In a time of layoffs, belt tightening and the chanting of “do more with less” ringing through departments, there is nothing better than watching startups pitch for capital. They are dye-in-the-wool optimists who think they have the better mouse trap. That’s why I’m happy that I managed to attend the last 2013 regional startup challenge sponsored by Innotribe, SWIFT’s innovation initiative last Thursday.
This was the third and final regional challenges hosted by Innotribe this year. It held one in Singapore in April and another in London in May. In each competition, the audience, which is composed of venture capitalists and angel investors, select three startups and two innovative companies to send to Sibos, where they will compete for a $50,000 grand prize.
Second- and subsequent place winners can expect a warm handshake, according to Innotribe’s Nektarios Liolios, who emceed the New York event with colleague Matteo Rizzi.
With heightened airport security, I guess a set of steak knives really was out of the question.
To be honest, the face time that participants had with venture capital firms attending and judging at these events is more valuable than the actual cash prize.
This year P2P Cash and XYVerify repeated their 2012 victory as startup finalists. Realty Mogul joined them with its first time win. Each of the companies is under three-years old and has had less than $1 million in combined revenue or investments in the past 12 months.
P2P Cash offers clients a free cash transfers to mobile wallets from around the globe using existing industry standards and SWIFT’s infrastructure. The company plans to make its revenue by splitting the difference between the wholesale foreign exchange (FX) exchange rate and the retail exchange rate with participating banks.
XVVerify provides “geofencing” that determines whether a user can use applications and data by determining their location by cell towers triangulation. Early interest in technology is coming from the mobile gaming industry and, not surprisingly, the state of Nevada.
Realty Mogul seeks to place qualified investors into a private real estate investments. Launched two months ago, the company vets all potential properties and management teams and then creates a special-purpose vehicle like a limited-liability company (LLC), in which clients can invest as little as $5,000.
Quantum4d and Entrepreneurial Finance Lab (EFL) will also be going to Sibos for compete against other innovator finalists. Unlike the startup contestants, innovators are small companies that brings something innovative to the market place.
In the case of Quantum4d, it is the company’s pattern-recognition software that provides an intuitive graphical representation of big data. In its pitch before the VC audience, the presenter suggested its use in anti-money laundering (AML), but that’s really just the tip of the iceberg for this technology.
The team over at EFL uses psychometric principles to help determine credit worthiness in emerging markets that lack the maturity to support typical credit scoring. The process involves conducting a benchmark survey in a region about intellect, business acumen, ethics, and other factors that will help decide whether a client likely would repay a loan. After EFL gathers and processes the benchmark data, it compares a potential client’s answers to the benchmark data, assigns it a value and sends that value on to the requesting bank or financial institution.
All of regional finalist presented well and have sound business plans, but I found the voting process interesting. Audience members weren’t asked to vote for the company’s they liked best, but which one would best improve the financial services industry as a whole.
I felt this put some firms that had more mature business models and likelihood of success at a disadvantage and helped firms looking to break into untapped markets. I’d like to acknowledge a few of the challengers that didn’t make the first cut, but still bring interesting things to the table and are worth a look.
First is QuantConnect that has created an online community for quantitative analysts and retail investors. The community provides quants with free and low-cost virtual infrastructure services, which they can use to create, back-test and run their quantitative trading strategies. As part of the agreement, retail investors can then use these community-published trading strategies and mirror the quant’s trades. By providing these strategies to the retail investor, brokers can expect to see more retail trade flow, which will bring more liquidity to the market.
The other two are AgileCredit and PeopleHedge, which provide for online lending and FX hedging capabilities for small and medium-sized businesses (SMBs) that did not have access to them previously.
AgileCredit looks to recreate the local banker relationship with its online clients by tracking client performance and addressing small issues that could affect loan repayments before the grow into larger problems. It also plans to keep its costs of client acquisition low by partnering with other hosted business applications focused on the SMB vertical.
PeopleHedge reduces a SMB’s FX exposure risk, which helps the SMB expand its overseas markets. Using PeopleHedge’s services guarantees the FX rate when a client’s customer finalizes their online purchase. If the exchange rate moves into the merchant’s favor by the end of the monthly cycle, the merchant keeps the extra profit. If it moves against the merchant, the original locked-in rate prevails. PeopleHedge accomplishes this by aggregating its clients’ FX exposure into a monthly FX options contract. According to the company’s presenter, PeopleHedge is capable of hedging transactions as small as a dollar.
There were also several other startup focused in the retail space, but I’ll save those for bloggers covering that space.