Episodes
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HI FINTECHTALKERS, (follow me on Twitter (X) for lively discussions on these topics @PADDYRAMANATHAN),
I sat down with Frank Desvignes, founding partner of True Global Ventures (or TGV) 4 Plus. We talked about the unique approach of TGV in the venture capital landscape, their global footprint with local presence in all major theatres, and the recently concluded AI startup competition they recently held in San Mateo.
TGV's remarkable success underscores the essential need for startups to cultivate a global presence early in their journey. This approach is vital for securing capital, accessing diverse markets, and building networks of talented knowledge workers. In light of the recent collapse of Silicon Valley Bank (SVB) last year and the decline in venture debt mechanisms, alongside Elon Musk’s decision to move away from Delaware incorporation, the traditional rules and orthodoxies for startup success are undergoing significant shifts.
TGV's innovative model represents a positive disruption to the current, sub-optimal Silicon Valley venture capital culture, a topic I have explored extensively in earlier writings. By embracing a global perspective, TGV not only navigates these changing dynamics but also sets a new standard for what startup success can look like in today's rapidly evolving business environment.
Frank and his team at TGV actively deploying capital for Series A/B. Connect with them at https://www.tgv4plus.com/contact.html
Enjoy and always be in the know,
Paddy Ramanathan Follow me on the new X @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, and Spotify)
(Violin piece in podcast, courtesy of my daughter Ilina)
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
Hi FINTECHTALKERS, (These opinions are mine and not of the guests of my show)
It is commonly accepted wisdom in Silicon Valley that venture capital (VC) portfolio, especially early stage, follow the power law and not the normal distribution - a small number of investments make huge returns whereas a large number don’t even return the invested capital. Given this reality, venture capitalists focus on startups with odds of achieving higher-than-average success, a fact they openly acknowledge. It is frequency vs. magnitude of success or the assessment of that at an early stage. This assessment is very subjective as they prioritize specific trends or ideas simply because they're popular within their social circles or if the founding team has connections within their extended network. Simply put, it is group think with a lot of bias which are not signals of business success or any value analysis. To make matters worse they think this is a strength. Vinod Khosla, a prominent Silicon Valley venture capitalists (VCs) and the founder of Khosla Ventures, candidly admitted to Harvard Business Review that the power dynamic swiftly shifts when VCs become enthusiastic about a startup, particularly if it receives offers from other firms. "The best startups with inspiring entrepreneurs face intense competition for funding," he remarked. However, what is seldom said is that minority founders, such as Black or Latino founders, often do not fit the profile of “best startups” or “inspiring entrepreneurs” due to biases inherent within these elitist capital allocators. 1 2 3.
A living example of this bias is Tope Awotona, the now billionaire founder of Calendly. Awotona, a black entrepreneur from Atlanta (originally from Nigeria), bootstrapped Calendly by draining his bank and 401(k) accounts, according to publicly available news articles and Calendly website (see screen shot below). It wasn't until eight years into his journey that he raised venture capital, Calendly now is valued at over $3 billion (he may have got some seed capital from a local Atlanta Ventures). Awotona likely did not meet the “inspiring entrepreneurs” label for Khosla and his Silicon Valley peers. Mr. Awotona persisted but several others don’t and cannot.
Source - Calendly Website
“I raided my bank account and 401(k) to launch Calendly in 2013. Eventually, I ran out of money and started to seek VC funding. I had a working product, and customers using it, and everyone said no. Meanwhile, I watched other people who fit a different “profile” get money thrown at them for shitty ideas. Those VCs were ignorant and shortsighted. The only thing I could attribute it to was that I was black,” he told media. Tope Awotona as quoted in https://peopleofcolorintech.com/ Emphasis added
Moreover, when a startup garners the backing of VCs, these investors often pull out all the stops to ensure its success. They employ various mechanisms, such as venture debt and mutual co-investments at inflated valuations, practices that go unscrutinized in private markets but arguably should be, especially considering that much of the capital originates from pension funds and 401(k)s. In the wake of the SVB collapse, VCs have lost access to tools like venture debt that were once used to amplify leverage and prop up valuations. This shift demands a more value-based approach to portfolio construction. Previously, VC-friendly banks like SVB facilitated venture debt through concentrated deposits, a strategy encouraged by Silicon Valley VCs who insisted their portfolio companies bank there. I explored this issue last year, highlighting concentration risk and the perils of venture debt as key factors in SVB's downfall. Private investments, especially in early-stage ventures, don't get scrutinized much, allowing for big gambles (unreal valuations) and the ability to influence co-investors. However, if factors such as race are influencing investment decisions, aren't we on a slippery slope? Shouldn't there be more reporting to at least increase transparency? 4
To further illustrate my point, let's delve into the data on VC selections, which underscore how early-stage investment practices of venture capitalists are little more than a glorified lottery ticket selection process, heavily biased against minority founders, particularly Black and Latino entrepreneurs.
The statistics reveal a stark concentration of returns in venture capital investments: a mere 6% of investments, representing only 4.5% of the total invested capital, account for approximately 60% of the total returns. Conversely, about 50% of the companies (around 37% in dollar terms, see graph below) in which VCs invest fail to provide returns greater than 1x. This highlights a significant inefficiency in the allocation of capital and underscores the need for a more equitable and performance-based approach in VC practices.
Source - Correlation Ventures blog post
Many funds underperform, and even the successful ones are burdened with numerous money-losing investments. For example, underperforming funds have nearly 80% of their investments underperforming, both in terms of dollar value and the number of investments. Conversely, even a fund that achieves a 5x return still has over 40% of its investments losing money, which is higher than that of 2-3x performing funds. See graph below. This suggests that the primary difference between highly successful funds and less successful ones isn't superior overall performance across their portfolios but rather the success of one or two high-risk, high-reward investments that paid off significantly - they don’t always but since it is huge factor VCs almost look for that and leave money on the table in the process. This further emphasizes the need for a more judicious and equitable approach in venture capital investment strategies.
