Yesterday I was in NYC for the day to meet some people and go to the NYC Fin Tech Innovation Lab presentation. I thought I would share some of the insights of the panellists because they are informative to anyone that wants to undertake Fin Tech innovation and work with institutional customers. Those comments were especially interesting to me since West Loop Ventures invests in seed stage companies that are disrupting Big Finance where institutions are the primary target customers. We are hoping to work with some companies in this future class.
First, understand that although finance is a big hairy ball of wax with lots of people in it, it’s also a small community. People are gossipy. That stems from the fact that when you are trading, information flow is key to getting into good trades and out of good trades. The right information flow can mean the difference between making a profit and blowing up. People move around the industry. They don’t stay with one company forever and ever. Finance is all about networks.
That means if you are a startup and you have a meeting don’t blow it off at the last moment. If you are a person and have arranged a meeting make sure you are on time and prepared. If you aren’t, word gets out.
Here are some things I got out of the presentation:
- If you are pre-seed don’t apply. Apply if you are post-seed and nearing Series A. Have your tech built.
- Be prepared to spend a solid 3 months in NYC.
- Banks are interested in Reg Tech, so are insurance companies
- Institutions are interested in blockchain, but as a direct application to solve a problem in process
- No one is interested in totally redoing their tech stack. Too hard a tech lift and too disruptive
- Everyone interested in growing revenue
- Everyone interested in automating commoditized processes so employees can focus on building revenue. 67% of COGS inside big institutions are in their back office.
- When you sell to an institution, ask questions, listen and especially hear. Digest what they are saying. Understand.
- Don’t expect to get an order right away. Sales cycles are longer.
- If you build for one institution, it’s likely your product won’t scale to other institutions
- If you are using something like big data or artificial intelligence or another cutting edge technology, have a specific use case for it inside the organization that solves a real problem. Don’t use broad brush terms, be specific.
All in all, I thought it was a pretty great presentation and I found myself nodding my head a lot. It certainly feels like if you are a company in this space at this stage the incubator could be a good fit for you.