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Advice from the FinTech Front Lines

Posted by Lauren Kendall on September 13, 2018
On September 10, 2018, The Bowdoin Group hosted a panel discussion on “The DNA of Boston FinTech” as part of #BostonFinTechWeek.  100+ executives and senior professionals joined us for the inaugural event for the new DCU FinTech Innovation Center.  The room was brimming with energy as we kicked off to a standing room-only crowd.

The event featured an all-star panel of investors, entrepreneurs, and advisors from Boston’s FinTech space, including:

The panelists gathered to discuss what it takes to be successful in FinTech when it comes to talent and partnerships.  Here are some of the key insights:

What constitutes a great founding team?

For better or for worse, it requires a little gray hair to be successful in Financial Services.  FinTech is different—those who are most successful aren’t afraid to fail.  Jennifer Lum has successfully started and sold two companies—mQube and Quattro Wireless—and, in her current position as Co-Founder of Forge.Ai, she has the benefit of being able to “get the band back together.”  Working with a team she’s been successful with before, she can shortcut some of the fundamental issues, like communication.  Her challenge is injecting formal Financial Services domain expertise into her tech-first team to make them stronger and smarter.

Mark Casady, founder of VC firm, Vestigo Ventures, says the culture and flexibility of the founding team is critical.  From his perspective, deciding whether or not to invest in a team has a lot to do with balance.  They must have passion and conviction for their idea, but it can’t be so strong they won’t (or can’t) pivot if they hit a wall.

Richard Tibbets, founder of three venture-backed startups, including his most recent company, Empirical Systems, recommends building depth of knowledge around your points of innovation.  He suggests filling the gaps in your team’s expertise by reaching out to your network and bringing people in as advisors until you know they’re a complement to your team.

How important is diversity of experience in building a high caliber team?

Jeff Glass has built five companies in various industries, ranging from financial services to software infrastructure.  He says that there is a delicate balance to industry experience and startup expertise.  From his perspective, even if you have all the industry experience in the world, companies are doing something that’s never been done before.  In his role as CEO of HomeTap Equity Partners, which gives homeowners a financial alternative to traditional mortgages, he didn’t write a line of code for a year.  Rather, he spent that year conducting a “listening tour” where he learned everything he could about the problems his company was trying to solve and the holes it could fill.  When you’re doing something disruptive, there’s not always a domain expert who can help you navigate through the uncertainty.

Richard Tibbetts says, “As an entrepreneur, you’re your own least diversified investor.”  You’re all in.  From his perspective, it’s important to learn about what you’re getting into before you’re in over your head.  Jeff Glass countered with the reality of being an entrepreneur: “Some level of being a startup founder is blissful ignorance.  If I knew what it would take to make it successful, I probably wouldn’t have started it.” 

Jennifer Lum says her next step for Forge.Ai is to commercialize, and for that, she needs people who can “talk the talk and walk the walk.”  The individuals who bring her product to market must be able to work hand-in-hand with her customers who are large financial institutions, like Goldman Sachs.  Her existing team can build the platform, but they need a team with financial services chops who know the industry—the vernacular, the people, etc.—and who can bring it to market.

Are partnerships part of your strategy and, if so, how are you engaging with incumbents (large financial institutions)?

Partnerships are becoming increasingly important for startups and incumbents alike, and Boston is unique that it has all the players in one city.  Jeff Glass says that incumbents have complex businesses—they have large departments to manage separate issues, like security, compliance, user experience, etc.  As a startup, you’ve got to cover your bases and make sure you have someone who can speak to how your product or service addresses the issues that are relevant to the partnering institution.

In any case, it’s important to find your advocate within the incumbent institution—the person who believes in what you do so much that they could actually be on your team.  Along these lines, Jennifer Lum shared that many of the incumbents are developing Tech BD groups whose purpose is to help startups navigate the organizational structure and get them to the right people.

Several of the panelists warned to be cautious of the structure of partnerships.  Richard Tibbetts encourages startups to position partnerships so that it looks like they bought your company because things get murky when you consider joint ownership or the sharing of IP.  Jennifer Lum said that she’s also learned not to partner with other early stage companies as it’s not a great use of time—both companies are still working out their kinks and it ends up creating confusion instead of being helpful.

How do you balance the pace of play and drive to innovate typical of a startup with slow-moving institutions and increasing regulation? 

When you’re pulling in advisors from incumbents or developing formal partnerships with them, Jennifer Lum says that it’s not necessarily about big vs. small company—it’s more about mindset.  You have to be able to assess whether a candidate can succeed through the highs, lows, and chaos inherent with an early stage company.

Richard Tibbetts adds that it’s important to remember that people coming from slow-moving companies aren’t slow people, they’re just used to working for a slow-moving company.  They tend to be more cautious.  In his experience, they’re thrilled to be moving quickly, but they need coaching on where to cut corners as they’re used to red tape environments.

How would you describe Boston FinTech? 

There’s a deep respect for experience in Boston.  Businesses seem to understand that to get further, they need to work together rather than compete.  Incumbents are appreciated for their stability and knowledge while startups are valued for their innovation and agility.  Richard Tibbetts jokes that as a startup founder, “I don’t need to Uber Fidelity.”

Jennifer Lum and Mark Casady agree.  They brought it home by pointing out that the power of the Boston FinTech scene was inherent in the (crowded) room—investors, entrepreneurs, universities, incumbents, and organizations like the FinTech Sandbox come together to create an incredible ecosystem.  Jennifer Lum jokes that she particularly likes that being Boston-based means she doesn’t have to get on a train or a plane to meet with her financial clients.

Wrapping it up

The discussion revealed that Boston’s FinTech scene is going to continue to thrive as a result of the varied organizations and businesses that call Boston home.  Judging from the simple fact alone that last year’s Boston FinTech Week featured 12 events and this year featured over 45, it’s obvious that FinTech is heating up in Boston and we’re thrilled to be involved.

Learn more here about attending future FinTech events or about receiving best practices and insights from the Bowdoin team.