Source - Correlation Ventures blog post
Now, let's examine the stark disparity in venture capital allocations to minority founders and the vast opportunities they are uniquely positioned to capitalize on. In 2023, Crunchbase reported that Black-founded startups received a mere 0.5% of the $140.4 billion in VC funding—only $0.7 billion in total. Considering that Black individuals comprise about 13% of the U.S. population, this allocation is woefully inadequate. McKinsey estimates the Black consumer market at approximately $300 billion, presenting a significant opportunity for Black startup founders.
Latinos, who start more businesses per capita than any other racial group in the U.S., fare slightly better but still receive less than 2% of venture capital funding. The total economic output of Latinos in the U.S. is around $3.2 trillion, nearly 15% of the nation's GDP. Latino founders are well-positioned to tap into this substantial market, particularly in sectors like healthtech, edtech, fintech, and eCommerce.
Investing in minority founders represents a tremendous opportunity for investors, especially those building in areas where they hold natural advantages. One of the fundamental principles of successful startup investing is that founders with a personal connection to what they are building have a higher chance of success. By recognizing and addressing these disparities, venture capitalists can unlock significant untapped potential and drive more economic growth.
To summarize, the overall track record of venture capital selection is not impressive. Venture capitalists often fall prey to groupthink, prioritizing specific trends or ideas because they are popular within their social circles or because the founding team has connections within their extended network. This approach has led to significant underperformance in many funds. Meanwhile, minority founders, who have been neglected by the VC community for decades, are uniquely positioned to deliver substantial returns. They have a deep understanding of and connection to the markets they serve, making them well-suited to solve specific problems and capitalize on significant opportunities.
I sat down to discuss all this and what can be done with Linda Haddad, Director and Program Coordinator at Bank of America’s Breakthrough Lab (BTL) - an accelerator for underrepresented founders, Laura Moreno Lucas, General Partner L’Attitude Ventures - a VC firm focused on Latino founders, Stephanie Joseph, CEO of Kura - BTL Cohort 3 member, and Maria Medrano, CEO of Inspirame - also BTL Cohort 3 member. We cover a lot of ground with this all women panel on the reasons and what can be done to raise awareness to this missed opportunity for investors and the community at large. While certain corporations and specialized venture capital firms have started to acknowledge and seize upon these opportunities, there's still ample scope for enhancement, particularly from limited partners and institutional investors, and potentially regulatory oversight, and policy maker scrutiny.
The data unequivocally indicates that venture capitalists are leaving potential returns on the table, failing to meet performance expectations, and disproportionately underfunding minority founders. The temporary surge in funding for minority founders in 2021 has faded, with 2023 investments falling below 2020 levels. This shows that VCs will not change unless held accountable. Limited partners, institutional investors, corporate partners, and the startup community must demand transparency and accountability within the VC industry.
With changing economic conditions, global innovation hubs, and the loss of tools like venture debt, Silicon Valley VCs will find it increasingly challenging to achieve extraordinary 10x returns on individual investments. This situation underscores the necessity for a more resilient approach, focusing on diverse and robust portfolio companies that consistently perform well. Limited partners and institutional investors must recognize this need and act promptly to avoid the risk of diminishing returns from an already struggling asset class. Holding VCs accountable for value driven funding practices is not only a moral imperative but also a necessity for sustained financial performance.
Click here to learn more about BTL and to apply to Cohort 4
Click here to learn more about L’Attitude Ventures
Click here to learn more Kura Technologies
Click here to learn more about Inspirame
Enjoy and always be in the know,
Paddy Ramanathan
Follow me on the new Twitter (X) @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, YouTube, and Spotify)
Thanks to chatgpt, Evita Grant and Eza D’Souza for suggestions.
(Violin piece in podcast, courtesy of my daughter Ilina)
* Venture Capital — We’re Still Not Normal - David Coats
* How Venture Capitalists Make Decisions - HBR
* Performance Data and the ‘Babe Ruth’ Effect in Venture Capital - Chris Dixon,
* The real reason for the Collapse of SVB - Paddy Ramanathan
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
Episodes manquant?
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Hi FINTECHTALKERS, (follow me on Twitter (X)) for real-time discussions on these topics @PADDYRAMANATHAN),
I sat down with Deep Varma, CTO of Alkami (0-41.20) to talk about Digital Banking Solutions and separately with my good friend Booshan Rengachari, CEO of Finzly (41.30-1.13) to talk about Finzly’s BankOS and how he plans to incorporate AI/GenAI.
You don’t want to miss the insights of these technology visionaries building the next generation of technology for financial services.
ICYMI, the two-part series on AI that Elon Musk and Sam Altman appear to be reading and posting about:
FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Enjoy and always be in the know,
Paddy Ramanathan
Follow me on the new Twitter (X) @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, and Spotify)
(Violin piece in podcast, courtesy of my daughter Ilina)
Check out some of the new episodes of FINTECHTALK podcasts on AI at Apple, Spotify, or YouTube links below
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
Hi FINTECHTALKERS, (follow me on Twitter (X)) for lively discussions on these topics @PADDYRAMANATHAN),
I sat down with Ram Palaniappan, CEO of Earnin, a company that allows workers to access their pay instantly. Lot of folks in the industry like to talk about financial inclusion as it is good for the brand, Palaniappan and Earnin are the real deal.
