Bootstrap to IPO - diversify funding for fintech growth

By Claire Cockerton | 29 January 2015

On Tuesday morning at the London Stock Exchange, a small crowd of VCs, private equity firms, investors, early-stage tech founders, corporate venture funds and representatives from the LSE and British Business Bank gathered together in a room for the “Bootstrap to IPO: Redefining Finance in a Brave New World of Finance” event, all eager to learn more about how to capitalise on the changing financing ladder.  Innovate Finance played host to the event, a membership-driven fintech trade body launched by the Chancellor last August.  This unlikely mix of crowd in in an unlikely setting played testament to how even the City’s most embedded historical financial institution is now embracing the changing forces in finance.

Even more striking, given the traditional male-domination at tech conferences, was the well-represented gender diversity across the panel discussions. Julia Groves, CEO of the Trillion Fund, poised a thought-provoking question on whether differential treatment exists from VC investors towards startups who have raised investments through crowd-funding platforms. Indeed, the readily available capital that crowd-funding platforms provide, often make it a magnet for tech founders who do not fully factor in or understand the impact on future investments. Kevin Dillon, from Atlantic Bridge Ventures, offered his insightful perspective that such fintech startups that have already received crowd-funding platforms are often viewed upon favorably as it demonstrates traction, although the downsides include a widely distributed shareholder register.

The final panel moderated by Caroline Hyde from Bloomberg TV focused on the founder’s personal journey navigating through the funding map. Clare Flynn Levy, CEO Essentia Analytics, a fintech startup that uses behavioural economics to maximise returns for hedge funds and asset management firms, highlighted the pain points and obstacles that she faced in raising finance in the new world of finance.  In true lean startup method, she learned the hard way that she had to burn a lot of energy by speaking to different investors who often did not have a clear understanding of the asset management industry. It wasn’t until over time that she realized a targeted approach would mean maximised returns for the amount of energy expended.

Marta Krupinska, co-founder at Azimo, a mobile and internet-based social remittance network, revealed the differences between the UK vs. US funding roadmap on her personal finance journey. The oft-cited glut in capital at later funding stages in the UK compared to the US was alluded to in her views. In particular, Marta remembered that during raising series A round, her co-founder mentioned, “If UK VCs do not up their game, US VCs will eat their lunch.”

Joining in the UK vs. US conversation, Clare Flynn Levy hinted that as an American-born citizen, she was also reluctant to agree that stateside offered more attractive financing opportunities for a tech entrepreneur, “For what I do, [Essentia Analytics], yes New York is the most logical place for us to be headquartered. However, it doesn’t mean that you can’t do good business in the UK. Mathematical and engineering talent here is good. London really does have something special when it comes to recruiting talent that is cheaper than stateside. People, don’t understand the whole ramifications around an IPO. There is a lot of ego around it and you burn a lot of energy talking to analysts.” For Claire Flynn Levy, a trade sale rather than an IPO seemed more of a logical exit. 

The founder female financing journey is often not heard or picked up by the media. We therefore need to do more is to highlight the founder female’s finance journey and ensure that their voices are equally represented on panels at tech conferences. The truth is, we are still at the teething stages in our adoption of alternative finance and by driving more inclusive conversations, the fintech sector will be all the better for it. 

In light of International Women’s Day, Innovate Finance is launching a book on Top 100 Women in Fintech, to be announced at the Innovate Finance Global Summit 2015 on 9th March at the Guildhall.
 

By Claire Cockerton, CEO, Innovate Finance

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