MatteoRizzi_Gladiator

Gladiators

You know by now I like TV shows, especially to survive long flights like this one when I am not blogging or working or sleeping.

We are gladiators with a suit” is how each member of the team of Olivia Pope, the hero of Scandal, a US made TV show, define himself. These guys are often doing the groundwork.
They are relentless, they get their hands dirty, they are not afraid to break the rules and they trust each other, often when nobody else believe in their mission (these guys are often called to solve cases no one would take and their leader, beside sleeping and beeing madly in love with the President of the United States, is a true genius in dealing with these apparently unsolvable problems).

Allow me to make a jump back in 2008.
As Gottfried (SWIFT CEO) said in his opening speech at Innotribe at Sibos this year :

when Innotribe started SWIFT Management had no idea what this ‘thing’ was all about.

These are textual words, and despite – of course – being a bit emphasized, they are actually accurate.
FinTech was not even a commonly used word, back then.
Innovation merely existed as a vague concept, no fintech accelerators, no challenges, no Labs…
Nothing.

This is the first Innotribe stand at Sibos in 2009, in Hong Kong, with pictures from the very first Fintech Startups gathering (the Challenge came one year later) – please notice Lazaro Campos, you will see later in this post as well.

PS : notice Kosta and Peter with a suit and an unusual version of Mela 🙂

 

This is the Innotribe Stand in 2015 in Singapore just beside the SWIFT stand and actually since the very first session using the SWIFT stand as the second scene because the Innotribe stand was too small.

What you see inside is the most beautiful interactive all-round screen I have ever seen, in what I think was the most beautiful place of every Sibos I have ever attended.
We were gladiators.

Now something else…
It is actually the first time I check this. I didn’t know I was in the picture as well.
Look…

TransferWise Innotribe 2011

This is the link of Tranferwise pitch at Sibos 2011 :
https://www.youtube.com/watch?v=w5eQZGvRZ8Y

Now everyone talks about Transferwise as the greatest example of Fintech Unicorn.
We were gladiators.

This is the article that announces the official opening od Level39, roughly two and a half years ago : it mentions Innotribe as one of their first events.

Screen Shot 2015-11-03 at 05.37.11
Now, you would ask, why this rather nostalgic, maybe Innotribe too focused, kind of celebrative and self-celebrative type of post ?
Without making another useless list, I wanted to pay a tribute to the pioneers.
Most of them still around, who believed in this shift from the very beginning, when FinTech had to be explained (still has to, in some context, admittedly), when thinking of a startup working with a bank was in the best case a secret proof of concept in some remote place in the basement, and only ONE bank had a truly structured approach for Innovation and investment : CITI. But just starting.

Screen Shot 2015-11-03 at 05.50.29

I had a recent, long overdue, super refreshing catch-up conversation with a true friend, a gladiator as well and we were both observing some of the disappointing consequences of a booming trend : shallowness, irrelevance, lack of content, greed, luckily confined and absolutely not defining the current system, but for someone who has seen the whole story is – lets say – easier to spot and easier to get bothered by.

So this is a gladiator’s celebration.
The beauty of it is that the ones who were there to share these moments and many others I had no time to report here, will read this and smile.
The good news is that the last two hours of this flight literally went away without me noticing anything.

Let me finish with one of my favourite pictures, recently : Lazaro and I at our FinTechStage event, in Barcelona, with a very symbolic black t-shirt convergence.

11427854_1153366148013066_1725153134044542641_o

If you have met Lazaro already, you know why he has all the rights to be in this post.

Stay Tuned

Matteo

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matteo-rizzi-omidyar-network

Banking the bottom billions 

 

I am writing from an Uber cab heading to Sentosa beach, in Singapore, ready to begin my 15th straight Sibos (wow)

As some of you might have noticed, I became an advisor for the Omidyar Network, an organization started by Ebay founder Pierre Omidyar, and I must say I impatiently look forward to meet him when the opportunity will come.

Financial Inclusion is not only about rural countries and poor people. In the UK there are 2 millions people without a bank account, and in France there are over 6 M people under banked. This mission is much larger than it looks.

