Asset-Management

Why “asset management” is missing a point

Every startup (and banks, for that matter, but in a much less attractive fashion) are all after the Mass Affluents, meaning the large majority of potential investors and try to manage their money or at least to be the preferred infrastructure through which they can manage it themselves.

Personally, I had the worse experience ever with asset management, equity and financial products (funds, mainly blue chips) investments.
I can proudly claim I had no significant success in investing in financial products, whether I did it myself or I delegated it to someone else.

In Italy, we have this great category called “financial promoters”.
Thirty years ago, they started their career with a great deal of skepticism, fighting the perception that they were like stilling the money from the savers, that they pretended to be cheaper than banks but in reality was the opposite, and so forth.

Now, my home country maybe is not the brightest example of modernity or vision, for this and its insurance market (to name another financial service that badly need innovation as well) is not a good example either.
This being said, what I have learnt in my failed career of a private investor is the following :
– you have to follow your investment daily,
– there is never enough information that needs to be gathered in order to take mindful decisions,
you (or whomever human) very hardly beat the market, unless your money is virtually unlimited,
you have no idea what “risk profile” REALLY means nor if the portfolio you have been advised to set up is the best for you,
luck is still a great components of a successful investment, sometimes in a higher proportion you would like to admit.

There are roughly twenty very good platform for asset management now in the market, without of course taking into the account the market feeds aggregators, the on the spot analytics platform, and the “behavioural” trading platform (where you do nothing else than betting on you copying someone else’s strategy, for example).

The reasons why this business is exploding have the same fundamentals than Alternative Lending.
It’s impossible for a bank (in this case for an asst manager) to perform in managing a portfolio of a few dozen of thousands dollars, as well as it’s impossible for a bank to give a 20000 USD loan and make money out of it.

Now : most of the value proposition of these new asset management startups today is based on ACCESS and PRICE. Access to a variety of financial products (and a comprehensive literature around it) in a much more unbiased, granular, global way than what a single bank can do, and price because the commission asset under management is much lower than the “traditional” way.

What very few people have managed to do is to go beyond asset management and give tailored STRUCTURE on the way people manage their money. Let me explain myself.
What the mythical Italian “financial promoters” were doing, back when they started, was very simple : they built such a deep knowledge about you, your family, your assets, your real estate appetite, your pension requirements, the need for your kids school and most importantly a feeling that they would have managed that money as if it was theirs.

Something that today is missing – again, for the mass affluent, meaning anybody fortunate enough to save some money at the end of the year – is being able to do Life Scenario Planning and get the necessary help to implement it when needed.

Since I left my dear, safe, structured, hierarchical, over cuddling previous company, I am facing this problem myself : I have a piece of that mythical retirement, no defined plan, some attempt of real estate. But who could I really trust to advise me on what the best future proof asset allocation would look like for me ?
When you can afford a private banker for yourself, admittedly you would be better helped off… But arguably that person would be partial and probably have dozen of clients like you.

What’s the point I am trying to make here ?
Unless you spent 30 years in the same company, bought a house and save enough for your kids to manage to grow up and reloaded their dreams (or at least help them to), it is likely you need mindful advice about :
– heritage,
– real estate management,
– life insurance,
– pension,
– tax optimisation.

And no one will pay enough attention to you unless your money at the banks justifies that waste of (their) time.
Interesting enough, there are only so many billionaires (or close to that ) on the planet and the next market is clearly going to be the second layer of that fortune.

The new entrants combining a intelligent, top notch user experience in managing their assets, supported by a like-human advice big data driven and most importantly a comprehensive profiling and tailored proposal on the top of the pure investment side, will get the biggest part of the cake.

Stay tuned

Matteo

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FinTech Stage Milan March 2015 30 & 31

FinTechStage in images. Tribute to an amazing event.

As you can imagine, I needed a couple of – resting and sleeping – days after 4 very intense days of FinTechStage.

It’s time to debrief, to celebrate, more important to say thank you and – needless to say – to move forward to the next one. Because the one lesson learned from Milan is that FinTechStage hits the right spot : local FinTech community meeting the international one and building new catalysts of Innovation.
Exactly what happened in Milan.

DAY -1
We started with a week-end of preparation with Ioana and Mariela, drafting the networking wall and the running order…between some pizzas and ice scream 😉

DAY 1
On the morning we had over 80 people and some 50 start-ups attending the crash course to help them understand how to negociate a deal and how to pitch to an investor.
Mircea, Andrew and Tom did an amazing job in preparing the tuition. At the end, we even made Mariano jumping on stage in a very animated Q&A session with the entrepreneurs.

In the afternoon, we gathered Investors, Start-ups eco-systems and Innovators (from banks and insurances).
We ran a networking workshop to make sure the 3 communities had the chance to discuss topics compelling to their own spaces, as well as to get to know each other in a smaller group.

Day 2
The agenda had a clear “fil rouge” :
– understand where FinTech Investors are putting their capital today,
– cover where Innovators from banks thought the investments should go and are not today,
– define how start-ups and financial institutions can work together.
This was the debate of the 3 panels we had.

Italian and international start-ups had also a place on stage. Not looking for capital, but for customers and new business. We explored 2 important themes, inspired by a keynote, featuring 7 start-ups in the related field, payments and banking models disruption and capital markets, in this case, both relevant for the Italian market.
Also start-ups went on stage with their investor. The latter explaining why they put their money on that particular company.

The remaining slots were filled up by what I would call inspirational conversations on financial inclusion and new ways to approach payment disruption. People loved it.

Organisation and infrastructure
Just Amazing.
From the venue, to the great apero party on Monday evening, sponsored by CheBanca! in Talent Garden, to the perfectly arranged plenary room and Tree House of UniCredit. (video linked)

Perfect gorgeous sunny day, feeling like summer.

