VCs invested almost $40 billion in fintech last year. 4 major leaders describe the steps they’ve taken to grow their businesses after being flushed with cash.


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  • The fintech industry continues to grow, with the sector raising a record $39.57 billion globally in 2018, according to research conducted by data provider CB Insights and reported by Reuters.
  • With the fintech market projected to be worth over $300 billion by 2023, the key question in the world of fintech is shifting from how to raise capital to how to intelligently spend it.
  • Business Insider spoke with four leading fintech companies who have completed significant capital raises to understand how the founders allocate their money.
  • Each leader has a distinct philosophy, but it’s clear that successful fintechs find a balance by investing in technology, products, and people.
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The global fintech market raised a record $39.57 billion from venture capital investors in 2018 through 1,707 deals — up 120% from the previous year — Reuters reported in January 2019 on research conducted by data provider CB Insights. 

And the fintech space is showing no signs of slowing down, with the market forecasted to be worth in excess of $300 billion by 2023, according to a Global Fintech Market report. That means the key question in the world of fintech is shifting from how to raise capital to how to intelligently spend it. 

Adam Hughes, president of Avant, an online lending company focused on personal loans for the near-prime market — in other words, “riskier borrowers” — told Business Insider that consumers are expecting banks to move with the times. 

“The ‘Amazon Effect’ means that consumers are now demanding better levels of service and digital banking and lending capabilities,” he explained.

Business Insider spoke to four successful fintech founders about the steps they took after raising funding — several of which involved a bigger investment in tech — how they made those big decisions, and how those steps have gone on to impact their businesses.

Investing in fraud prevention and detection technology

Adam Hughes, president of Avant.
Courtesy of Adam Hughes

Hughes oversaw an initial seed funding round of $1 million for Avant, which he raised through family and friends in 2012. The business has since brought in a further $600 million in institutional equity capital, said Hughes, including their most recent Series E round of $325 million in 2015.

“After we raised equity capital, the theme we wanted to execute on was using better data and technology [to] provide our target customers [a] much more affordable and transparent product online,” said Hughes. “We saw that the ‘near-prime’ customer wasn’t being served by the banks, and that customer segment was having to settle for sub-prime products — and our view was they really shouldn’t have to based on their credit profile.” 

For Avant, that meant focusing on fraud prevention and verification. Over seven years, Avant has put around 25% of equity raised into building a true risk identification and mitigation system that is over 90% automated for the customer. Avant’s sister company, Amount, is the technology behind the Avant platform, and partners with large financial institutions.  

But more than simply a good customer experience, this fraud system is key to Avant’s business model — and has helped it to secure major institutional investors, including General Atlantic, Tiger Global, and August Capital.

“Having confidence in a proper verification system is critical, and it is something that investors have really gotten behind,” said Hughes.

Hughes and his colleagues also found that traditional banks want to buy into top-line fintech rather than simply develop it themselves — and investing in fraud prevention and detection technology has allowed Avant and Amount to stand out among the pack.

“Investing in verification has been instrumental in identifying the leading edge that banks are interested in. We can provide them a digital fraud prevention tool that they can use across their own individual products,” he said.

Bringing in smart tech and smarter people

Nick Molnar, cofounder and CEO of Afterpay.
Courtesy of Nick Molnar

Nick Molnar was in his early twenties when he had a vision to turn an installment payments system into a millennial-friendly fintech sensation. His company Afterpay, which allows online shoppers to buy items and pay for them over four interest-free installments, has moved aggressively from a small startup in Australia into the US and UK online retail space, and currently has a market capitalization of around $8 billion, according to MarketWatch.

The cofounder and CEO said that he found that the dynamics of raising capital were “very different in the Australian market than it is in the US.” Molnar and his cofounder Anthony Eisen floated on the Australian Stock Market (ASX) in 2016 — only nine months after the business launched — to gain access to capital so that they could focus on growth. 

“We were very pleased with the decision to list on the ASX, as it gave the company the financial resources needed to realize the value of the business,” he explained. “And, importantly, with our public balance sheet, we were able to demonstrate the highest level of business compliance and the ability to guarantee payment settlements to our retail partners — a critical factor to our business success.”

Molnar said that the top priority after listing on the stock market was managing scale, and this was achieved through investing equally in people and technology.

