Risky business: how to de-risk your fintech startup before it’s too late

 Running a Risk Diagnostic can help mitigate risk

Running a Risk Diagnostic can help mitigate risk

Co-written by Elizabeth Davidson

Early identification of key risks can help fintech startups invest in the business support they need early on before a risk takes down the business. These risks can scare off investors, who want to ensure that entrepreneurs understand the key challenges they face. Instead of waiting for entrepreneurs to identify key risks, early stage investors can work with startups to tackle these risks before or in conjunction with their investment.

Catalyst Fund has taken just this approach. By working with our entrepreneurs to identify risks, we can tailor technical assistance to solve these risks so that investors are more confident in the future success of the business.

 Our Risk Framework as a Focusing Device

Our Risk Framework as a Focusing Device

Taking an honest look at their own key risks can be difficult for entrepreneurs, who may be too deep in the weeds to step back and look at the bigger picture. This is why the Catalyst Fund developed a risk diagnostic to help startup leaders get a better grasp on their challenges, and understand those within or outside of their control. The tool offers a checklist of possible mitigation strategies for the entrepreneur. Read more here.

Timing isn’t quite right for SaaS startups in Africa

 Source: Alrami.info

Source: Alrami.info

Let me tell you how I failed to build a scalable SaaS (Software-as-a-Service) startup in Africa.

Remember the hockey-stick growth chart? This is what an entrepreneur signs up for and what investors want to see.

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But let’s face it, hockey-sticks are not part of the reality in Africa… not yet. So why are software-as-a-service startups not taking off? Three reasons:

  1. 1. Businesses are competing for the investor dollar, not for superior tech
  2. 2. Economies of scale can only work at scale
  3. 3. Scaling across the continent is harder than it sounds

Read more here

How social entrepreneurs can strike partnerships with big companies

 It can take a lot of effort to get a partnership off the ground. Image: REUTERS/Krishnendu Halder

It can take a lot of effort to get a partnership off the ground. Image: REUTERS/Krishnendu Halder

While the opportunity is clear, the bad news for growing social enterprises is that closing a technology partnership is time-consuming and risky.

Some social enterprises may be able to endure the long time horizons, but for many early-stage ventures, investing in a partnership with a larger, better-resourced player, with extensive due diligence and decision-making processes, may be a deal-breaker. These delays can be a death knell for early ventures that do not have the time or capital.

At the same time, not all partnerships are valuable. Startups need to carefully understand the potential of a collaboration by analyzing mutual benefits and determining which processes and priorities will dominate the relationship. Our partner, Accion Venture Lab, offers additional strategies for “Enterprise Sales for Fintech Products and Services.”

A quick guide for social enterprises to land successful partnerships, read more.

Webinar Series: The Catalyst Fund Toolkits

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Launching a startup is not easy, especially when you don’t always have the right resources and tools to help you succeed. The Catalyst Fund Toolkit offers you tools across three main areas: customer trust creation, risk management and product/market fit. These tools are tailored to the needs of startups that serve low-income customers in emerging markets, through our experience working with early-stage fintech companies around the world.

As the manager of Catalyst Fund, BFA, is pleased to host this special webinar series covering each of these toolkits in the coming weeks:


Webinar: Design for Trust

Trust is an essential factor in financial transactions, but what is trust made up of? Fintech companies providing digital financial services often find it difficult to build trust with their customers because of a lack of physical contact. However, managing the principles of competency, appearance, control, transparency, & commitment can be great drivers for building trust with customers.

DATE & TIME:

February 14, 2018

10-11 AM EST


Webinar: De-Risk your Fintech Startup

Running an innovative startup is not without its set of risks and challenges. But understanding these risks, monitoring and managing them with mitigation strategies can help lower a company's risk profile. The second webinar of the series provides a framework for de-risking internal and external factors, while helping founders and CEOs see the overall picture of their firm's health and how to take action on their high priority risks.

The panelists for this webinar include Maelis Carraro from BFA and Jonathan Duarte, CEO of Escala Educacion. 

ESCALA is a Catalyst company and works as a higher-education savings program for lower and middle-income families in Colombia. Jonathan is passionate about growing the entrepreneurial ecosystem in Colombia and is an Industrial Engineer from Georgia Institute of Technology (USA) and an MBA from Harvard Business School.

Maelis manages Catalyst Fund at BFA and has previously worked directly on microfinance product development for Grameen Bank in Bangladesh, on development and climate change policy issues for the Organization for Economic Development and Cooperation (OECD), and impact investing for Global Partnerships, a not-for-profit impact investing fund dedicated to alleviating poverty in Latin America.

 
 
 

DATE & TIME:

March 15, 2018

10-11 AM EST


Webinar: Get to Product/Market Fit

One of the biggest questions early-stage companies have to answer is whether their product is right for their targeted market. That is to say, Product-Market Fit can be thought of as the measure of how well your product satisfies the market. The Product/ Market toolkit covers the journey where companies start with a pain-point, a passion or a hunch, and go all the up to the final stage of optimization where they scale up. This final stage of scaling up includes a perfect combination of visibility, desirability, and feasibility of the product, in the market they are serving. 

