CarbonDelta, VirtualBroker) and an unusual pitching from those investing, the suppliers of Capital, funding innovation. In addition, it was the Investor side that pitched first; and everybody watched their public speaking anxiety.

A room in Technopark with a fusion of buyers and sellers of innovation, in a market that is active, growing, and changing.

Thank you SwissFintech for highlighting the changing nature of capital raising in Fintech. Offline and online match-making is everywhere, with Corporate VCs and Financial VCs (broad ones or Fintech specific), and then the Accelerators, and the Angel networks (traditional ones and digitized, syndicate-led). These are all contributing to the growth of capital into Fintech innovation; while also disrupting the business models that have been traditionally employed (especially by VCs).

I walked away thinking that no doubt innovation continues, with more attempts to solve Fin problems, more entrepreneurs taking the dive, more potential for better Fin services for customers.

But watching the two sides that are both eagerly looking for the perfect match, it confirmed the conventional wisdom that this remains a Buyer’s market. Those that have the Capital, are the ones setting the rules in the flirting game. This segment of capital markets, isn’t nowhere close to a natural process, like bees finding pollen in flowers (a frictionless market that Richard Olsen referred to during his keynote).

#ReversePitch commences

Nicolas Brand from Lakestar, won the majority of votes from the audience for the best Investor pitch. His message was around the way “sellers” (the Fintechs) should approach the suppliers of capital. He suggested avoiding monologues and recommended coming to have a conversation. He repeatedly alluded to a metaphor of bringing to the innovation proposition the same attitude as “when being in love”.

Radboud Vlaar from Orange Growth Capital, emphasized their selection process which weighs heavily towards ventures that aren’t about incremental change but that have large scale effect.

In contrast to the Fintech pitching, which was 100% Swiss; the capital suppliers, the reverse-pitchers, were global. Based in Switzerland, France, Holland, or the US but with a global presence in most cases.

AXA Ventures is a Financial VC focused on Insurtech, functioning separately from the insurance company. No more than 10% of deal flow comes from AXA.  Florian Graillot, a Twitter influencer, claimed that Insurtech can soon become a standalone vertical; he even went as far as, maybe Fintech becoming a sub-vertical of Insurtech.

The two Swiss reverse-pitchers, Swisscom and SICTIC, are the newcomers to the Fintech space. Both with experience in broader tech innovation and with a recent dedicated focus in Fintech. Andreas Page heading the Digital business unit at Swisscom, explained the co-creation approach for Fintech between Fintech enterpreneurs and Swisscom Fin customers. Swisscom has invested a lot in the Fintech sector. To hear more about their multifaceted involvement, listen to the Daily Fintech Pirates with Ties interview with Andreas Page.

Ralph Mogicato from SICTIC, described their angel network offering and experience in the other sectors, along with their decision to dedicate a special focus to Fintech. Their first dedicated Fintech event is coming up soon on Nov. 14th, see details here.

My heart goes to the sellers of innovation – the Fintechs

Sellers (Fintechs) are trapped in a buyer’s market. Who will then push the buyers to show more metrics? Which are the metrics that suppliers of capital should be showing up on the screens in ReversePitch events?

VCs have to come up with ways to quantify their value-add through their strategic relationships. None of them do. They anecdotally refer to isolated unicorn type of cases. Graphic databases could be one technology, to help them showcase the impact of their relationship value-add.

Angel networks need to find ways to standardize their performance. They are currently operating much like asset managers that manage multiple discretionary accounts that are customized based on each investor’s profile. A performance benchmark is needed. The quantitative algorithms exist and a cost-effective technology solution.

Richard Olsen, founder of Lykke and keynote speaker, jump started the Meetup with his vision of a global marketplace that will be feasible and necessary, once all assets are digitized. In such a world, fundraising will be:

  • Global – you wont have to move to the Londons or Palo Altos of the world.
  • Each stockholder will be an ambassador of your innovation proposition – as the roles of Customer and Capital suppliers, are fused.
  • The process – fundraising and business progress – will be monitored real time. As if you are watching how the fuel (capital) is consumed by the vehicle (the business) towards the business goal (arriving to the destination).

The chasm between current practices in the “Capital seeks innovation to invest” match-making business and the global marketplace that Richard Olsen is pushing for is huge. In that world, there will be no gatekeepers and there will be no costs for transactions. The value-add (for which profits will be made) will be in the investment strategy.

Thanks again to the Swiss Finance + Technology Association, for organizing the gathering. There are many conversations that were started at this Meetup (more than a dozen around understanding Lykke only). We invite you to continue publicly these conversations on the Fintech Genome, so that the community can benefit.

We have opened a first topic around capital funding innovation “Which Fintechs have a model that assumes that the power really lies with the entrepreneur?”

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network.  Efi Pylarinou is a Digital Wealth Management thought leader.

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