Interestingly enough, as much as very few financial institutions had an Head of Innovation (or even less than that) in 2008, when we founded Innotribe, in a similar way today banks are just starting to consider financial inclusion a priority.

But it’s coming.

Not having access to fair financial services, actually, make someone pay way more than the well served by this industry, and this is an unfair setting per se, already. Think about the commission to send cash abroad, to give an example, or – as in certain countries – to pay someone to deliver cash to someone else, or the endless lines to pay cash an utility bill, or the impossibility to buy online (therefore buy more expensive offline because of little alternative choice).

On the top of it, there is a direct correlation between GDP growth and financial inclusion, which is the reason this is one of the best battles worth fighting.

Omidyar Network (ON), I learnt already from the initial hours of conversations with an exceptionally talented team, has an approach to investments and innovation that I can only admire and second: backing the pioneers.

Not many people are aware of it, but ON backed Prosper, today valued 1.6 Billions, sharing the very early journey in alternative lending, through the initial challenged and turmoil, because they saw the potential.

Investing in a technology, an idea, a new business that is itself in an early stage, and actually become the catalyst for new incumbents to play in the same space is one of the success KPis of ON.

“Changing the world” (or at least one aspect of it) is exactly that: drive the market change. A typical VC would probably back a successful P2P lending today, because the industry has embraced the concept, there is no question about the market and even the metrics are standardised (like the default rate, interest rate and so on).

Since I started writing this post, 3 days of Sibos have past, and I am now on my way back to Europe. I named Omidyar Network in few conversations in Singapore, and it s amazing to realise that an organization that has invested close to a billion dollars in this space it’s familiar only to few (granted, most of my F&F know about ON, already).

In two weeks from now will have the first series of meetings at ON in my new role, and it’s my intention to give as much visibility as possible to the ON initiatives … Bridging it with the FinTech network and develop new collaborations with other VCs and Eco-systems seems one of the right things to do.

Will spend more time in another post about the strategy and especially this concept of “market pivotal” investments …now let me rest after Sibos

Stay tuned

Matteo

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Skills

Fintech IQ or the unbundling of FinTech skills

The abundance of FinTech sources makes very complicated to separate noise from substance.

The number of ‘experts‘ in this space is as puzzling as the proliferation of “Top XXX Fintech” where XXX equals Influencers, Experts, People to Watch and the criteria to put together these “who’s who” are to say the least subjective. (the only “objective” one are based on social media influence, but this again is fuzzy, because it does not capture the “quality” of the network – hear me, CityAM).

What is required (or suitable) to be meaningful in this super hyped space ? (my absolutely challengeable opinion of course) :

1- deep understanding of how financial services actually work. The ACTUAL financial services, which are given 98% by banks or financial institutions (yes, even the alternative lending is actually a fraction of the traditional one). As trivial at it may sounds, a decade in a bank is not enough to claim this. Not even two. Simply because the multiple businesses of financial institutions have reached a complexity that very few people can claim to have faced.

2- be a tech savvy, enough to evaluate the replicability of the technology you are facing at given time. To be more clear and to give the simplest example, in the era of Internet, it’s all about scale. Countless startups have failed because the architecture of their great idea did not scale fast enough or was not robust enough even in the AWS (if you dont know what that is you are not passing point 2, btw) era. Do not forget that integration with existing systems is the biggest challenge a startup willing to sell to banks has to face. You can outsource these assessments, of course, it s what we called an expensive due diligence, but here again – you need to know who you work with and here is number….

3-  have a solid, multi-dimensional (tech, business development, sales, financial structuring, security, entrepreneurs, investors, bankers) network that you can pull when you need at the fastest possible speed. This is a VERY delicate point, as some people confuse the number of LinkedIn connections with the opportunity to reach out to as many of these guys as possible at any given time. I have extensively spoke about being a Connector in another post, and this is not the same, although the WAY your network  will help you is certainly influenced by the mindset with which you have developed it

4- (still not optional) figure out where the capital is and how to reach it and have some experience in how to deploy it. It’s obviously easier if you are a FinTech investor, but if you are not, understanding if and when is a good time to ask for how much money to do what is a real asset. You would say – I hear you – that this is not a FinTech expertise, but a generic investor skill. Well, point is FinTech needs capital by definition, whether is to fund a start-up or to convince a large bank to concept-proof a new idea and make the link from the ideas to the funding in the best possible way is invaluable. This comes back to point 3 again, there are Ways and ways to “connect” to investors, but you get that by now.

