Exits aren’t just IPOs & Roads Shows”¦

Article written by Mason Doick, Head of Corporate at Scottish fintech InfinitX

A successful exit plan for your business needs to start early and be built with the support of the team you have around you. And given current market dynamics it’s never been more important to invest the necessary time to fully consider the options available. At its core, there has been no real change here ”“ you’re either looking at a trade sale on a whole or partial basis, or otherwise it’s a case of releasing equity in the firm, affording founders and early stage investors in the business the opportunity to continue sharing in what will hopefully be the ongoing profitability.

One fundamental shift that has been observed however is companies staying private for longer. Traditional IPOs aren’t off the table – even if we have seen a real slowdown in deal flow over the last 12 months as monetary policy normalised and macro-economic headwinds have been building ”“ but the burden associated with seeking a full market listing only ever seems to increase. IPOs have always been a challenging and time consuming process, with a slew of hefty costs from various parties also needing to be accounted for. And bear in mind that becoming a public company is just the beginning, with significant ongoing obligations to maintain a listing – and placate investors ”“ also needing to be taken into account. Whilst the longer term benefits of an IPO remain clear, the increasingly complex and costly approach here is by definition necessitating a longer runway ”“ something that has the potential to starve the business of much needed capital to fuel growth.

With the IPO burden growing on an annual basis, against this backdrop we’re noticing a growing number of entities who previously may have looked at a listing deciding that the approach now looks uneconomical and the prospective return on investment is no longer alluring. But what are the alternatives if an IPO is too costly and a trade sale sees founders lose all economic interest in the business they cultivated? That’s where platforms like JP Jenkins are able to offer a third way, enabling cap tables to be reorganised, fresh investment to be made into the business in exchange for equity and then for a valuation ”“ and an ability to buy and sell stock – to be available on an ongoing basis. Issuers from many sectors are already benefitting from these services, including technology-play WeShop and the fintech incubator Quantum Financial. For many, this intermediate step has the potential to create a solid foundation when it comes to making the step to a full public market listing.

It’s difficult to ignore the headlines which all too often seem to be declaring the death of the UK as a capital raising venue. But according to UK Finance, the nation’s capital market remains one of the strongest in the world, with highlights including the fact so £14.7 billion of equity was raised in 2021 for UK companies. And the appetite for investing in privately held companies continues apace too. Using the proxy of the government’s EIS scheme, 2022 saw a record £2.3 billion invested under the program, some 40% up from the 2021 figure.

So the key takeaway here is that whilst underlying market conditions may be looking less than optimal and there’s no shortage of people willing to talk down “UK plc”, the investment market remains vibrant and businesses with solid growth prospects have little to fear when it comes to seeking fresh capital. Financial innovation means that there’s more choice than ever and allowing founders to retain an economic interest is arguably a worthy trade off if it paves the way for a better return in the longer term.

Photo by energepic.com: https://www.pexels.com/photo/close-up-photo-of-monitor-159888/

Stories from female fintech entrepreneurs

To celebrate International Women’s Day 2023, we met with two female fintech entrepreneurs to hear about their stories, why they chose to become fintech leaders, their successes and challenges.

Ana Gallacher, founder of BabyReady Finance

Sheila Hogan, CEO and founder of Biscuit Tin

I am Sheila Hogan CEO and Founder of Biscuit Tin a “death-tech” SaaS business – we make life admin easier for you now and easier for those you love in the future by helping you create a digital legacy to be proud of. Biscuit Tin is a digital secure vault holding all your life information that is released to those you nominate when you die, providing them with the direction they need to easily and effectively close down your life and a digital biography of your life to hand down the generations.

I had an entrepreneurial flair from a young age ”“ from making pencil cases that I sold to my school mates, Pencil skirts with my own , clothes label ItFitz and I tried everything to make money ”¦ every party plan going. I left School at 16 and went into Tech as I had a feeling it was a thing of the future. I started at Bradford Council as a Junior Computer Officer, I then went to study Computer Studies part-time at Huddersfield Uni.

A Programmer in the early days, I progressed onto analysis project & programme management and up to creating Biscuit Tin I was a Consultant Business Architect designing the way businesses need to operate to leverage technology. Predominantly for large financial services institutions.

The challenges I faced before Biscuit Tin were mainly my own making ”“ always looking for the next thing’ and trying to find my niche and the career I felt destined for. It appeared after closing down the lives of both of my parents armed with a physical Biscuit Tin of old papers. The two worlds of my professional technology career and personal experience collided as I realised that the life close-down’ process is completely broken and needs to change.

It seems many of my challenges since then have revolved around money ”“ from bootstrapping, winning grants and investing what I could from my pension to get the business off the ground. To the challenges of raising capital I face now to forge ahead to scale-up and deliver to our mission to make a difference in this space and be a global Digital Legacy leader within 5 years.