Palaniappan has built a very sucessfull main street fintech and raised around $200 million from prominent VCs like Andreessen Horowitz, Matrix Partners, Ribbit Capital. He talks passionately about how how his company’s product have impacted real customers. Seems like a simple concept but a huge deal for someone who lives paycheck to paycheck.
We cover a wide variety of topics including solving for medical debt, overdraft fees or its avoidnance, increasing savings and overall improving the financial health. Can Earnin be the financial AI co-pilot - the killer GenAI app in consumer finance? Tune in to find out.
Enjoy and always be in the know,
Paddy Ramanathan
Follow me on the new Twitter (X) @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, and Spotify)
(Violin piece in podcast, courtesy of my daughter Ilina)
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
HI FINTECHTALKERS, (follow me on Twitter (X) for lively discussions on these topics @PADDYRAMANATHAN),
Happy New Year! I sat down with Zor Gorelov, CEO of Kasisto, a pioneer in AI. We cover a lot of topics from Artificial Financial Intelligence (AFI before AGI) that Zor passionately talks about, how domain-specific models can win over general-purpose LLMs, and how those capabilities will provide a competitive advantage for future enterprises.
Here is the table of timestamps for easy navigation of the conversation
0.-4.40 - Intro of the episode, Zor’s background, and what got him to build Kasisto
4.41- 8.04 - Kasisto’s history, how it came to be from SRI, democratize and everyone to have a digital advisor
8.05-13.36 - Banking-specific model KAI-GPT and how will AI can be a differentiation in FS
13.37 -18.57 - AGI, AFI et al - AI-based financial advisor that is like human advisors
18.58- 23.33 - How should FI’s adopt LLMs - Augment LLMs, domain-specific model or build from the ground up
23.34 -26.0 - The design principle or pillars for Kasisto and KAI-GPT
26.01-27.46 - AI becoming the Enterprise Information and Intelligence (Human + Machine)
27.46- 33.30 AI Middleware or Middle GPT Ware and AI for structured Data
33.30-36.50 - Closing - how to connect with Gor
Enjoy and always be in the know,
Paddy Ramanathan Follow me on the new Twitter (X) @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, and Spotify)
(Violin piece in podcast, courtesy of my daughter Ilina)
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
HI FINTECHTALKERS, (follow me on Twitter (X) for lively discussions on these topics @PADDYRAMANATHAN),
I sat down with David Nohe, CEO of Fingoal, a Fintel Startup creating hyperpersonalization, and Leslie Gillin, Chief Growth Officer at Pagaya another innovative company applying AI in financial services in credit decisions and financial inclusion.
Subscribe to tune into my conversation with Zor Gorelov, CEO of Kasisto, and Deep Varma CTO of Alkami coming up next.
Enjoy and always be in the know,
Paddy Ramanathan Follow me on the new X @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, and Spotify)
(Violin piece in podcast, courtesy of my daughter Ilina)
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
HI FINTECHTALKERS, (follow me on Twitter (X) for lively discussions on these topics @PADDYRAMANATHAN),
I sat down with Ian Horne, author of Why DeFI Matters to discuss his book. This was recorded on the sidelines of Money2020.
We talk about how DeFI changes to the financial system factor whereas fintech is essentially a distribution innovation, and how Web3 fundamentally changes the business model of the internet. Ian talks about successful projects in DefI/Crypto that don’t get much attention and what he is most excited about.
Enjoy and always be in the know,
Paddy Ramanathan Follow me on the new Twitter (X) @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, and Spotify)
(Violin piece in podcast, courtesy of my daughter Ilina)
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
HI FINTECHTALKERS, (follow me on Twitter (X) for lively discussions on these topics @PADDYRAMANATHAN),
I sat down with William Capuzzi, CEO of Apex Fintech Solutions (also a board member at DTCC and a prolific investor) on the sidelines of the Money20/20 show this week in Las Vegas. We covered a lot of topics including why Bill challenges himself to run triathlons, what is his mission at Apex, and how he and his team are enabling average retail investors to invest like hedge fund managers; Apex’s new fractional fixed income product; the transformative role that AI and generative AI will play in the wealth management business and in closing how he follows key advice from Greg McKeown’s Essentialism - the disciplined pursuit of less.
I have included a table of timestamps for easy navigation:
0.-3.21 - Intro of the episode, Bill’s background, and what got him to build Apex
3.22- 5.19 Apex’s mission and purpose
5.20-7.39 Running, Triathlon, Iron Man and what does running help
7.40-11.35 What does Apex do and who do they serve?
11.36-15.05 Embedded Finance - the future of digital distribution of financial services including wealth
15.06-17.50 How is Apex different from the traditional players
17.51-22.35 The democratization, making every retail investor invest like a hedge fund manager
22.36-26.40 The New fractional fixed income and doing it right
26.51-35.54 The future of Wealth mgmt with AI, Gen AI - Autonomous Wealth Mgmt, Advisor Co-Pilot
35.55-40.30 Philosophical alignment with Steve Jobs, and George Mckeown’s Essentialism (The disciplined pursuit of less) and type of companies Apex is looking to partner.
Enjoy and always be in the know,
Paddy Ramanathan Follow me on the new Twitter @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast, and Spotify)
(Violin piece in podcast, courtesy of my daughter Ilina)
FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
HI FINTECHTALKERS, ( follow me on Twitter for lively discussions on these topics @PADDYRAMANATHAN)
Three years ago, in January 2020, we published our top 10 predictions for the decade below. So we wanted to follow up to see where the puck has been and where it will be.
Multi-modal AI, which includes text-to-image and text-to-audio capabilities, has arrived, as has quantum computing for cyber-security. TwitterFiles demonstrate that Twitter is more than a social media platform, but a critical transmission network that shaped public opinion, much like a power grid is for electricity.
