“Fintech is waiting for its Gmail, not its Uber, moment”

Originally posted as a Guest Post by The New Statesman

Over the last five years, there has been a massive explosion in global FinTech investment activity – rising from $1.8 billion in 2010 to $22.3 billion in 2015, according to CB Insights.

And while no one in the financial services industry disputes the massive opportunity that exists in FinTech, there are those who question the form and timing around this revolution (or what might today be called, simply, an evolution).

FinTech is financial technology that uses software to either disrupt or transform financial services businesses, typically packaged as a tech startup company.

FinTech startups have many similarities to those other technology-driven businesses that have successfully launched over the last few years, and because of this, they have attracted a substantial number of investors with a very bullish view of this opportunity.

In the cold light of day though, it’s my belief that both investors and entrepreneurs have massively underestimated the challenges associated with FinTech.

Minimum or viable product?

In 2011, Eric Ries launched a thousand startups with his book The Lean Startup, which emphasises things like the ‘Minimum Viable Product’ model.

Unfortunately too many entrepreneurs focused on ‘Minimum’, rather than ‘Viable’, and when it comes to a FinTech MVP, that lax view on viability is a death sentence.

Simply put, when it comes to people’s money (and health), startups can’t get away with the argument that “it works 99 times out of 100”.

Because of these higher expectations, along with stringent regulations and compliance rules, FinTech startups see challenges not faced by the typical startup.

Even though the Financial Conduct Authority (FCA) has been applauded for its bold and imaginative approach, and its willingness to co-operate with the industry, the long shadow of the banking collapse in 2008 is never far away.

Unfortunately, many FinTech startups drastically underestimate the time and effort that getting compliant requires, and before they know it, they’ve added a year to the startup lifecycle before their idea has seen the light of day.

And, even when a startup finally has a product ready to launch, the uphill battle is by no means over – particularly for those that have adopted a direct-to-consumer approach.

Challenging unit economics

By choosing not to sell to the large and slow-moving incumbents, these startups have taken on the massively challenging unit economics inherent with startup banking.

Unlike the average high street bank, startups do not have deep pockets or the ability to cross subsidise, and therefore are essentially competing on service against a free account from a traditional bank.

Not only that, the traditional banks can offer perks such as a ‘free £100 when you join’ and still make a healthy profit across a broad spectrum of services – particularly via the lucrative mortgage market.

This all adds up to a significant disadvantage for young FinTechs.

Beyond making the unit economics work, another pretty imposing barrier exists for these startups – trust. Unlike many other apps that can be downloaded and used without significant consequence, switching banks still needs an implicit level of trust – hence why many startup banks must target the ‘under banked’ who have no choice but to try alternatives.

There is also the issue of customer inertia. There are those who have argued that banking is still waiting for its ‘Uber’ moment, but this is simply the wrong analogy.

Substituting a taxi for an Uber requires much less effort, risk and long-term consequence than substituting one’s financial institution for a young upstart.

Waiting for the Gmail of FinTech

Probably more applicable analogy is that of Gmail, which launched on 1 April 2004. It looked the same as many of the other services that existed at the time – Hotmail, Yahoo and AOL – but simplifying the interface, adding search, having a 1Gb capacity and a great spam filter was transformational.


Even with these significant advantages, it still took over eight years before Gmail overtook Hotmail to become the largest email provider. Changing your primary email is not a decision lightly made, much like changing banking institutions.

All of the above adds up to greater investment and time requirements than a typical startup in order for it to mature into a business that can make a healthy return for its investors – potentially more investment and time than a traditional VC fund can accommodate.

Therefore, entrepreneurs and early stage angel investors need to be prepared for a longer journey and more dilution than their colleagues in other industries.

So what does the near future of FinTech actually look like?

I would argue it looks a lot like the way advertising technology looks now. Since 2000, many forecast the end of advertising agencies with the rise of adtech, however only a few startups ever managed to build sufficient critical mass to become businesses in their own right.

