The conference covering global investment in the FinTech industry started off with taking a look at the 30 Largest VC FinTech Deals of 2016. Of the largest FinTech deals of 2016, majority lie in the Asian continent.
FinTech isn’t as disruptive a business as what most would believe; be it peer-to-peer or to institutions, it enables lending to happen with a good margin. Regulations that the government and banks put in place will help with building consumer trust and confidence. Regulators should, hopefully, judge the cases based on the situations rather than impose regulations in a more rigid manner.
US and China are 2 markets where FinTech companies can probably try to grow in scale. What is important is the collaboration with banks for smaller markets, because it is harder for smaller companies to understand the local landscape well. Hence, a partnership could be more beneficial.
Question: As investors, do you prefer the B2B or B2C FinTech models? Which of these models is gaining traction?
There has been a shift towards FinTechs with B2B models from FinTechs that use B2C models. Approximately 75% of investments are going into the B2B or the B2B2C rather than the B2C models. It may be more prudent to look at solutions that the B2B space can provide and try to grow from there.
However, the B2C space has some growth in funding as well. In health and wealth management—when people are not doing well economically, there will be an increase in demand for solutions to help customers manage their finances better. Another B2C area that receives funding are in the creation of alternative lending solutions—areas in which the banks or institutions cannot provide funding for.
Question: Why would people choose a corporate VC?
Many FinTechs struggle to scale up and with heavy regulations in the market. Corporate VCs can provide complementary collaborations: operations, internal information, leveraging in the marketplace. They might also have relevant expertise that startups can tap on to improve as well. Make sure that there are no special rights given early on in the partnership to leave an exit strategy.
Question: At what stage of growth should a startup think about extending beyond the regional to a global scale?
It is important to understand the economics and basic business model to make sure the company and business model you use is scalable. You would also have to understand your revenue model and whether it is possible to secure sufficient funding.
Make sure you are strong enough in one market before moving on to the next one. Instead of multiple product lines, streamline the product/service to strengthen the business. You would also need to prepare a platform that would be able to adapt to scaling up.
Question: Views for 2017 in the US?
Given the recent elections, there has been a slowing down at Washington DC. There has been some uncertainty due to the elections and the immigration policies. The situation will have to be monitored. But investments wise, the investments are slowly returning now that the elections are over.
Question: Financial services don’t have to be so serious—there is a youthful and vibrant vibe. What advice would you give startups?
Be more careful about the business model: think about how you make money, and whether your business is scalable. Investors are more cautious about who they want to invest in.
You have to get global talent and diversify your talent pool. You need solid partnerships that you can tap on to grow and mutually learn from. Management is about trust, and it would be good of your partnership will allow you to grow and move out of the region.
Go to the best investor in the region; it could be a person or institution. Keep an eye out for investors who have strong track records of helping founders grow. You will need a sizeable capital to start and grow your business.
B2C startups should pay attention to the lending space; if you are a B2B startup, when working on the solutions, don’t forget about the regulations. Make use of the regulators’ sandboxes to test your products.
THE GLOBAL FINTECH INVESTMENT LANDSCAPE
A panel led by Money20/20 on what it takes for a FinTech company to move from regional to global success.
Pat Patel, Content Director, Money20/20 Europe & Asia
Ankur Kamalia, Managing Director – Head of Venture Portfolio Management, Deutsche Börse
Stefan Klestil, Partner, Speedinvest
Anju Patwardhan, Fulbright Fellow and Visiting Scholar, Stanford University
Krating Poonpol, Managing Partner, 500 TukTuks
Raphael Strauch, Managing and Founding Partner, Nova Founders Capital
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