When we consider the reach and attention of a platform like Twitter2.0 and the AI-generated content (narratives, texts, images, and videos), we are headed for a new level of hyper-personalized and augmented reality.
This is why - I decided to bring in some experts and talk about what is in store for 2023 and beyond and what we make of all the Generative AI and AGI (Artificial General Intelligence) talk.
I saw down with Jags Kandaswamy (CEO and Founder of Latent.AI), Lewis Liu (CEO of EigenTech), Sean Austin (CEO of Helios Life Enterprises), Ahon Sarkar (GM of Helix from Q2), Riad Hartani (Managing partner at Xonapartners) and Steven Ramirez (CEO at BeyondtheArc) to talk about all things technology, consumer behavior, and societal trend. The podcast and editorial infograph is included in this edition along with the link to the Generative Elder’s recap.
Artificial General Intelligence (AGI), a theoretical concept of human-like AI has been a topic of discussion lately. I asked ChatGPT about AGI and whether it was AGI, and here is what I got:
“No, I am not an AGI. I am a language model…Yes, as an AI language model, I am a small step towards AGI. AGI is a hypothetical concept that aims to create machines that possess general intelligence, and while we are not yet close to achieving AGI, language models like me represent a significant advance in artificial intelligence.” ChatGPT Feb 2023
We are at a pivotal moment in history, where the capabilities of artificial intelligence (AI) are expanding rapidly. The infograph above is an attempt to roadmap AI into horizons of increasing sophistication and use.
With generative capabilities in text, audio, video, code, and 3-D, AI is no longer just a decision support engine but is now able to augment and will soon replace several knowledge worker functions.
The implications of further advancements in generative models are significant and could change functions such as sales and marketing, design, and programming, and have a transformative effect in the fields of life sciences, medicine, financial services and even manufacturing. Imagine the possibilities if we were to connect AI to the cerebral cortex, which could unlock human potential in new and creative ways. For now, with embedded AI and AI on the edge, we are expanding human potential and creating new applications and value in areas such as warfare, terrestrial and space exploration, and other verticals.
Businesses beware! The biggest potential disruptor to your competitive advantage is the emergence of a competitor or upstart capable of doing what your best human resources can do, but on a much larger scale, with greater efficiency and effectiveness, thanks to AI. Therefore, investing in AI readiness for your core team is paramount for long-term success. Despite the deep technology behind AI, its value ultimately lies in its creative usage by humans. AI can augment and amplify human capabilities, but the critical decision-making, innovation, and creativity that drive the business forward are distinctly human traits. By embracing AI and preparing your team to integrate it into your operations, you can unleash your full potential and stay ahead of the competition. Don't miss out on this opportunity - invest in AI readiness today and prepare for a brighter, more innovative future.
Paddy RamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show
(Violin piece in podcast courtesy of my daughter Ilina, thanks also to chatgpt for suggestions)
The Generative Elder recap of the FINTECHTALK show - The Cambrian Explosion in AI: A blast like never before
Connect with us!
iValley Innovation Center11040 Bollinger Canyon Rd, E-909San Ramon, CA 94582,The United States.
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HI FINTECHTALKERS,
This is one of the recordings from the sidelines of Money 2020 earlier this fall in Vegas. It was great to be back at this high energy show sometime back when FTX was just a TLA known to a few.
There were several broad themes at the show. Here are my top takeaways.
* Modernization of Infrastructure - Digital platforms like Smart Card, BaaS/Embedded Finance, neoCore platforms, and Enterprise DeFI
* Fintech explosion in the South - LATAM and beyond (I talk to Jean Mies of PPRO in this edition)
* We are just not ready for Web 3 or at least no clear owner of Web 3’s marketing push (probably will happen over time like Bitcoin) and why i disagree with prognosticators that FTX debacle is bad for Crypto (it would be akin to saying the end of derivatives after Lehman collapse - but more on this in a separate edition)
Latin American market presents an interesting dynamic as one of the fasted growing market for eCommerce and presents a great opportunity for fintechs and as my guest Jean Mies, General Manager at PPRO, explains the market is unique and to be successful offerings have to be hyper-localized to consumer preferences.
Paddy Ramanathan Follow me on the new Twitter @PaddyRamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (on Substack, Apple Podcast and Spotify)
(Violin piece in podcast courtesy of my daughter Ilina)
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
HI FINTECHTALKERS,
I was at Money 2020 in Vegas. It was great to be back at this high energy show, antithetical in some sense to the Vegas cliché - what happens in Money 2020 is talked about all over the fintech world.
There were several broad themes at the show. Here are my top takeaways.
* Modernization of Infrastructure - Digital platforms like Smart Card, BaaS/Embedded Finance, neoCore platforms, and Enterprise DeFI - succinctly captured in our editorial info graph at the end.
* Fintech explosion in the South - LATAM and beyond (don’t miss our upcoming podcast on this)
* We are just not ready for Web3 or at least no clear owner of Web3’s marketing push (probably will happen over time like Bitcoin).
I recorded a couple of podcast and one of them is featured in this episode on Embedded Finance and neoCore. I sat down with Luvleen Sidhu (CEO at BMTX formerly BankMobile), Jamie Donahue (CTO of BMTX), and Ahon Sarkar (General Manager at Helix by Q2) to talk about all things BaaS, Embedded Finance and the recently announced partnership between BMTX and Helix.
These pages have written and prognosticated about this space as early as 2014 - more recently last year I wrote about the virtualization of Banking and how it is easier to embed a Bank in any workflow with a fintech than to open a Bank account with a traditional bank [Do you want to Embed a Bank in your Business - the future of Baas and platformization of Banking]. My guests are pioneers and leaders in this space and they are changing the distribution of financial services. Let me explain with some historical context.
