Just in time for Xmas, Fintech Founders has been published. You can read more about it and buy it here. It is my search round the world for the best stories on how fintech businesses were created, getting the best tips for wannabe financial technology entrepreneurs.
You can read more about the book here and download a sample chapter. http://fintechflash.co.uk/fintechfounders
I also thought it would be useful to share with you the interview I’ve done with the Fintech Magazine which covers the launch of the book. I hope that you enjoy it.
We talk to fintech influencer Agustin Rubini, winner of the Wealth & Finance award for fintech strategy. Founder of consulting firm FSPal.com and best selling author of Fintech in a Flash. Rubini has recently interviewed more than one hundred of the top financial technology firms around the world. In this issue, he discusses some of the insights from his new book Fintech Founders: Inspiring Tales from the Entrepreneurs that are Changing Finance.
How to be a successful entrepreneur
Agustin Rubini tours round the world to find the secret sauce of successfully starting a financial technology company
FINTECH FINANCE: Agustin, you’ve been interviewing fintech founders for a year. It clearly is an interesting project, but what prompted you to do it?
AGUSTIN RUBINI: Over the years, through my career I met and coached incredible founders and wanted to share their stories and learning so that others can benefit.
FF: That’s very interesting. How important is it to have a mentor or a coach to be successful?
AR: Research shows that leaders that are willing to learn from startup thought leaders raise 7x more money and have 3.5x better user growth. More than half of the people that I interviewed use a coach or a mentor. As I went through the interviews, it was interesting to find that the founders of some of the companies were actually mentors or coaches for other younger startups, like the founder of CurrencyFair helping a fellow Irish company Assurehedge. Entrepreneurs are more productive when they get help to prioritize and keep them accountable.
FF: How do you feel after writing the book?
AR: I feel inspiration and admiration. Founders are heros that push through so many obstacles, like a fearless honey badgers. I especially like fintechs focused on financial inclusion. Take for example entrepreneurs like Steve Polsky from Juvo, who is pushing to create financial identities for the billion of unbanked people around the world. Or Elizabeth Rossiello from Bitpesa, who is offering a low cost way to make cross border payments in Africa.
FF: What criteria did you use for choosing the companies? It could be a bit over optimistic for people to read only about the poster boys of fintech.
AR: Entrepreneurship can be difficult, our research suggests that less than 15% of the fintech startups will make it. I wanted to show a mix of firms at different maturity stages. Include unicorns and acquired firms, but also companies in earlier rounds of funding. I wanted to show a snapshot of founders at different stages of scaling.
FF: What are the key attributes to success in a business?
AR: Great question! I liked the view of Wong Joo Seng from Spark Systems. First, you must understand the problem in its simplest way and translate the solution clearly. Then you need to find the right team and get traction. In FsPal I like to use to a model to help startups scale that includes five pillars: customer base, product offering, team, business model and financials
FF: Where can people find good ideas for starting a fintech?
AR: Most of the startups begin when founders experience some pain themselves, some times it occurs in their personal lives. Picture the iZettle card reader. Jacob de Geer got the idea as he was trying to help his wife, who was importing sunglasses to then sell them at fairs and markets and needed a slick way to charge for them.
Other times, ideas come to finance professionals during their day-to-day job. This is the case of Tradeshift, where the founders had been working in trade in the Nordics for a long time.
FF: Do you think you need to have deep expertise to found a company, know something that the rest of us don’t know?
AR: It is really important to develop a deep understanding of the problem that you are trying to solve. I usually see that one of the founders has a deep industry expertise, but this is not really a deterrent. You can learn deeply about the intricacies of the industry, the way it operates, and its challenges in just a short amount of time. Talking to the different players in the ecosystem, interview prospective clients, be ready to ask many questions until you are the most knowledgeable person.
Take the example of Karn Saroya, the founder of Cover. He created an insurtech startup without really having knowledge about the distribution or underwriting of insurance. And he is now one of the most knowledgeable insurance professionals that I know.
FF: What can people learn about funding from your experiences?
AR: There is no one size fits all for funding. It used to be a lot more difficult before VCs started getting in, startups founded before 2010. For example Stephane Dubois from Xignite survived for six years until he got a sizeable investment. His company is a key player providing data to most of the best renown fintechs in the world. Nowadays people have a lot more options, thanks to fintech. SME lending has diversified, we got equity crowdfunding, ICOs, STOs…
FF: Was there any funding technique that surprised you?
AR: There are some. If I had to pick one, I loved the way that Rentomojo’s founder, Geetansh Bamania , managed to get funding. His main weapon was cold calling combined with LinkedIn. Geetansh was bold to search for angel investors and proves that it can be done.
I also like the approach of SyndicateRoom, a crowdfunding platform that have actually used their own service for raising funds. Or look at Fiverr, who have created their IPO documentation using a freelancer from their own platform.
It is way easier for entrepreneurs with a track record to raise funds. VCs rank experience higher than the idea. Serial entrepreneurs like Anthony Thompson, Renaud Laplanche or Mike Serbinis make them money magnets
FF: Which of the companies surprised you by their ability to profit quickly?
AR: I was very impressed by Oaknorth, a UK company that enables businesses to get mid sized loans. They broke even on its 11th month. The founders, Joel Perlman and Rishi Khosla, started the business based on a bad experience as customers, and have worked on it to make it the fastest growing fintech in Europe.
FF: What have you noticed about founding team sizes? What’s the optimum size?
AR: It is very varied, many companies have started as a one-man band, like Juvo, Nav or Flywire, but having two to three different founders gets better results. In terms of roles, one will take the commercial and strategic helm, while another one will look at technology. A third one will look at operations as well as partnerships, although it depends a lot on the targeted niche.
FF: Did founders speak about their regrets or mistakes they made.
AR: That’s a great question. Not a single founder I’ve talked to regrets jumping on to the entrepreneurship bandwagon. Some of the founders enjoy growing the companies into proper corporates, and others like to move on to new ideas as companies grow, because they like the initial creation phase. But they all love the challenges that startups present.
In terms of mistakes made, there were some common themes, many people regret not having pinned down properly the problem they wanted to solve, which costs money and time in the end. And some others regret making mistakes when scaling up, especially when growing the team too fast. This is probably the most sensitive area that startups need to take care of, how to bring in people that are aligned with the vision and culture and that can add value immediately.
FF: That is a really inspiring, thank you. Just to close off. What founder story stood out during your journey?
AR: Quite a few… It is really hard to pick just one. I really like the stories from Latin America, where fintech activity is rapidly picking up. The case of Brex blew my brain out, it’s the story of how a couple of teenagers, instead of playing video games, decide to create a payments network called Pagar.me for Brazil, then sell it and start off a new startup that becomes a unicorn after just a few months. And they manage to do it staying humble and true to themselves.