5 Questions with FinTech Founders - Instnt

Welcome to 5 Questions with FinTech Founders, where we sit down with the next generation of FinTech innovators to hear about how they got started, and where they are going. 

In this installment, we spoke with Sunil Madhu, Founder and CEO of Insnt, the first fully managed customer acceptance platform for businesses with fraud loss insurance. Sunil has spent over 30 years innovating in the Identity and Access Management, Security, Governance, and Risk and Compliance markets.

Previously, Sunil was the Founder & CEO and CTO of Socure, which he grew into what is now a $ 5 billion business and a leader in AI-driven fraud prevention and digital identity verification that powers several of the top banks, fintechs, card issuers, and e-commerce companies in the world. He holds a master's degree in Management Information Systems from Glasgow Caledonian University and a bachelor’s degree with honors in Computer Science from Strathclyde University in the UK.

Sunil is recognized as a Top 100 Fintech Influencer in the US by Forbes and CB Insights.

1. What inspired you to start Instnt?

As a seasoned entrepreneur in security, risk, and compliance for over 30 years, I founded and grew Socure into what is now a $5 billion identity verification and fraud prevention service provider. Recognizing the persistent issue of businesses bearing fraud-loss liability despite advanced tools, I decided to start Instnt, with which I also wanted to address the challenges of a layered approach to fraud mitigation and compliance, which often excluded a growing younger customer base.

2. What problem were you trying to solve in the market?

The problem we are solving is helping businesses grow without fraud losses. Our comprehensive solution spans the entire customer life cycle from the initial account opening, verification, and onboarding to subsequent logins, transaction processing, and the enhanced accessibility of additional products and services strategically upsold to them.

3. Describe a time when you needed to course correct.

When starting a business, it's common to bring a developed idea to the market, aiming to achieve a product-market fit. However, challenges such as unfavorable timing or capital depletion may necessitate a pivot. In fortunate cases, the original idea may have multiple facets, allowing for a strategic pivot by leveraging one of its components.

4. What lessons have you learned that you would share to other entrepreneurs looking to scale? 

In the beginning, when your business is growing rapidly, it always costs twice as much and takes three times as long as you think it will until you reach a steady pace of growth.

5. What measures do you take to create a culture of growth within your company?

To create a culture of growth, you have to normalize change, so people are not afraid of change. The most constant in start-ups is change. If you create a culture to not fear change, then you allow growth to naturally occur.

To learn more about Instnt visit instnt.com.

Spotlight on Chris Ferris

We're beyond excited to introduce our newest team member, Chris Ferris, who has joined us as the Head of Investor Relations and Capital Formation at Cohen Circle. Chris plays a key role in leading our capital formation efforts and overseeing our investor relations function.

Before joining us, Chris gained valuable experience as a Director at Franklin Venture Partners, focusing on capital raising and investor relations. Prior to joining Franklin Templeton Investments in 2018, he served as a Vice President at Bank of America Merrill Lynch, specializing in private equity due diligence. In this role, Chris was responsible for sourcing, underwriting, and monitoring private equity investments for high net worth clients of Merrill Lynch Wealth Management. His career also includes various product roles at John Hancock and Fred Alger Management.

Chris holds a B.A. in Business Management from Gettysburg College and earned his M.B.A. from the Gabelli School of Business at Fordham University. A native Bostonian, Chris still roots for his home teams, but currently resides outside of NYC with his wife and two daughters.

We're looking forward to Chris's contributions to our team and are excited to welcome him to Cohen Circle. Read on to get to know our newest team member.

Get to Know Chris

What are you most excited about in your new role?

I am excited about the opportunity to work with FinTech pioneers, Betsy and Daniel Cohen, to help continue building a differentiated investment platform that excites both founders and investors.

I believe that when investing in private assets, having access to the best assets increases your probability of successful outcomes, and in order to gain access to the best assets you need a differentiated value proposition. The Cohen Circle platform has been built by former founders, which means we have a deep understanding of the challenges to build a successful business. This understanding, our operational experience and our global networks are key components of our differentiated value proposition which allows us access to high quality investment opportunities. I look forward to building relationships with limited partners that are interested in leveraging our platform to create positive outcomes.

