It’s a good time to be raising money in Fintech. All the major VC Funds are making Fintech bets, there is good activity on Angel List, there are Fintech specific funds and there are Fintech specific networking groups.
Many Accelerators are domain agnostic. I have already reviewed the Fintech output from Y Combinator, which is generally recogised as the Accelerator leader (but only an option for founders who are willing to live in Silicon Valley).
Today’s post focusses on just the 8 Fintech specific Accelerators that I found (please tell me if I have missed any):
- Barclays (powered by Techstars). Location = London. Single Bank Sponsor. I have reviewed one batch and am looking forward to the next batch where applications are now being considered.
- Fintech Innovation Lab (powered by Accenture). Locations = London, New York, Hong Kong. Multiple Bank Sponsors. I reviewed the current batch in Hong Kong as part of my Fintech City Tour.
- Level 39. Location = London. Multiple Sponsors. They do not take equity and are in the financial trading hub of Canary Wharf. They are mostly Fintech but also do Smart City Internet of Things type ventures.
- Citi Ventures (Powered by Plug and Play Tech Center). Locations = announced plans for USA, Germany, Singapore, Brazil and Spain. Single Bank Sponsor. The big bragging right for Plug and Play is Lending Club.
- Innotribe StartupChallenge. A slightly different model, not a premises based Accelerator, more of a global road show. Sponsored by SWIFT (so indirectly sponsored by all major banks). I reviewed their early batch here.
- SeedCamp Fintech. I should probably put them in the domain agnostic camp, but as they have a specific Fintech category with some good alumni I added them.
- Anthemis. Anthemis is not really an accelerator. It is unclear which category to put Anthemis in. However, leaving them out would crazy as they were one of the pioneers of Emergent Fintech and have a great track record with success stories like Simple, Betterment and The Currency Cloud.
Six themes arise:
1. The location is a magnet for ventures in the region or globally. For example, the Accenture Accelerator in Hong Kong has startups from all across the Asia region but also has one from Canada (presumably because they target Asian customers). Barclays Accelerator is only in London but draws startups globally and actively seeks them from America.
2. Accelerators powered by a single bank sponsor make it clear that the bank has no proprietary rights and that startups are encouraged to reach out to all banks that they want to work with as customers and/or partners.
3. Like a College, the peer pressure matters as much if not more than the quality of the professors (or “mentors” in this case). It is the pressure cooker of putting up your metrics every day in front of equally smart and driven founders that drives results – plus the fixed deadline (usually around 12 weeks) by which you have to be ready (classic Agile time boxing).
4. They stress that this is not just for early/seed stage but also works for growth stage after Series A. I wonder about this in practice as a growth stage venture should already have its metrics and growth hacking nailed.
5. Ventures can be in more than one Accelerator. For example, I spotted Advanced Merchant Payments in both Level 39 and Accenture Hong Kong.
6. Some differentiation is happening. For example, I spotted more Capital Markets plays in Level 39, which makes sense given their location. Barclays tends towards Consumer ventures, which makes sense given the Techstars focus. I suspect that this trend will accentuate as a Capital Markets venture will tend to seek out Level 39 and a Consumer venture will tend to seek out Barclays/Techstars, for example.
The big question is whether all this Accelerator activity accentuates the Series A Crunch problem (too big an early stage supply through a narrow gate of a few Funds). I see this as less of a problem than some for three reasons:
- Angels are getting more active in some places thanks to tax incentives (e.g. SEIS in UK) and thanks to Angel List and Fintech specific forums.
- Crowdfunding platforms are getting more mature.
- Willingness of strategic acquirers to buy early. These could be the big Fintech winners (Unicorns) that have raised lots of VC money or done an IPO, or big Traditional Fintech players getting into Emergent Fintech or Banks wanting to get in early on disruptive innovation. These won’t be big wins, but if investors get their money back on these (and win big on others) they are happy and founders get a good job and a ton of experience that you cannot get from an MBA.