In the 1980s the growth catalyst and differentiator for financial institutions was having more branches and banking locations at retailers and educational institutions and the likes followed by mergers and acquisition in the 90s to expand that footprint. The Fintech generation and Digital Banking (the last 20 years) was all about removing friction and enhancing the customer journey and efficiency.
Now, the key differentiation in financial services is the combination of digital and distribution: digital distribution through embedded finance into the workflows at retail stores, doctors offices, colleges and SMEs at large. Banking products will be available through ERP, CRM, Digital and fulfillment systems.
A digital Banking product is or will get embedded in every vertical workflow. It’s truly outside in banking not only in experience but in economics. The vertical business could also becomes a mini-bank for its customers potentially deploying its balance sheet. These business microcosms are connected, and symbiotic. Put the ecosystem in blockchain and there is more efficiency and possibilities to manage risk and programmatic controls.The combination of enterprise Defi and embedded banking will be the next wave. Watch this space for more on that!
Enjoy and always Be in the Know!
On a separate and not so upbeat note: Very disheartening to hear about layoffs in tech esp. in the bay area including in bellwether fintechs like Stripe. I found this compilation useful if you are looking to hire. Under the List of Employees tab, there are lists of the impacted individuals.
If any FINTECHTALKERS that are reading are impacted, please let me know and I am happy to make some connections
https://layoffs.fyi/
Paddy RamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (www.fintechtalk.co)
(Violin piece in podcast courtesy of my daughter Ilina)
Substack has a new chat feature. Do let me know what you think about this edition on chat
EPILOGUE
Connect with us!
iValley Innovation Center11040 Bollinger Canyon Rd, E-909San Ramon, CA 94582,The United States.
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HI FINTECHTALKERS,
It has been a while. I had some personal situations over summer and beyond for an extended time. Just getting back into rhythm.
I sat down a few weeks back with Devon Kinkead (CEO of Micronotes), Patrick Reilly (CEO of Verde International), Naushad Contractor (CEO of Fable Fintech) to talk all things about data, AI/ML in financial services and the still evolving space of cross-border payments.
AI is not going to just drive our cars, but manage our finances and will augment the enterprise’s decision making and processes. We are in early stages of the Autonomous enterprise which will eventually lead to hyper-personalized consumer interactions and AI based decision support across the enterprise. Startups like Micronotes and Verde are not only solving problems in areas like sales and marketing and credit underwriting but also developing the foundation for the autonomous enterprise. On the other hand, Fable Fintech is enabling financial institutions to adopt payment innovations like using new blockchain rails seamlessly and transparently for more efficient cross-border payments.
Stay tuned for more podcasts on the autonomous Bank and emerging payments.
Enjoy and always Be in the Know!
Paddy RamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (www.fintechtalk.co)
(Violin piece in podcast courtesy of my daughter Ilina)
EPILOGUE
The Roadmap to the Autonomous Financial Institution
Connect with us!
iValley Innovation Center11040 Bollinger Canyon Rd, E-909San Ramon, CA 94582,The United States.
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HI FINTECHTALKERS,
I sat down with Shamir Karkal (CEO of SilaMoney), Brion Bonkowski (CEO & Founder at Tern) to talk about Fintech, the Equity/Crypto market correction, and the future.
We covered a lot of ground and in order to make it easy to navigate the podcast, I have included a table of timestamps and our infographic view of the Payment value chain along with Fintech Elder recap of the podcast.
0.10-7.05 - Introduction
7.05-16.00 Challenger Bank evolution - segment-specific lifestyle applications
16.00-16.50 Inclusion - Kilimanjaro initiative
16.50- 27.00 Equity Markets and Crypto markets - is there a correlation?
27.00- 37.00 what my guests are building - Programming with money, Democratizing fintech, and more
37.00-39.06 Advice from Shamir on perspective to take on downturn (before he runs to catch his flight)
39.06-52.28 - Future of BaaS, Banking as a utility, Cross-border payments future
Enjoy and always Be in the Know!
Paddy RamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (www.fintechtalk.co)
(Violin piece in podcast courtesy of my daughter Ilina)
EPILOGUE
There is a continued focus on digital payments innovation. iValley sees disruptors across the value chain as shown in the infographics below.
A Silent Banking Tsunami That Just Happened
By the Fintech Elder
I chanced upon this charming haiku about tsunamis by Carole Dwinell:
A towering wave
Eats small islands and is gone
A butterfly bows
Many things just creep up while you’re looking elsewhere. Something is so incomprehensible, such an outlier in the grand scheme of things, that it doesn’t seem to merit any attention.
And then, you’re swept away.
That’s what is happening in banking today. It’s all very well to talk about removing friction and moving money faster and so on, but it takes a real visionary to make things truly happen.
So when I heard that the highly-connected Paddy Ramanathan from iValley was planning to host a Fintechtalk panel discussion with two individuals who are blazing their own trails in banking, I decided to drop in and see what was going on.
I wasn’t disappointed.
On the hot seats were Shamir Karkal from SilaMoney and Brion Bonkowski from Tern. Both have done some ground-breaking work on enabling Banking as a Service and creating a new paradigm for payments and micro-segmentation.
First, the harsh truth. Despite the hysteria about challenger banks and how everything has changed, the fact remains that less than 10% of accounts are with these new kids on the block. The majority of people prefer to bank with names they recognize.
On the other hand, this is going to rapidly change as technology and fresh ideas reimagine banking.
Anyone wishing to start a bank in the traditional way has several hurdles to clear: regulatory, technical, manpower and more. It can take months or even years to put together the building blocks. It's not for the weak or impatient.