5- (optional but extremely compelling if added to the previous four) : have a vertical expertise in the new FinTech frontiers that only a (business) blind can’t see : Insurance, IOT (again, failing point 2 if i have to explain the acronym), Distributed Ledgers, Financial Inclusion, combined with the right pinch of business acumen to get the best out of being the (amongst the) first mover.

6- (optional and often the one that is the most visible, but compelling and lasting only when the previous ones are also at play) be a FinTech opinion leader or a successful CEO/Founder (the latter by definition implying most of the other assets). I am the first one witnessing that keep talking at conferences without deepening your expertise won’t make you compelling long enough, as substance will lack, sooner or later.

Supposing we all agree with this hypothesis, it would interesting now to figure what are the best combinations of these skills serving which community, as – of course – is kind of hard to be all of it at the same time.

Thoughts welcome, of course !

 

Stay tuned

Matteo

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The FinTech wave… all about timing.

I already said in a previous post – here – that the main reason for me to move on from my beloved Innotribe was – basically – my failure in trying to move thinks towards a more self-funded, independent, proactive and financially relevant setting and as many things in life you have to acknowledge when time is right and when is not.

I think we can proudly say that the Innotribe Startup challenge was the first global FINTECH startup Eco-system (I promise, I’ll stop using this word but you can put it on my poor English).

Think of it :
Transferwise, reported to raise now 50M USD on a close to a Billion valuation,
– TrueAxis, sold to Mastercard for some 85M USD (could be 65 but can t bother to check now, it does not really matter for this discussion),
Guardtime,
– Azimo, recently funded with a good 10M USD series A round,
– MatchMove, recently announcing their 10 M series A round,
– Digital Shadows, also raising recently series A.
The list – believe me – goes on and on.
Many of these guys are already in series B/C and I reckon have a good chance to exit (for us now, the game is to find the ones with the same appeal but at an early enough stage to make the investment compelling).

SWIFT turnover is, today, roughly 700M EUR.

If you take the Fintech Startup Bootcamp model, startups give up 8% of their equity to participate in a 4 months accelerator program, culminating with Demoday (that took place last week  in London, kudos to the team and to the 10 startups,or was really a cool event). They give 8% TODAY and the market is way more tougher and mature than 5 years ago.
They do it not for the (little) money Bootcamp is giving them, but more importantly for the mentoring, the coaching, the connection, and the strategic help they are getting.

Innotribe and SWIFT could have put on the top of all this the best possible financial institutions sales network that a Fintech startup could have dreamt of. And – believe me I was there – many finalists of the startup challenge, including some of the ones I mentioned earlier, were exactly at the same stage of the Bootcamp ones, especially in the early stage category.

What am I trying to say ?
Very simple : roughly a third (conservative) of today SWIFT annual turnover is the potential value of what Innotribe could have been worth if the opportunity to create a community investment vehicle would have been set.
Then, the “Innotribe Venture Fund” could have take either some single digit with no cash or even some warrants to be exercised, these are details for the sake of the discussion. The rest is math.
But that was then.
Back then, the opportunity to use the SWIFT leverage to foster start-ups growth was a unique opportunity for a financial return (and the objective of developing Innotribe at industry scale).

Today would be too late for the “mentoring versus equity” thing. Because the market is too crowded already. At least the one for generic Fintech startups.

How do I see it evolving ?
There is still room for series A/B round Fintech funds and for Fintech vertical opportunities, my favourite one being Financial Inclusion.

Conclusion…
It’s all about timing and we are at the beginning of the second Fintech wave.
The one Billion dollar question is : how many waves we will see?

 

Stay Tuned

Matteo

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