Media coverage
To report a sentence from Ioana, FinTechStage had a media cover like a Led Zeppelin concert. And it’s true.
Articles and some very nice videos flooded. See some samples here.

Doing good
I announced in the closing remarks our funding of 10 students from the University of Makelele, in Kampala (Uganda). I don’t think I explained myself well enough. Reason being I simply felt too overwhelmed by emotions. Kosta, who knows me well, sent me an SMS saying “I bet I missed some tears” and he was close :D.
The idea is to finance this project instead of give the speakers a token for their time as I already wrote previously – here – in my blog : changing the world one person at the time.

Networking
The networking wall was something that most of the attendees had never seen before.
Mariela deployed close to one kilometre of thread to show the connections between people, topics and attendees.
Pictures flooded on that wall !

Finally, least but not last… A huge thank you to my partners in this fantastic adventure :

Mariela for the design, the wall, her creativity, for being my shadow during the whole event and to be so good to find a walk around to anything.

Ioana, for being so fantastically available all the time, for her precious gathering data skills, for her permanent smile and for being always – always – there.

Lazaro, for being crazy enough to jump with me in this adventure, for his support, for stepping up when needed, and for his constant, invaluable advice (for persuading me to do things I would not have done, that revealed themselves to be a REALLY good ideas afterwards).

 

Ehm, forgot to say, March 31st was my 45th birthday. I never celebrate, but this one will be unforgettable.

The next FTS date ? Coming our soon enough.

Stay Tuned, for real.

 Matteo

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TooBigToFail

The largest the bank, the less they (should, would, will) care ?

Despite the fact that I have some 23 hours plane on my way to Sydney, this post will be a short one, because in the meantime I posted another one. Plus now I am beyond busy finalising FinTechStage.
It’s just a conversation I had recently with someone I do consider very highly and respect a lot.

As I partner in a venture fund, a billion dollar exit would be considered a success, no doubts. Well, it’s reasonable to think a fund like the one I am managing with Mircea would still hold some low 2-digit stake in the exited company. So we could make at least our limited partners recover their money and by all means accomplished a very important part of our mission : not to loose money.
Usually, the timing for such an exit would be somewhere between 5 and 7 years from the build up of the investment vehicle.

Now, look at is with another angle : “I am a global bank and my NET profit, yearly, IS in Billions.”
Therefore, the risk associated with a disruptive start-up aiming to have a billion dollar exit is it worth the danger of being fined, the  reputation loss, the technological risk (not applicable to all ideas, but mostly on the most “disruptive”).

Every innovation movement has its own internal and external detractors. We observe Fintech funds associated to financial institutions not an exception.
Make money obviously cannot be the ONLY reason to invest in start-ups if we look at it with the eyes of a big player, even if there are a couple of funds claiming the financial return their sole objective. It does not seem to be impactful enough.

The fine balance – in my humble opinion – is to have a self-sustained financial vehicle that make a wise mix between what can allow the fund to keep existing, what can really change the bank and what has the potential to change the world.

In the next 18 months, we will have another 10 funds and roughly another 2 Billion USD, set up by banks or insurances, my crystal ball is telling me. It will be extremely interesting to see how their construct and scope evolve.

Stay tuned

M

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Team-recipe

Team recipe 

I have been thinking a lot what a team actually need to succeed, and this came out on a personal story. I failed a couple of start-ups before, as a founder. In both cases coming up with the idea and bring that idea to life with very little or no resources and in both cases fail to scale, learned a lot and only few years later realising why.
I like to think I am creative and developed a network to be able to get things done, but I clearly miss “being relentless”… Meaning focusing on getting that project done because of a sense of boredom, of “not challenging enough” or simply because another idea, twist of the project itself or opportunity came up and my brain was instinctively attracted to that, with no other option than de-focus on the previous one (my dear friend Mariela thinks I should have an Impresario).
Despite that, I have – always – a very clear vision where the “thing” should go.

Does a start-up team need somebody like me ? Possibly.
But what else ?
Agility and Creativity are essential in a start-up team. So is the Vision.
But there are 2 other assets you cannot miss for the perfect recipe : financial control and project management.

As boring as these 2 assets might sound, in a small team these are essential. And the more the company grow, these are the ones who will ensure stability (and reinsure the investors).
Financial Control will also evolve and overstep into the Marketing function and a project management will closely beef up the sales (typically something that the “visionary” can or should do).

We actually had this discussion at a round table las week in London and many of the start-ups CEO and co-founders seemed to be mindful of this quest for balance.

Why is this discussion so important ?
Being an investor means finding yourself on the good side of the money, as I always say. The job seems relatively easy, especially if you don’t have to do much effort to build a deal flow (no later than yesterday I received the email about the Innotribe Challenge judging task, there are 180 companies eligible to be screened, great job BTW).

There are several moments in the life of a portfolio, when one or more start-ups become a “problem” for a number of reasons :
– strategy re-thinking,
– our of cash and pressure to raise,
– resources issue,
– management frictions.
And the list goes on….

Now : in this moment, the founders start calling you every 4 hours, send you tonnes of information because they feel they have to show they do stuff, and you get involved in the smallest possible management decisions of the company (including of course the tough ones).
In these moments, your ability to bond with the team is essential, because you all of a sudden become part of it for real (not only on paper because you are a shareholder).

The challenge is to find the emotional energy to have the same commitment, focus, brainpower to help all portfolio companies at the same time and the “problem” companies with a redoubled effort.
When the relationship gets that intense, is where the balance (or the absence of) of the assets I mentioned previously becomes crucial.

Stay tuned

M

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