Many adtech startups were moderately successful and were acquired by the agencies that they originally competed with. I foresee a similar outcome to many FinTech startups and the current financial service incumbents.

All this is to say that, while FinTech has huge potential, it will take capital, deep industry knowledge and patience to plot a way through compliance, regulation and the deeply ingrained customer trust in the traditional bank.

Startup Next (London S16)

We are back with instalment #2 of the second Techstars’ Startup Next pre-accelerator that I am helping out with in London.  Nine teams this time – and significantly light on male participation!!

  • BeBride is a platform which gives brides the opportunity to hire a designer wedding dress for a fraction of the retail price with a hassle-free process
  • Caper delivers the best groceries from your neighbourhood, in under 60 minutes
  • Instolist enables one to create virtual storefront from their instagram account.It allows users to inquire/buy/book directly from Instagram
  • LOOP is your favourite people’s favourite places, an app for you to discover the coolest places around you, curated by musicians, bands and DJs.
  • mindBot is a chatbot that uses introspective questioning and AI to help users find their personal happiness.
  • Shipamax is a tech-driven ship brokerage: Uber for big ships. We help mining, agriculture and energy co’s find the optimal ship, faster.
  • Sociable is the fastest way to get friends together. The love child of Eventbrite and Doodle, it makes plans happen with just a few taps.
  • Social Belly helps ambitious professionals grow their network and meet relevant people in a curated and intimate environment around food.
  • Ywarp is the first solution capable of transforming any screen in an Immersive Telepresence platform with true eye contact and 1:1 scale.


Health Hacks

It has now been almost 6 months since I stepped down from Techstars and to be perfectly honest during my time at Springboard and Techstars I have definitely picked up a few bad eating habits as well as a few pounds around the midriff.

427455_1_1024x1024In the interim, I have tried to undo a few bad habits and replace them with better ones. I have tried to recall some of the things I have done and some of the things I have undone (updates will undoubtedly follow). The net effect effect is I have lost around 30 pounds and am now *average* for my stature and hopefully have a few better habits to maintain my averageness.

  1. When you get to a certain age (you will know it when it happens), you realise that you are a little rounder than you should be for your particular height.  Check the graphs out, they are pretty scary. Set a target and aim for it.  Losing about a pound a week is achievable.
  2. The body is simple maths; you eat food (and calories) and your body burns calories. One should equal the other, if it doesn’t, you either put on weight or lose it – in my case the former (too many pizzas). You need to work out what is the best way to rebalance your own equation – everyone is different.
  3. When you do the math, you figure out very quickly that unless you have lots of free time, a regular place of work, don’t travel or have kids – it is almost impossible to get enough exercise to offset the typical diet of a “TechCity” resident.  Simply put, I needed to exercise but more importantly learn to eat less and better.
  4. Fitness trackers and (more importantly) their apps are essential way to reinforce and help measure the impact of your newly found habits.  Everyone has their preferred tracker and app – try a few and figure out which is best for you.  I ended up with the Jawbone app which is like a one way chat app with “nudge nudge” comments.  More to follow in a separate post about “chat apps”. And yes, I am now a slave to 10k steps.
  5. I also invested in “wifi scales”.  What I figured out was that my weight fluctuated wildly on a daily basis.  Pick a time every week and only weigh yourself then.  My preferred time is first thing on a Saturday morning.  After a good night’s sleep is when you are lightest during the day (see below) and I tend to eat more during the weekends.
  6. Porridge is now my staple diet for breakfast. It takes the edge off hunger for the morning and with fruit/honey it actually starts to taste okay.
  7. Fruit, fruit, fruit. When I feel hungry I now reach for an apple, banana, pear etc – all the usual outlets (Pret A Manger, EAT, Starbucks etc) have fruit, just not beside the cash register with the chocolate brownies!!! Note to conference organisers and co-workspaces, whilst I *love* pastries, fruit is so much better for me.
  8. Citymapper makes it very easy to tell the time difference between walking and using public transport.  Unless you are going across London, the time difference is normally about 10 mins (e.g. 35mins walking vs 25mins public transport). For the marginal time to walk (say 10mins) you can get a reasonable walk – and with planning I can do a mobile call.
  9. Buy a water bottle and drink more.  More co-workspaces have chilled water on tap and the US airports are also great at this, less so in Europe.  Eight glasses a day and constant running to the toilet!!
  10. Caffè Lattes are silent killers – particularly when you buy a “bucket” size from one of the usual coffee outlets (not picking on any one in particular).  Black coffee on the other hand has *zero* calories.  Winner. You become a little more fussy about what you drink – am now a Pact subscriber – but it definitely makes a difference.
  11. Lunch is my main meal of the day and I try to have a lighter/simple meal in the evening. Invitations to dinners are gratefully received but there are only so many you should attend.
  12. Brush your teeth immediately after dinner. Stupid as this might sound, but if I have brushed my teeth, I am too lazy to eat something more knowing I will have to brush my teeth again.  It also puts you in mind to go to bed earlier (as below) and get a few more ZZZs.
  13. Forget about exercise, nobody ever told me that you can lose about 2-3 pounds overnight whilst sleeping.  Simply put, you want to lose weight, sleep more.  Incredible but true.
  14. Travel is a another killer for putting on weight.  It is harder to have routines, you grab food on the go and probably eat too much, your hosts want to friendly and take you to dinner at nice restaurants (as above). If you can, always try for a hotel with a gym and get some exercise (it also helps with jet-lag).