DATE & TIME:

TBD. You can pre-register below and we will contact you when date is finalized.

Two Problems, One Solution: How Fintech is Boosting Access to Banking and Insurance for Domestic Workers in Mexico

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More than 2 million domestic workers in Mexico are virtually invisible to the financial system. They perform work as housekeepers, cleaners, cooks, carers, drivers, gardeners and doormen, among other professions. Nearly all are informally employed, which means they get paid in cash, make no contributions to a social security or pension fund, and are uninsured. 

Yet many domestic workers have a relatively stable source of income (when work is available) and they are financially active. More than 75 percent of them earn up to only 58,000 pesos a year (about US$3,100).

In this environment, Comunidad4UNO (4UNO), an early-stage Mexican fintech startup and Catalyst Fund company, is tackling the dual challenges of financial exclusion and affordable insurance access among this market segment. The company is providing domestic workers with tailored and market-based financial products through their employers via an online marketplace, helping reduce their vulnerability to accidents, health issues and the financial challenges they can cause- read more.

Fintech finds a way to reach domestic workers with financial services in Mexico

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Lola, a single mother of three, earns a living cleaning houses in Mexico City. She gets paid in cash every week, and asks for an advance from her employers when she really needs it, like when her mother passed away in her village and she had to cover transportation and funeral costs or when she was mugged on a public bus. Lola stores small sums of money at home to pay for food, rent, electricity, water and gas.

As is the case with many domestic employees, her job is informal and unsecured. Sometimes, she has to miss work when her kids get sick and, depending on the employer, she may or may not get paid for those missed days. She is unfamiliar with her labor rights and her employers, who are primarily concerned with employee retention, are generally oblivious to their legal obligations.

Although Lola uses several financial instruments to make ends meet, pay her bills and provide for herself and her children, her transactions generate no records in the financial system, thus making her invisible to banks and other financial institutions- read more.

Catalyst Fund Toolkits for Early-Stage Ventures

 View webinar presentation below

View webinar presentation below

Customer-centric design, agile product management, and innovative technologies are helping fintech ventures create better and more targeted value propositions for their customers, especially in emerging markets. How can early-stage ventures harness this powerful combination to win over their customers and ensure their businesses thrive? Working closely with inclusive fintech startups at Catalyst Fund, a philanthropic fund aiming to accelerate fintech innovation in emerging economies, supported by Gates Foundation and JP Morgan Chase & Co., they have distilled practical insights on how to support companies as they grow. They have built tools that enable startups to build trust with their customers, assess risks and develop mitigation plans, achieve product-market fit and apply machine learning strategies. Maelis Carraro, program manager of Catalyst Fund, will give ANDE members an overview of these tools and show how other enterprises could utilize these frameworks for their own business needs and aspirations. Learn more about our toolkits.

Webinar recording during ANDE Sector update at min 31:31

Presenters

Maelis Carraro | Senior Associate | BFA

Maelis is a Senior Associate at BFA. She is the Program Manager of Catalyst Fund, an innovative fund supporting early-stage inclusive fintech startups in emerging markets with grant seed capital, mentorship, and tailored business advisory services. Maelis joined BFA from the International Finance Corporation (World Bank Group), where she advised financial institutions in emerging markets on business strategy, digital product development, and customer acquisition strategies to serve underserved and low-income customers. Maelis previously also worked on impact investing to support small and medium enterprises in Africa and Latin America for Global Partnerships and on microfinance product research for Grameen Bank and the OECD. Maelis also co-founded RemitMas – a digital remittances service for Latino immigrants in the US, which sparked her passion for entrepreneurship and fintech. Maelis holds an MBA from Columbia Business School and a Master in International Affairs from Columbia School of International and Public Affairs. She received her BA Cum Laude from University College London, where she majored in Political Science and Economics. 

Jane del Ser | Senior Associate | BFA

Jane is a Senior Associate with the Insights & Influence team at BFA. Her areas of expertise include product management and marketing and strategic marketing communications. She brings over ten years experience working with startups, social enterprises and nonprofits leading Strategy, MarCom and Product in hi-tech, mobileand social innovation. Jane most recently served as Managing Director at Center4, an initiative in NYC to increase uptake of technology by health and human service nonprofits to transform how services are deliveredand improve outcomes for people served.

Three Powerful Tools for Fintech Practitioners

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Since we launched the Catalyst Fund in 2015, we have helped 15 fintech entrepreneurs deploy novel approaches to bring products and services to their customers. We have distilled the successful patterns and behaviors we have observed into toolkits and posts for those considering fintech methods for their businesses, whether they be startups or established players.

At a high level, successful fintech startups adopt principles of Design, Risk Management and Product Management, and also put modern technologies like smartphones, artificial intelligence and cloud computing at the core of their value propositions. At successful fintech startups Designers, Product Managers, CEOs and Engineers reinforce each other in multidisciplinary teams to explore the overlap between what customers find desirable, what engineers can build, and what the business requires to grow - continue reading.