Pathways: A New Approach for Women in Entrepreneurship

Last week, the Scottish Government published Pathways: A New Approach for Women in Entrepreneurship. This landmark report was overseen by tech entrepreneur Ana Stewart and the Scottish government’s chief entrepreneurial adviser Mark Logan, and was commissioned to help identify ways to unlock untapped potential, close the gender gap and boost Scotland’s economy.

We met with John Cushing, CEO and founder of mnAi, who provided detailed data analysis for the report.

The report “seeks to change how we think about the under-participation of women in entrepreneurship, to more rapidly and effectively move our society away from its current extreme gender imbalance in this field of endeavour.”

Startups founded by women in Scotland currently receive only 2% of overall investment capital, representing, the report states, a “denial of opportunity on an industrial scale”.

Just how significant is the report, and its findings?

“It’s the most comprehensive report of female entrepreneurism ever undertaken in Scotland,” says John Cushing.

mnAi use proprietary data and technology to supply unique research, analytics and insight on all UK companies.

“The Stewart Report lays bare the fact that fundamentally things just aren’t moving on as fast as they should be,” says Cushing.

“This is in spite of some amazing achievements by female entrepreneurs in and across Scotland – much more needs to be done to support their ambitions, particularly growth stage companies and those seeking investment. The report not only lays bare the problem, but also identifies the solution. That’s the critical part of all of this, that the Pathways Report actually does exactly what it says ”“ it lays a pathway to success.”

“With 12bn+ data points, our core product is a data asset encompassing 9m+ UK companies and 37m+ people that is updated and refreshed in real-time,” Cushing says. “Our unique insight on hard-to-find data points including emissions, diversity, gender, productivity, investment, debt, grants, financials and more, helps improve decision making, increases efficiency and removes complexity. Having learned about our gender disaggregated algorithms and the work we did with the 2022 Rose Review and The Gender Index, Ana and her team extended an invite to also support her ground-breaking research.”

The report makes 31 recommendations such as tailored funding packages, attention to diversity in education, and quotas to ensure women get proper recognition and a fair share of investment.

First Minister Nicola Sturgeon described the list of recommendations as “compelling”, adding: “The review’s findings are challenging but underline the need to tackle the root-causes, as well as the immediate barriers, of this inequality ”¦ The Scottish Government will respond quickly to the review as a whole, and its recommendations.”

Despite the progress made in some areas there is work to be done.

“I’m very confident that things will change… however this is a collective issue,” says Cushing.

“From secondary education to investment capital, I think we all have a responsibility to support those in need or who need help. Being a business owner is not easy, and yet many people choose to do it day in, day out so why should my gender make a difference to my ability to grow my company? It shouldn’t. This report presents the facts and now it’s up to all of us to make a difference.”

For more information about mnAi’s data platform, and to book a free interactive demo, click here

The Critical Role Partnerships Play When Scaling Fintechs

Blog written by Greg Watts, CEO at Findr

Alongside raising investment, securing the right partnerships is critical for business survival.

Indeed, in a recent research report from PwC, over 75% of CEOs rated partnerships as important’ or critical’ to their success.

Yet with many partnerships taking months if not years to come to fruition, it’s no wonder that so many businesses fail ”“ and waste considerable resources ”“ in the process.

So why do so many fintechs struggle with what we call the partnership problem?

Here are some reasons:

• They haven’t identified the right target partners;
• Their approach is too generic;
• They haven’t spent sufficient time identifying key stakeholders;
• Their offering and content doesn’t resonate with target partners;
• They don’t spend enough time or resources in the right places generating awareness.

In this article for Fintech Scotland, we’ll explore why businesses struggle with the Partnership Problem and provide tools and tips to enhance your approach and accelerate your efforts.

Get focused

In theory, partnership development is a straightforward process.

However, many businesses often fail at the first hurdle ”“ which is to have a razor-sharp focus on targets.

For example, it’s quite common to hear that a fintech wants to create partnerships with all’ retailers or banks in a particular market, then expect their sales teams to hit the phones and secure meetings.

However, with finite resources, that approach often misses the mark.

Fintechs ”“ and indeed, all businesses ”“ need clear partnership criteria.

The criteria for each business will vary, but some questions to consider may include:

• Which verticals, sectors or categories do you want to focus on? Within those, what are the priorities and why?
• What are the characteristics of your target partners? For example, are they high frequency retailers such as coffee chains or do they boast high transaction values, such as luxury brands?
• How easily can you partner with them? For example, a Tier 1 retailer such as BP or Asda is likely to take more time to partner with than a smaller coffee chain. Given how important time to market is ”“ it can often take months if not years to partner with large businesses ”“ targeting smaller partners initially to create case studies that demonstrate the value of your proposition may be a more efficient strategy.

Once you’ve evaluated your target partners, assign weightings to provide focus on where to spend your time and resources.

Sharpen your door opening approach by creating buyer personas

How often have you received a cold, un-researched introductory note on LinkedIn or via email?

It’s remarkable that so many businesses don’t tailor their approaches, then wonder why they don’t receive a response.