Alongside the above, I now run outdoors 2-3 times a week for about 30mins to clear the cobwebs. But more importantly, what I have tried to do develop simple hacks/habits that are easy to do (read sustainable) and cumulatively add up.

VCs, IPOs and Phantom Traffic Jams

Doesn’t time fly?

For many in the startup community, the first three months of the year have whizzed past. However, for the IPO market it has been a bit of a drag – actually it has been flat as a pancake (see Chris Tottman from Notion Capital’s blog post for further insight). It is the first time in 6 years that there hasn’t been a tech IPO for a full quarter. There are obvious implications to the pre-IPO market – startups and investors alike. But what the hell does this mean to earlier stage investments and investors?

The best analogy I can come up with is when you are driving down the highway minding your own business and you see a car being driven erratically ahead. The driver slams on their brakes and suddenly you can see the brake lights of the following cars flicker on – like a wave moving towards you and suddenly you find yourself braking and at a standing stop with no obvious reason. Otherwise known as a phantom traffic jam. Interesting the way to best avoid them is to enforce lower speed limits which ultimately allows the traffic in aggregate to move faster.


There are many analogies with investment market. The best investors are those who remain disciplined and recognise that it’s a marathon (which the markets have just extended) rather than a sprint. To quote a good friend “it only takes a cheque book and pen to be an investor”. Less experienced investors act more erratically, being driven by the emotional rollercoaster and wider enthusiasm – assuming that markets always move upwards. As the investment market expands with new less experienced players it will create phantom traffic jams.

What does this mean in practical terms? The IPO market is locked for the foreseeable future – conservatively assume to the end of 2016. Many of the late stage and unicorns rounds were overpriced relative to the public markets. Ratchet mechanisms mean that these investors will get their money back, but not as quickly as they hoped and the founders (and early stage) will get crushed by preference and liquidation rights.

It is my expectation that VCs will draw their wagons around, and (conservatively) assume that any follow on funding for the remainder of 2016 will have to come from their own funds. VCs are more likely to protect their reserves for their own portfolio and slow down investment into new companies. This will also be driven by market uncertainty particularly around valuation. This knock on effect will ripple down through the market and will impact earlier stage (and possibly seed investments) for the remainder of the year.