But it's significantly easier now than before. Silamoney, for instance, has been hard at work making things easier with Banking, Digital Wallet & ACH Payments APIs. All you need to do is plug in the right API and some aspect of banking happens!
What has been discovered (late perhaps?) is that community banking has very interesting little niches. Golfers, immigrant groups, and other demographic groups – all have very specific characteristics and if you think about what they specifically need, then the cost of acquisition becomes lower. That means community banks could easily become effective by deploying these APIs instead of spinning wheels and wasting time and money trying to do it from scratch. Think about it! You get a lock-in and have a better understanding of the Lifetime Value of such customers.
Likewise, there are segments that need help with cross-border payments, which is both expensive and vexing. Other communities have traditions of pooling resources and being comfortable with inter-community lending. Opening such banks that provide these niche services only helps!
Faster end-user verification, ACH integration, providing ways to work with cryptocurrencies, and practically instantaneous money transfers – these are some of the new demands people have, and banks that respond will benefit. And new banks can now go live in about 8 weeks!
Tern has, in turn, been working on helping banks create highly tuned credit cards. The limits could be as low as $50 or it could be valid at only certain businesses. There are options to auto-invest in crypto too! The specificity of such offerings is quite mindboggling!
What you’re reading about is fundamentally a democratizing of the entire banking process!
After all, what do early-stage challenger banks need? They don’t want to program, or do KYC, and such important but distracting activities. They need to concentrate on establishing their product fit. Silamoney and Tern help them do that!
Did I say tsunami?
I slowly shut my laptop, trying to absorb all this. I could quite see that the silent tsunami has crept through banking, changing everything. For everyone.
The Fintech Elder plans to start a bank.
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iValley Innovation Center11040 Bollinger Canyon Rd, E-909San Ramon, CA 94582,The United States.
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HI FINTECHTALKERS,
I sat down with Ram Subramaniam (CEO of Guardianlink.io), Prakash Somosundram (CEO of Enjinstarter.com), and Matthew Gunnin (CEO of eSports.one) to talk about all things Metaverse, the rise of the immersive web, NFTs, Digital Assets and more. We covered a lot of ground and in order to make it easy to navigate the podcast, I have included a table of timestamps.
Metaverse represents the evolution of the Web, where you are in the Web not just connected to it through a device like a mobile phone - the convergence of digital and physical realities. It will become part and parcel of our lifestyle becoming the experience portal for entertainment, education, and more. With technologies like AR/VR and upcoming tech like Elon Musk’s Neurallink which is aiming to connect the human neocortex (the decision-making center of our brain) directly to computing devices (thereby to the metaverse and AI), our lives and even what is an experience are in for a profound change.
The current web is built on websites, mobile apps, and APIs and gave us e-commerce, search, social media, digital advertisement, and the sharing economy as applications. The foundation of the Metaverse is being built on Crypto, NFTs (the framework for new digital asset class), DAOs (how firms, people, and even governments may organize in the future) giving us hyper-personalized convergent and immersive experiences, convergent commerce (commerce initiated in physical and fulfilled in digital and vice-versa), and experiences APIs that drive interoperability across the Metaverse. Fasten your seat straps as belts are not going to cut it this time.
0.10-9.10 Introduction - what led them to their current focus
9.10-22.10 What is Metaverse, Web3.0 and why are NFT and Blockchain important?
22.10-29.15 How big is this? The TAM for Metaverse, NFT, eSports, and Gaming
29.15-31.30 Which geographies around the world are most active?
31.30-48.00 What are you building and how do you fit into the ecosystem?
48.00 -54.40 Why should Enterprise care about Metaverse and when /how should you build your metaverse strategy?
54.40-1.01 The projects you are excited about - DAO, Inter-operability, and more
1.01-1.04 - What are your priorities and who are you looking to connect with?
To connect with my guests and their companies go to https://enjinstarter.com/, https://www.guardianlink.io/, and https://esportsone.com/ and use any of the social media like their Discord channel.
Included in this edition is the fintech elder recap below.
Enjoy and always Be in the Know!
Paddy RamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (www.fintechtalk.co)
(Violin piece in podcast courtesy of my daughter Ilina)
The Beginning of the Beginning–Metaverse’s Promise of Infinite Possibilities
By the Fintech Elder
“Why, sometimes I’ve believed as many as six impossible things before breakfast.”
You know where that came from. The pen of the great science-fiction novelist Lewis Carroll.
Oh, he wasn’t a science fiction writer, did you just say? Indulge me for a minute. Maybe he was a kind of prophet. Maybe he thought that one day we would have these virtual experiences and drift in and out of digital worlds.
I sat quietly in a corner of the digital world and listened to a fascinating podcast steered beautifully by Paddy Ramanathan, CEO of iValley, who’s made quite a name for himself as a great networker and influencer in the Fintech world. He weaved together a fascinating tapestry involving guests Ramkumar Subramaniam, Prakash Somosundram, and Matthew Gunnin who are extremely knowledgeable about NFT, e-sports and Metaverse respectively. As it turns out Metaverse was the ultimate glue that made NFT and e-sports so much more intense. So, I’ll just talk about that.
This article isn’t intended to be a primer on Metaverse. In any case, the definition is evolving constantly. We could perhaps get away by calling it a growing convergence between the real world and a virtual one. One day, perhaps the two will be indistinguishable.
To begin with, you can live a digital life on various Metaverse platforms. This is not quite the same as a game. In Metaverse, we exist (digitally) and actually buy assets and conduct ourselves as we might in the real world. We may buy digital NFT assets with the currency in that particular metaverse, we may play games, and we can do practically everything. Some may require us to use special devices for an enhanced experience, which I believe will become commodities very soon.
