The secret to a successful raise

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“How much do you want to raise?
 How much do you want to dilute?
 There’s your answer…”

That was me asking a VC pal of mine to value my business for a possible fundraise next year. Fortunately, this wasn’t his only advice.

And so, the past fortnight has been mainly spreadsheets, pitch deck iterations and long lunches. That and spending a decent amount of client time better operationalising how to scout emergent tech and manage activity across teams.

I sense we’ll soon see a very obvious commercial divide between those who have dedicated resource/budget to explore emergent tech, and those who continue to passively and organically innovate.

Many of our clients come to us having committed to growth whilst recognising they can’t get there organically and as such need help to define and execute an alternative strategy. That bit’s easy. We’ve done plenty of that.

What really interests me at the moment are those operating new ventures or innovation teams running into the 100s of people. They know what they’re looking for, have active scouting strategies in play and have already made a decent number of investments or agreed a tonne of partnerships.

But as is so often that case, things are never quite how they appear on the surface.

It’s incredible to discover just how disjointed and, consequently, inefficient the innovation functions within these companies really are. Everyone is using different spreadsheets or CRMs, no one knows who has met who, multiple people working independently on the same brief etc.

Whilst there’s a cost to all this, the more alarming side to me is the $$ millions that are missed or left on the table as a result. And if this all sounds a little too familiar, get in touch. We’re getting more involved in this stuff too and have developed a 1-week design spike, sitting on top of Sønr, which will get you and your broader team working a whole load smarter. Happy to send it out if you’d like.

Now time for the bit which you’ve probably just scanned to anyway...


London is still the centre of the financial world (for now)

I thought I’d break with tradition and start with some investments of note from the past couple of weeks. There’ve been a good number of raises by UK fintechs, with a real mix of business models taking in B2C, B2B & tech plays.

Really interesting to note that London recently overtook NYC for Fintech investments this year, an indication of the UK’s welcoming environment for innovators perhaps, with frequent regulatory sandbox programs and a thriving startup ecosystem which is starting to capitalise on the potential of Open Banking data. Or just that the States, the land of cheques and pin codes, has always been so frustratingly behind in the consumer finance space.

This week saw challenger business bank Tide raise £44M to grow in the UK and expand into Europe. Savvy secured £20M for their ‘ethical’ alternative to pay-day loans. And card-linking pioneers Fidel banked a £16.3M Series A to fuel growth.

The big one earlier this month, though, was Fintech-as-a-Service (which, I’m sure is a term) scaleup Rapyd, which closed a hefty $100M Series C after securing a remittance license in Singapore the week before; quite the opportunity now awaits given the widespread adoption of e-wallets and e-payment in APAC.

Given Visa’s acquisition of Earthport - another cross-border payment platform - in May this year, delayed briefly by an attempted gazumping by Mastercard, borderless transactions are clearly a space that’s heating up at some speed. (Later in the year, by the way, Mastercard scratched that particular itch with Transfast).

So whether it’s Savvy using customer data for credit scoring, Tide building SME financial services on Open Banking, or Rapyd’s API offering partners a wealth of possibility, these companies and many like them are creating stellar new tech which is driving them relentlessly forward.
 
Lastly, a random one to include with all these Fintechs is the Proptech platform Canopy, which followed their £3.1M raise in July with a freshly-minted partnership with Plaid - leveraging cross-border Open Banking possibilities to offer tenant checks on renters coming to the UK from N America and Western Europe.

The specific problem being solved may be relatively niche, but it promises to be an elegant solution to what can often be quite the difficulty for non-Brits moving here, and which could get even harder post-Brexit.

I can take an Uber copter to JFK. I can rent an electric scooter. I’m sure for the foreseeable future I’ll still ‘avocado’

The entire industry from Valley tech-preneurs to Detroit’s gas-guzzling dinosaurs is busier than ever, trying out new ideas and leaning on investors as it goes.

Market-leading scooter e-rental firm Bird shook off the nay-sayers to close a $275M Series D last week at a value of over $2.5B. I can’t but help think of China’s bike graveyards - a tough reminder of what happens when investors chase growth at any cost. 

Closer to (my) home, Bird contemporary German-based Tier Mobility will be hoping for market longevity as they closed their $60M raise, including participation from AXA.
 
An interesting fact is e-scooters remain illegal in the UK (despite my dog, deservedly, being almost run over by one or two, each morning).

Another quirk of UK transport law is that the average fine for driving a car without insurance is now cheaper than the average motor insurance premium. Whilst that overlooks the obvious liability issues, it does feel something somewhere has gone badly wrong. Downwards pressure on UK motor premiums may also soon be applied by our financial regulator, following their findings that 6m policyholders per annum are paying a ‘loyalty penalty’ worth £1.2bn. Gulp.

Looking upstream to the manufacturers, Ford are keeping themselves busy - training their AI to create future urban transport solutions (aren’t they all) and figuring how to stop bug splats from messing up the LIDAR sensors which enable their self-driving cars to ‘see’. Sounds sensible.

At the same time, ‘Russian Google’ Yandex is testing its self-driving cars in Tel Aviv while ‘Chinese Google’ Baidu does the same in Changsha. And Vodafone (which has nothing to do with Google in this context) is helping Kia to connect up its vehicles in India.


Time to take your foot off the accelerator?

Last bit of news is that a couple of global accelerators have new programs launching: Plug & Play announced their latest Insurtech Europe batch and Rainmaking are kicking off a new 30-day course in Australia. 

Is it just me or is anyone else feeling this model is starting to feel a little outdated? Or at least the value becoming less clear? We’re hearing from/working with a bunch of insurers who have been paying through the nose for such little, and often seriously parochial, output. 

A good counter in a report from CapGemini this week, is the continued global increase in corporate + tech startup partnerships. This was backed up by a statement from Wrisk which stated it is actively courting new corporate partners, going so far as to recently restructure their leadership to better build and manage those relationships.

Finally, I read Aussie banking group ANZ ran a 3-day hackathon last month, where 125+ internal participants presented 20+ ideas. That’s fun but the bit I LOVED is that the ideas were presented to a 70-stong customer panel. Excellent work ANZ. 

On that note, I promised our pals at Zurich that we’d push their Innovation Championship 2020 - “Protecting the Next Generation”
 
They’re looking for outside inspiration on how to tackle challenges around climate, health, automation and other issues that are expected to put a strain on the next generation. If you think you can help, sign up before 24th October to receive free early-bird coaching, otherwise applications close on 17 December 2019.
 
Right, time to wrap up.

As always, if you want to more information, do get in touch. Accessing the right innovation intelligence can be massively time-consuming and/or freaking expensive. We get that. And that’s why we built Sønr and that’s why insurance companies around the world are now using it.

Always happy to give you a tour around.
 
Have good weekends.

Matt
 
Sønr helps companies identify innovation that drives strategy and its execution. 

We achieve this by presenting our clients with timely and relevant intelligence from the world's most comprehensive source of innovation data.
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