Interesting European and Israeli data published by Gil Dibner indicates that the IPO slow down hasn’t had an effect in Europe. However there were a couple of points which he made that were relevant to the comments above

  1. There were 4 mega-rounds in Europe – none of which attracted US VC participation
  2. In fact, US VC participation decreased as a percentage of deals done across Europe & Israel

But don’t make the unfortunate mistake of putting your head in the sand and ignoring the broader signals. You can be assured that the waves from this passing “west coast” ship will be eventually hit the shore – even with lesser power – and the slow down IPO market will be felt by all both geographically and at all stages.

Trump, Corbyn & the Good Friday Agreement

It might sound like the start of a joke but each are connected to a reality that we cannot continue to ignore.

As we draw closer to the conclusion of the US primaries, it is now inevitable that Donald Trump will be on the Republican ticket for the US Presidential Election later this year. The Trump outcome is not an anomaly, over the last month, the Irish election results highlighted that a sizeable minority of the Irish population are massively dissatisfied with the representatives of their traditional political parties.

Here in the UK, the Labour Party’s leader was overwhelmingly elected by a highly engaged part of its membership base. Similar to the Republican Party, this was at complete odds to the Labour Party’s representatives in Westminster. It provokes an interesting debate about whether the leadership of political parties from across the spectrum have completely lost touch with their local membership.

It is my view that this new political shift is a result of the dissatisfaction felt by a significant proportion of the population who felt the pain of the financial crisis in 2007 – many of whom lost substantial equity in their own homes, were made unemployed and/or ultimately went bankrupt – and have not rebounded over the interim and are becoming increasing detached from mainstream society.

I have seen this story before. Having grown up during “The Troubles” in Northern Ireland, I would argue that the middle classes were firewalled from the harsh realities of those who struggled on a day to day basis and were less well off. The divide in Northern Ireland really only started to heal itself when everyone in society felt better off. The peace dividend derived from the Good Friday Agreement helped to bridge this gap, only for it to widen again during the economic crisis.

It is important that we should not dismiss the support that both Trump and Corbyn have received from a significant minority – but to look carefully at the “why”. Society has increasingly become “two speed” with a proportion benefiting from the rise of the tech sector whilst a proportion has not. Blade Runner might once have been considered science fiction but “high-tech and gleaming in places but decayed and old elsewhere” is closer to a reality that we might have previously dismissed.

Society as a whole can only move forward as quickly as its slowest members, in our rush to a high tech future it is important to ensure digital (and entrepreneurial) inclusion for all and from which everyone can benefit.

The John Bradfield Centre, Cambridge

Over the last five years I have had the incredibly good fortune to work with some incredible entrepreneurs and since stepping back from Techstars London last year, the urge to work with the most talented entrepeneurs in tech and business has become an itch that just won’t go away.

A few may have noticed I recently joined Central Working as a Non Executive Director – and we (with Trinity College) have been cooking up something very (very) special – the John Bradfield Centre in Cambridge. This new Central Working location will include a massive 40k sq ft spread across three storeys, housing over 700 entrepreneurs and innovators at any given time. This £20m purpose-built space will celebrate its groundbreaking ceremony this week and is due to open in Q1 2017.

Bradfield - Rear

For those who are aware about my (lack of) organisational skills, you can be assured that the day-to-day operation of the building will be firmly in the hands of Central Working and I will (in my words) have oversight of content.

Cambridge has been hugely supportive of me over the last few years, and without their help Springboard (the predecessor to Techstars London) would never have happened. In someways the John Bradfield Centre represents an amazing opportunity for me to repay part of the debt which I owe to Cambridge.

There has been some jealousy in Cambridge over the last few years about the attention that TechCity in London has had and many would argue that Cambridge was the *original* TechCity UK. I strongly believe that Cambridge’s best days are ahead of it.