With the metaverse nudging forcefully into our lives, we may soon have to rethink … well, everything.
Is there a philosophical objection to the Metaverse? Could one say that it confuses reality and fantasy and could cause an identity crisis at the very least?
Well, it doesn’t matter at this point. For a generation that has grown up consuming information and living lives on social media, the Metaverse represents a natural progression. While many of us struggled to understand NFTs, the digital generation had no problem comprehending it and leveraging it. Buying, selling, renting – and even scamming – NFTs seem perfectly reasonable.
At this time, there are quite a number of Metaverse platforms and a struggle for dominance is underway. In anticipation, the panelists foresaw interoperability and the pervasive influence of DAO to reduce the dependence on platform-specific digital currency.
While we jump back and forth between Metaverse, the more obvious attraction of the virtual-physical diffusion continues to throw up exciting possibilities.
Imagine going to a Pizza store in the Metaverse and ordering a pizza and having it delivered to you in the real world. And in the other direction, imagine going to a Starbucks and getting a loyalty NFT pass to get premium access to Metaverse locations.
The Metaverse will be in a constant state of churn and turmoil. Perhaps experiences could be bundled and dropped into the Metaverse or even removed.
There are perfectly plausible and practical reasons why organizations are investing in the Metaverse. For one, it needs to do so to keep its brand relevant for the “metaverse generation”. For another, this is the place for converged commerce in the manner I just wrote about. This is where commerce, customer engagement, entertainment, sports, and education will “exist”; yes, the irony of that word has not escaped me.
NFTs in the Metaverse, buying land in the Metaverse, renting, watching a game in a stadium – all of this has quickly become “normal”. We are talking about billions of dollars of economic activity, not just a passing fad. The Metaverse will be included in the Annual Reports of all enterprises. There is no doubt about that in my mind.
The portable experience the Metaverse offers, slipping into any available virtual world at will, is a mind-bending notion that will soon become commonplace.
Are you ready for it?
Where do I exist? In the real world or in a Metaverse? You tell me.
The Fintech Elder
Connect with us!
iValley Innovation Center11040 Bollinger Canyon Rd, E-909San Ramon, CA 94582,The United States.
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
HI FINTECHTALKERS,
I sat down with Morgan McKenney, the CEO of Provenance Blockchain Foundation to talk about all things Blockchain, the future of DeFI, and how Provenance and Figure are driving innovation in all domains of financial services - Lending, Payments, Capital Markets. We covered a lot of ground and in order to make it easy to navigate the podcast here is a table of timestamps.
0.10-0.55 - Introduction
1.00-4.45 - Morgan’s background across the years
4.45-5.45 - What made Morgan join Provenance as CEO and promise of DeFI
6.00-9.00 - Blockchain is disintermediating financial services and changing the Factory
9.00-15.30 - The innovation process and platform in financial services
15.40-24.15 - What is Proof of Stake, Stable coins, Hash, Digital Money, programmatic money?
24.30-30.40 - Mission and Vision of the Provenance Blockchain Foundation- Transforming financial services with digital assets
30.40-32.00 - Provenance Blockchain, Figure the fintech and Mike Cagney’s Modernization of the Financial Services Infrastructure with Blockchain Vision
32.00-35.00 - The ecosystem: MERS, Figure Loans, Hash
35.00-38.50 - USDF and how can banks benefit from being part of the USDF Consortium
38.50-40.20 - Collaboration between banks in USDF; new avenues of NFT/Gaming
40.20-45.00 - Access of Provenance to startups and developer community
45.00-45.30 - Inclusive innovation and opportunities for underrepresented founders
45.40-47.10 - Website and Discord to stay tuned to announcements
46.10-52.00 - Inter-operability, regulatory and policy considerations
52.00-54.00 - Web 3.0 and the Digital Economy and the rail the enables transfer of value
54.00-59.30 - Crystal balling: Digital Assets, NFTs, Metaverse
59.45- 1.01.10 -Closing thoughts: How to get in touch with Morgan (LinkedIn) and Provenance. Employment opportunities and co-creation opportunities for startups
Included in this edition is our editorial infographic.
Enjoy and always Be in the Know!
Paddy RamanathanFounder of iValley (www.ivalley.co) andHost of the FINTECHTALK™ Show (www.fintechtalk.co)
(Violin piece in podcast courtesy of my daughter Ilina)
EPILOGUE
Connect with us!
iValley Innovation Center11040 Bollinger Canyon Rd, E-909San Ramon, CA 94582,The United States.
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
Recording of The FINTECHTALK™ Show on Clubhouse on Nov 18th, 2021.
EPILOGUE
To join iValley as it sculpts (build, write, and talk) the future of fintech and crypto economy click here.
Connect with us!
iValley Innovation Center11040 Bollinger Canyon Rd, E-909San Ramon, CA 94582,The United States.
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
Recording of The FINTECHTALK™ Show on Clubhouse on Oct 13th, 2021.
Connect with us!
iValley Innovation Center11040 Bollinger Canyon Rd, E-909San Ramon, CA 94582,The United States.
Phone: +1 925-575-7832
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
Recording of the FINTECHTALK(TM) Show on Clubhouse on Aug 25th, 2021.
Connect with us!
iValley Innovation Center11040 Bollinger Canyon Rd, E-909San Ramon, CA 94582,The United States.
Phone: +1 925-575-7832
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe -
Small is Beautiful: Where Challenger Banks and Fintechs Really Score
I was in a philosophical mood when I checked in to a Fintechtalk session on Clubhouse on July 28.
Why, I asked no one in particular, did the word “success” seem to invariably suggest terms like “large deal”, “double digit growth”, “enterprise solutions” and so on. “Does that imply that to be small is somehow not as cool?” I wondered, as I sat in the digital shadows and looked on silently, and a bit crabby, sipping on a below-average Pina Colada, waiting for the session to begin.