“We focused on attracting top talent to the company with expertise in retail, commerce, and payments technology, as well as expanding our platform capacity and accessibility to meet the consumer and retailer demand for Afterpay,” he said. Afterpay has more than 500 employees globally, and since launching in the US in May of 2018, it has a staff of around 100.

Their latest investment has been in tech, as they look to be market leaders in focusing on helping their retail partners grow.  

“We invested in the Afterpay Shop Directory, a highly visual and intuitive way for shoppers to find brands and specific items to buy,” said Molnar. “This directory has become a critical customer acquisition tool for our retailer partners and a strategic differentiator for the business. In July 2019, it referred nearly four million customers to US retailers — with some retailers seeing more referrals from Afterpay than the largest social media sites.”

Going from zero to $8 billion in under four years has taught Molnar that keeping on top of great talent is the best way to spend their money. 

“Looking back, there is always room to improve,” he said. “We continue to focus on attracting the best talent across all of the markets in which [we] operate. To date, Afterpay’s best talent has come from executives and internal teams’ own network, our board of director members’ network, and recruiting based on Afterpay’s growing brand in the US.”

Zeroing in on product marketing — and steering clear of a minimum viable product

Paul Byrne, CEO of CurrencyFair.
Courtesy of Paul Byrne

In 2014, CurrencyFair, a marketplace where money isn’t exchanged across borders but stays in the country of origin, allowing customers to avoid bank conversion fees, became the first platform in the world to break the $1 billion barrier in money-matching transfers, The Irish Times reported. 

Today, the peer-to-peer lender is launching its services in the Asian market, focusing on Singapore, Hong Kong, and China. 

CEO Paul Byrne has worked for three fintech startups, and thinks that the key to scaling up after equity funding is understanding markets rather than individual customers

“My counsel for anybody launching a business is that you should spend the majority of your time and money on product marketing … as opposed to being tech or sales led,” he told Business Insider.

Byrne oversaw CurrencyFair’s most recent equity raise of $22 million in December 2018, which came from institutional investors as well as the acquisition of Hong Kong-based Convoy Payments. This capital raise has seen him double down on his fintech philosophy, plowing the funds into product marketing for the move into the Asian market.

During the company’s recent launch in Singapore, it conducted a series of financial wellness events, as well as a formal launch event at Raffles Hotel. This was all to help raise awareness of the product in a small and networked market. Byrne and other executives are also speaking at fintech conferences around the world to raise brand awareness. 

“You need to really understand the way customers buy, and really understand the actual scaling aspect of going from your first five or 10 customers to 150 to 200 customers, because that’s really where successes gets counted,” he said. “Everyone is too focused on minimum viable product. You have to understand the market need, as opposed to [what] the first few customers want. MVP is just your users determined by you, and a couple of early-stage customers doesn’t necessarily translate into ‘this is what the market actually will buy.'”

Going back to the basics and investing in the talent that got the company to where it is today

Jason Brown, CEO and cofounder of Tally.
Courtesy of Jason Brown

For Jason Brown, CEO and cofounder of the San Francisco-based smart app Tally, which helps users automate management of their financial commitments and deploys add-on services such as automated student loan management and credit score improvement, an injection of cash is a time for grounding and ensuring the fundamentals remain in tact.

“Every time Tally raises money, I give the same talk internally, comparing it to a long road trip where we need to stop for gas every once in a while in order to continue on our journey,” said Brown.

From starting in 2015 with $2 million in seed capital, Tally has completed a further three funding rounds that have brought in $90 million in total, with more than half of that coming in June of 2019. Despite these large numbers, Brown recommends companies be prudent about celebrating dollars raised.

“It’s definitely important to make your existing team feel appreciated and supported, but the most significant moments to celebrate are when the company is shipping product and delivering value to customers,” he said. “Companies should be judicious with their money, prioritizing the things that move you toward your vision. This means going beyond providing frivolous perks, but rather finding ways to better support your team functionally and emotionally in order to grow the business.”

Tally’s latest round of funding has a two-year plan attached to it to invest the money back into the business. 

“We’ll be investing about half of our money raised in hiring talent across the organization,” said Brown. “A good part of the other half will be put into marketing so we can bring the benefits of Tally to as many people as possible.”

The company is planning to double headcount in the next year, with a particular focus on scaling its engineering team. It will also be investing significantly in brand and marketing efforts, including various paid acquisition channels such as social media and national television commercials.


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