With the increasing tech activity in the Kings Cross area of London – Google, Facebook and multiple VCs have either moved there already or are planning to – the link between the London and Cambridge tech scenes will become even more important. With less than an hour’s train journey between Kings Cross and Cambridge, the relationship between the two locations can resemble that of San Francisco and Palo Alto.

Whilst the building will not open for another 12 months, I will be reaching out to many of you for feedback and ideas about what the John Bradfield Centre should and shouldn’t do. My ambitions for the what it might become are substantial and with the help with Trinity College, Central Working and the tech community in Cambridge, London and elsewhere, I hope to fulfil many of them.

The Difference Engine S10: A Pictorial

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It is that time of the year when it is out with the old and in with the new.

For me, 2015 was a transitional year, stepping down from Techstars in London and moving onto other things.  Well that was the plan, most of the year was just trying to put my house in order, getting some sleep and getting a plan together.  I am getting closer to what next and I should be making a few announcements in the first 100 days of 2016.  I promise.

I also promised myself (and a few others) to start blogging on a more regularly basis – however I realised that I had accumulated a massive amount of content across multiple challenges over the last few years and I feel a necessity to pull it together before I move forward.

Apologies in advance of a mass of different blog posts over the next week or so.  I also promise to try to draw some conclusions from my work over the last few years and also make a few predictions about how I see the future.

Startup Next (London W15)

I am thrilled to announce that today I will be helping to launch (with Karina Costa) the Techstar’s Startup Next pre-accelerator here in London and even more proud to announce the 12 teams that have chosen to take part.

  • C8 is a platform that enables people to license their data and attention to brands in return for a payment or reward.
  • Cardlife is on a mission to save you money on your subscriptions, so you can be more productive. Join to stay on top of your Subscriptions.
  • Crossa is the first community powered roadside assistance and servicing app for cyclists that gets you back on your bike, wherever you are.
  • Giggypop is your easy ticket to a great gig with a group. When you book a Giggypop approved gig, you won’t have to worry about going alone!
  • Makelight helps you learn to take better photographs. Master your phone or camera via online courses and a supportive community.
  • Mode For Me is the Kickstarter for fashion designers. Designers get pre-orders, consumers get products at pre-sale prices.
  • Relayto is the first publishing platform for smart, interactive documents: from sales pitches & proposals to on boarding customers & staff.
  • SAFER helps people to know their risks and buy adequate insurance cover.
  • Shopmo is a web-based platform for online merchants to quickly build beautifully designed native mobile apps for their store; without writing or compiling any code.
  • Strobee makes personal video as engaging, shareable, & explorable as photos.
  • Vallie is an on-demand valet parking app that lets drivers drive directly to their destination and not worry about where and how to park.
  • Versify is an online language learning community where members can practise their conversation skills, because Practice Makes Fluent.

I wasn’t quite ready to go “cold turkey” on accelerators and am looking forward to the rollercoaster of next six weeks with the teams.  See ya on the other side.

Springboard Cambridge S11

For every “ying”, you need a “yang”, and mine was called Jess Williamson, without whom Springboard would have a been but a shadow of what it became. When I first met Jess she was in Edinburgh under some pretence of doing a Masters degree and running Startup Cafe. In a random throwaway comment I suggested that she should pack her bags and head south to Cambridge and help me out – initially for Springboard Cambridge. For some inexplicable reason she did and the rest is history.

In a later blog post I will be bringing the 90 day blog posts of the original Springboard Cambridge back to life as well as the video series which was put together – including Brad Feld at the Demo Day. As I previous mentioned the programme was launched at Silicon Valley comes to UK (c/o Sherry Coutu) and reported by Mike Butcher at Techcrunch and Martin Byrant at Next Web.

So who were those crazies that volunteered for the three month programme in Cambridge. Only one came from Cambridge, five others came from London and across the UK, the balance came from Estonia, Lithuania, the Czech Republic and finally New Zealand.

More to follow on this one with videos and the Springboard Cambridge blog.


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