As I learned quickly during the session, that’s not true at all.
There is something very beautiful and inspiring about being small and successful. And you can make a huge difference in your Fintech efforts if you focus on small enterprises.
These FINTECHTALK sessions are so addictive. Paddy Ramanathan, the CEO of iValley, a Fintech incubator, conducts a couple of arresting sessions every month and attracts a lot of movers and shakers to his speaker’s panel. Thereafter he engages them in very interesting ways. You owe it to yourself to attend.
But I digress. Back to the session.
The panellists were an impressive and erudite bunch. Take a look:
* Paul Loberman, Chief Product Officer at untied
* Adi Engel, CMO at vcita
* Nir Netzer, FinTech Innovation Strategist and Founding Partner of Equitech Group
* Araminta Robertson, Marketing Consultant at Mintcstudios
* Nathan Baumeister, CEO at ZSuite Technologies
* Derik Sutton, Marketing at Autobooks
They first spent a little time talking about what they do.
Adi spoke about their focus on digitizing business operations. Simplifying and automating the day-to-day activities is a huge relief for SMBs for whom time is the most precious commodity.
Paul, with an impressive background in banking, focuses on personal tax at untied. “No one likes to pay tax,” he remarked. He helps SMBs by collecting tax data automatically and submitting forms to the authorities. Again, saving SMB owners lots of time and aggravation.
Nathan works with Banks to get them more small business clients. ZSuite deploys niche technologies to help with different kinds of deposits that have different rules that apply to them, for which compliance can be vexing. Time is saved.
Are you seeing a repeated theme?
At Autobooks, Derek offers reporting tools in digital environments. He helps financial institutions recapture their relationships with clients. Araminta too assists fintech companies acquire and retain clients and develops case studies. And Nir helps create strategies for Fintech, who, he said, are trying to solve unprecedented problems.
These are motivated individuals!
Paddy asked the panel for their view on the current challenges that small businesses face. Was there really a case for digital transformation and innovation for SMBs, he inquired.
The collective opinion of the group was that the technologies and digital initiatives do exist but the really crushing problem is that SMB owners have no time and resources and often no capital to leverage these initiatives!
Lack of good valuable advice on appropriate systems is something SMBs face. In fact, most cannot even articulate what they need. Thus, Fintechs need to find these SMBs and clear the fog, instead of expecting them to ask for help.
When 81% of SMBs have no employees, they are consumed by basic challenges such as how to accept payments through various vehicles. These owners want to spend time in their businesses, but they end up being forced to address non-core activities, getting paid, controlling costs, and staying compliant – all of which eat into their time and make them sub-optimal. Almost all face cash flow problems. Putting companies back in control may be a fundamental solution they need!
Nir highlighted a unique issue: many young companies are trying to solve problems that did not exist before. Even helping them articulate the problem helps in a big way. Sales and Marketing challenges are also significant.
What a thought! And so, if Fintechs can do a deep dive into these new challenges, they can be successful.
For instance, SMBs are being forced to deal with bewildering new regulations. Araminta spoke about how SMBs in Europe are having to learn about PSD2 (customer authentication), SCA, and 3DS2 and ensure they are compliant. Do SMBs have the bandwidth for all this? Well, they don’t have much of a choice, because studies show a possible authentication loss of 21%. In essence this is a new hurdle and requires education. This problem presents a great opportunity for a Fintech.
Further, 90% of SMBs are service providers who work with excel, WhatsApp, pen and paper. Digitizing their operations is a huge and rewarding proposition.
The complexities of an SMB’s business can be intense. As Adi observed, even a Yoga studio has a staggeringly large set of possibilities in terms of processes and payment options. Ultimately it is the triangle of Time, Money and Clients is what needs to be addressed by Fintechs that want to be make an impact in the SMB segment.
A lot of interesting points came up:
* From a Sales and Marketing perspective, new approaches will need to be considered by CBs and Fintechs. The customer must be caught in the right channel.
* Fintechs who serve SMBs have the challenge of raising enough capital to compete with Square or PayPal, to then reach out to massively underserved markets.
* Paul hypothesized that we will soon witness the next level of “downtech”, such as Square extending into Shopify. There is a growing market for tech giants, and they can find opportunities to partner with SMB oriented Fintechs.
* The new wave of Challenger Banks is attractive because of significantly lower fees, an easier onboarding process and so on. And many Fintechs that have no banking license can do payment facilitation. That’s actually pretty smart!
* But something to keep in mind: there is only so much profitability for Fintechs while dealing with SMBs, even though there are plenty to go around. Partnering with banks has obvious advantages for Fintechs including interchange fees, deposits, and such.
At the end, SMB merchants will use Fintechs for better customer experience, with the easiest on-ramps being more successful. SuperApps (which combine multiple services within an app) and the thirst for simplicity will prevail.
It all just goes to show that in the banking world, small can be beautiful in stimulating innovation. Fintechs can become unbeatable if they make efforts to solve the issues that resource starved SMBs face in terms of time and capital.
Will banks, big tech, super fintechs (Square, Stripe etc), and these other fintechs all converge into an SMB SuperApp, which does Operational, Financial, Sales/Marketing and Regulations stuff? Imagine!
The Pina Colada suddenly seemed excellent! I felt good!
Connect with us!
iValley Innovation Center11040 Bollinger Canyon Rd, E-909San Ramon, CA 94582,The United States.
Phone: +1 925-575-7832
Get full access to FINTECHTALK™ Sculpting the future of fintech, AI, & Crypto at substack.fintechtalk.ivalley.co/subscribe