In fact, if you haven’t met someone before, you have less than a 3% chance of securing a meeting with them (unless you’re on Findr of course – where we average 27%)

It’s imperative you know as much as you can about your target partners before you approach them ”“ or any resources used to try and engage them will simply be wasted.

To maximise your chances of getting a meeting with a target partner, you need to make assumptions about what they may be looking for to help you tailor your approach.

To do this, it helps to develop buyer personas from which you can create content that makes them want to engage with you.

As you create the personas, points to consider are:

• What problems do you fix?
• What benefits do you offer? How do these compare to other players or competitors?
• Why should they engage with you?
• What channels do they engage with? How can you reach them?
• Which events or forums do they attend?
• Who ”“ if anyone ”“ do they currently partner with? And, critically, why would you be a better partner?

Cluster them to create segments with common challenges and issues you can solve.

Ultimately, you need to articulate why they should engage with you.

Once the personas have been created, you can focus on your content plan, encompassing your website, social media feeds, thought leadership and other marketing efforts.

Make it a team effort

Too frequently, partnership development and lead generation are viewed as the sales team’s responsibility.

Yes, the role of a salesperson is to sell ”“ however, he or she must have the full support of the business behind them to generate leads. Without that, the effort is likely to fail.

At Findr, we believe that the entire organisation should be involved in generating business and creating partnerships ”“ albeit in different ways ”“ and that any efforts not focused on growing the business should be questioned.

Thinking of it in these terms can help galvanise and focus your resources.

Bringing it all together

Creating partnerships sounds easy. However, without the right planning and focus, the results may be disappointing.

Being ruthlessly clear on who you’re targeting and why they should engage with you ”“ and then creating content that resonates ”“ is the most effective approach to creating long term, valuable partnerships.

Photo by Savvas Stavrinos: https://www.pexels.com/photo/monochrome-photography-of-people-shaking-hands-814544/

Fintech ”“ never an overnight success

By Anthony Rafferty, CEO, Origo

At the beginning of 2022 everyone was breathing a sigh of relief as the worst of the two year pandemic appeared to be behind us. We looked ahead to 2022 as a year when we could get back to normal’ again.

A year on and the world is looking at a global recession, we have a war in Europe and in the UK, high inflation, rising interest rates, falling GDP and an austerity budget which will see many people and businesses pay more tax.

With the Bank of England’s warning of a two year recession ringing in our ears, there is plenty of negativity in the atmosphere.

Which is why I believe every company every year should look back on their achievements and celebrate their successes.

The tenets of success, certainly as I have found them in my many years in the financial services industry, are that it takes a lot of hard work and it takes time. “Overnight successes” are rarely ever that, but the cumulation of many hours of hard graft by a dedicated group of people, propelled by a vision, a passion for what they do and a resilience to make it work.

This is no better evidenced than in Fintech.

Origo has a long history of working collaboratively with the industry to deliver ground breaking technology. This includes the Origo Transfers Service, our current work to establish the pensions dashboard central digital architecture and our Origo Dashboard Connector, as well as Unipass Identity, Unipass Mailock, Unipass Letter of Authority and the Origo Integration Hub.

Every one of these are developments offering industry-wide benefits, helping to make the industry more streamlined and efficient, helping companies to achieve their ESG goals, as well as delivering better service to the end consumer.

Yet, despite the considerable efficiencies, cost savings and other benefits they bring to the industry, none of them have been overnight successes.

If we take the Origo Integration Hub as an example, it was launched in 2016 as a service for products providers, platforms and software houses in the savings and investment market.

We had spotted that we could help these participants achieve considerable efficiencies, cost, time and resource savings by doing away with the need to undertake resource heavy, time consuming and costly point-to-point integrations with the companies with which they needed to exchange data. Instead we built a centralised hub to which they could link once and then connect to any other user of the hub for key services such as investment valuations, bulk valuations, account opening, remuneration, transfer tracking and bulk transaction history.

It is a common-sense strategy for the industry, fulfilling the very real need for companies to be able to integrate with each other as quickly and as easily as possible. In addition, it meant the industry could become more efficient and competitive, as integrations did not depend on having deep pockets or a significant business case.

Genius, right? Everyone told us so and yet by August 2020, only 21 firms had joined the Hub.

There were plenty of good reasons for it, not least the incredible drain on resources, time and money caused at the start of the pandemic.

But having been in the market for 30+ years we were not fazed by this, as we know with projects of this kind it can take time for momentum to build. You often need your early adopters to demonstrate the benefits before the rest of the industry will come on board.

And this is what happened. As we go into early 2023, we will be looking at over 50 companies, including top industry names, who will be using the Origo Integration Hub, with others in the pipeline.

To achieve success, we have learned that along with the hours of hard graft, dedicated people, a vision, passion and resilience, it also helps to have a little patience.

So, as we head towards the end of the year, we are celebrating our successes, bit by bit and no matter how long they take to come to fruition. I recommend you do the same.