Agustin Rubini, fintech author, influencer and Founder of consulting firm FSPal.com, shares insights from his new book, Fintech Founders: Inspiring Tales From The Entrepreneurs
That Are Changing Finance
THE FINTECH MAGAZINE: You’ve met and coached extraordinary founders during your career and shared some of their stories so that others can benefit from their experience. How important is it, do you think, to have a mentor or a coach to be successful?
AGUSTIN RUBIN: More than half of the people that I interviewed for my new book use a coach or a mentor. As I assessed the interviews, it was interesting to find that
the founders of some of the companies were actually mentors or coaches for other younger startups, like the founder of CurrencyFair, helping a fellow Irish company called Assure Hedge.
Entrepreneurs are more productive when they get help to prioritise and keep them accountable. Mentors can help identify issues before they become a problem as they’ve often dealt with the same issues themselves in the past.
TFM: What strikes you most about these fintech founders?
AR: I feel deeply inspired by, and have profound admiration for, them! They are heroes that overcome so many hurdles, like fearless honey badgers, and never give in. I especially like fintechs focussed on financial inclusion.
It’s great to see entrepreneurs transforming emerging markets and bringing countries closer to the developed world. Take, for example, entrepreneurs like Steve Polsky from Juvo, who is pushing to create financial identities for the billions of unbanked people around the world. Or Elizabeth Rossiello from BitPesa, who is offering a low-cost way to make cross-border payments in Africa.
TFM: What criteria did you use for choosing the companies you profile in the book?
AR: Entrepreneurship can be difficult. Our research suggests that, at most, only 15 per cent of fintech startups will make it.
I wanted to demonstrate a mix of firms at different maturity stages. I have included unicorns like Brex and Tradeshift and acquired firms like iZettle or Holvi, but also companies in earlier rounds of funding. It’s great to see the challenges that founders face at different stages of development.
TFM: What do you need to start a successful fintech and where do the best ideas come from?
AR: I’ve discussed this in depth with Wong Joo Seng, CEO of Spark Systems.
First, you must understand the problem in its simplest way and translate the solution clearly. Then you need to find the right team and get traction. Entrepreneurs should also make sure that the business model and financials make sense.
Most startups begin when founders come across problems or experience problems themselves, sometimes in their personal lives. Picture the iZettle card reader. Jacob de Geer got the idea as he was trying to help his wife, who was importing sunglasses to sell at fairs and markets. She needed a quick way to charge for them, given that many loved her product but didn’t carry enough cash around.
At other times, ideas come to finance professionals during their day-to-day job, as was the case with Tradeshift, where the founders had been working on digitising invoicing in the Nordics for a long time and realised there was a global opportunity to connect businesses better. Or Roofstock, a property investment platform, where the founder was just trying to make his investments more automated.
TFM: Do you think you need to have deep expertise to set up a company, or know something that the rest of us don’t know?
AR: It is really important to develop a deep understanding of the problem that you are trying to solve. Usually, at least one of the founders has deep industry expertise, but if you don’t, it’s not really a deterrent. You can develop an in-depth knowledge of the intricacies of the industry, the way it operates and its challenges, in a short amount of time. Start by talking tirelessly to the different stakeholders in the ecosystem, including providers and prospective clients; this will help you develop into a true expert.
Take the example of Karn Saroya, the cofounder of Cover, who created a successful insurtech startup without really having knowledge about the distribution or underwriting of insurance. By throwing himself into insurance, he is now one of the most knowledgeable professionals in the industry.
TFM: What can people learn about funding from your experiences?
AR: There is no one size fits all for funding. It used to be more difficult before venture capitalists started investing, especially for startups founded before 2010. For example, Stephane Dubois struggled to keep Xignite alive for six years until he got a sizeable investment from Silicon Valley venture capitalists in 2006. His company is now a key player, providing data to most of the best-known fintechs in the world.
Nowadays, people have many more options, thanks to fintech creating a virtuous cycle. Small and medium-sized enterprise (SME) lending has diversified, equity crowdfunding was born, and there are initial coin offerings (ICOs) and security token offerings (STOs).
TFM: Was there any funding technique that surprised you?
AR: There are some. If I had to pick one, I loved the way that Indian RentoMojo’s founder, Geetansh Bamania, without a big track record, managed to raise $2million in seed funding. His main weapon was a great idea and good old cold calling, combined with LinkedIn. Geetansh was bold in approaching some of the most successful angel investors and proved that it can be done.
I also like the approach of SyndicateRoom, a crowdfunding platform that used its own service for raising funds. Or Fiverr, which has created its IPO documentation using a freelancer from its own platform. It is much easier for entrepreneurs with a track record to raise funds; venture capitalists (VCs) rank experience higher than the idea.
So, a good strategy is to approach serial entrepreneurs like Anthony Thompson, Renaud Laplanche or Mike Serbinis to join your startup as advisors.
TFM: Has any company surprised you by its ability to turn a profit quickly?
AR: I was very impressed by OakNorth, a UK company that enables businesses to get mid-sized loans. It broke even after 11 months. The founders, Joel Perlman and Rishi Khosla, started the business based on a bad experience as customers, and it is now Europe’s fastest-growing fintech.
TFM: Is there an optimum size and composition for founding teams?
AR: I don’t think there is a specific perfect number of people. I have seen many companies start as a one-man band, like Juvo, Nav or Flywire. However, having two to three different founders can help get better results. In terms of roles, one will take the commercial and strategic helm, while another one will look at technology. A third person may look at operations as well as partnerships, although it depends a lot on the targeted niche.
TFM: Did founders speak about their regrets or the mistakes they made?
AR: Not a single founder I’ve talked to regrets jumping onto the entrepreneurship bandwagon. Some of the founders enjoy growing the companies into proper corporates, and others like to move on to develop new ideas as companies grow – they simply like the thrill of the initial creation phase. But they all love the challenges that startups present.
In terms of mistakes made, there were some common themes. Many people regret not having pinned down properly the problem they wanted to solve, which cost them money and time. Others regret making mistakes when scaling up, especially growing the team too fast. This is probably the most sensitive area that startups need to take care of – how to bring in people who are aligned with the vision and culture and who can add value immediately.
TFM: Just to close off, was there a founder’s story that really stood out during your journey?
AR: Quite a few – it’s really hard to pick just one! I really like some stories from Latin America, where fintech activity is picking up rapidly. The case of Brex blew my mind. It’s the story of how a couple of teenagers, instead of playing video games, decided to create a payments network called Pagar.me for Brazil. They sold the successful company and off they went to start a new one that became a unicorn after just a few months. And they managed to do it while staying humble and true to themselves.