 

5 barriers holding back Fintech entrepreneurs

  Men at a mobile money kiosk in Zimbabwe. Photo by:    Kay McGowan / USAID    /    CC BY-ND

Men at a mobile money kiosk in Zimbabwe. Photo by: Kay McGowan / USAID / CC BY-ND

(By Adva Saldinger)

There are a growing number of financial technology companies starting up across the globe in an effort to find ways to harness technology to reach underserved or unserved customers. While financial inclusion presents both a development and a business opportunity, there are challenges that constrain the ability of this cadre of entrepreneurs. These challenges include funding, regulations, appropriate technology, human resources and building trust. 

To help address part of the funding gap, JPMorgan and the Bill & Melinda Gates Foundation launched the Catalyst Fund in 2016. Impact investors help identify innovations or companies that are not yet investment ready — those companies get derisking grant capital through the fund and customized technical assistance. It is that customized help that sets the fund apart from many accelerators or incubators, which often focus on more general business skills- continue reading.

Why We Invested: Meet the newest Catalyst Fund Companies

 Abalobi: The fisher's journey

Abalobi: The fisher's journey

What we’re seeing in insurtech and digital credit

We’re excited to announce the latest companies to join the Catalyst Fund portfolio! Our new cohort of inclusive fintech startups is innovating in two promising areas: insurance technology (“insurtech”) and digital credit. As a group, these companies exhibit strong founding teams, experience working in emerging markets, and a resolute commitment to reach the underserved. As an early-stage accelerator committed to expanding innovative financial solutions for the the underbanked, we invested in these companies because they share the following qualities. Read more.

How can investors use machine learning to pick the right startups?

 Photo credit:  Machine perception

Photo credit: Machine perception

When considering a startup, especially an early-stage startup, investors want to conduct as much due diligence as possible. What little data they can gather is scattered all over different sources including Crunchbase, LinkedIn, Pitchbooks, company websites, etc. Consolidating this data takes a great amount of time and effort. Furthermore, the data sets can be incomplete or biased depending on the search queries — imagine overlooking a keyword. To make the due diligence process fairer and less cumbersome for investors, various platforms are using machine learning (ML) to pull together information about startups from all available resources to help investors assess companies and investment opportunities. But where machine learning really shines is in the interplay of data-driven insights that are qualified by human intuition and personal experience. Read full blog here.

Top 100 Emerging Market Inclusive Fintechs

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You may have heard of companies like WePay and Oscar. WePay is an online payments service provider; and Oscar is a user and technology-centered health insurance company. And you might have witnessed how these fintech companies are contributing to the transformation of the financial services sector in the United States. But what’s happening in the global south? There, “inclusive fintech”, or fintech products and services that serve the bottom of the pyramid, is thriving in its own right with the likes of Tala and Branch. The sector is growing – enough to compile a list of our top 100 inclusive fintech companies by funding raised in emerging markets.

Catalyst Fund presents the Top 100 Emerging Market Inclusive Fintechs. Get insights about accessibility, affordability & flexibility, customer-centric design, speed and digital-first approaches and how these approaches can improve outcomes.

Article originally published on the World Economic Forum

Next-level computer vision: When off-the-shelf software options don’t cut it

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Let’s say you’re in Tokyo and you see a billboard with a catchy photo. You want to know what the billboard says, but you can’t read Japanese. No problem! You can use Google Translate to take a picture of the billboard, highlight the text you care about, and then your phone will translate it into English. This is a prime example of computer vision, which allows us to automatically extract, analyze, and understand information from images due to recent advances in machine learning.

Given these advances, we thought it would be straightforward to adapt off-the-shelf computer vision programs to pull important data from identification documents, a task that most fintech companies face in the field. Ultimately we found that off-the-shelf computer vision programs were not sufficiently accurate  - continue reading here.

A Fintech Approach to Financial Inclusion

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We are pleased to announce that BFA will be hosting a Financial Inclusion Week event, which will be part of a week of global conversation exploring the most important steps to achieving full financial inclusion.  Partners from around the world are holding conversations to explore this year’s theme New Products, New Partnerships, New Potential.

BFA will host a webinar focused on the benefits, challenges and insights of fintech approaches to financial inclusion as part of Financial Inclusion Week. The webinar will highlight key findings from three of BFA’s global programs: Catalyst Fund, FIBR and OPTIX.

Date:

Thursday, November 2nd, 2017

Time:

9:00am - 10.30 am EST

Early insights on incentivizing Indian customers to go cashless

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Early this year, Amitabh Kant, CEO of the National Institution for Transforming India (Niti Aayog), declared “Cards, ATMs, POS will all become redundant in India by 2020, and India will make this jump because every Indian will be doing his transaction just by using his thumb in thirty seconds….”Although evidence indicates that demonetization has moved India towards a digital economy, there is still much work to do before Kant’s vision becomes a reality. Read insights on going cashless.