What recent trends in venture investments have caught your attention, and why are they significant for investors and startups? 

We still have not seen the reset in private valuations that many VC’s and allocators have been waiting for; I think there is going to be a lot of opportunity to deploy capital into high quality assets at attractive prices in the next 12-24 months via the secondary market and as companies raise primary capital again.

In the venture space, how can startups build and maintain trust with investors throughout their growth journey?

Transparency is very important. The more transparent companies can be with GP’s, the more transparent GP’s can be with their LP’s. Trust is such an important building block of long-term partnerships.

What’s the best advice you ever got?

While this falls more in line with a principle I adhere to rather than explicit advice, I do think the Golden Rule holds true, especially when trying to build long-term relationships with investors.

Director Corinne Bortniker Named 2024 Venture Capital Journal Rising Star

We're thrilled to share that Cohen Circle Director Corinner Bortniker has been named a Rising Star by Venture Capital Journal.

Corinne joined the Cohen Circle team in 2021 as a Vice President, and was promoted to Director at the start of 2023. Currently, Corinne leads the sourcing efforts for the firm's impact investments as Director of its impact investment arm, Radiate Capital.

Corinne pioneered Cohen Circle's ESG and due dilligence questionnaire metrics, which are used in assessing social impact investments. She is also actively engaged in fundraising efforts, acting as a liaison between the firm's partners, advisors, and internal teams.

To read more about Corinne's nomination and to see the full list of award recipients, visit here.

5 Questions with FinTech Founders - Nova Credit

Welcome to 5 Questions with FinTech Founders, where we sit down with the next generation of FinTech innovators to hear about how they got started, and where they are going. 

In this installment, we spoke with Misha Esipov, Co-Founder and CEO of Nova Credit, the leading data analytics company enabling businesses to grow by harnessing alternative credit data.

Before Nova, Misha was a private equity investor at Apollo Global Management, a $190 billion global asset manager. Misha started his career at Goldman Sachs where he was involved in over $10 billion in corporate financing, mergers and acquisitions.

Misha was born in Russia and immigrated to the United States. He holds a B.S. in Mathematics and Finance from NYU and an M.B.A. from the Stanford Graduate School of Business.

1. What inspired you to start Nova Credit?

When my family immigrated to the United States from the Soviet Union, it was incredibly difficult to establish ourselves without U.S. credit history. We quickly realized how inaccessibility to credit products – like a car loan – could stand in the way of opportunity. While studying for my MBA at Stanford University, my co-founders and I realized that the inability to transfer credit history from country to country was actually a global issue. In response, we founded Nova Credit to close the credit inclusivity gap that prevents many segments (including immigrants) from getting credit products, like apartments or credit cards, every day. 

2. What problem were you trying to solve in the market?

When the credit reporting system was established over a century ago, financial inclusion was not top of mind. As a result, today, over 60 million Americans struggle to access the U.S. credit system. These users represent people of every background, including immigrants, young people and those who have not prioritized building credit in the way our outdated system calls for. Without the ability to signal creditworthiness, these individuals are left without access to basic financial services.  

Nova Credit is dedicated to accelerating financial inclusion for new-to-credit and underserved communities by using alternative credit data sources like bank transactions and credit risk analytic models that show the full picture of a consumer’s creditworthiness. By using this alternative credit data via our Credit Passport® product, we’ve had tremendous success in helping thin and no-file customers gain entry to other global credit systems. Now, with Nova Credit’s Cash Atlas®, all consumers and lenders are able to enjoy the benefits of alternative data. Looking ahead, Nova Credit is excited to lead the shift away from outdated and incomplete credit reporting.  

3. Describe a time when you needed to course correct.

After our Series B closed in February 2020, the Nova Credit team was eager to accelerate our Credit Passport product – which provides immigrants with an international credit file for greater access to global credit systems, including that of the United States. But a month later, the COVID-19 pandemic shut down global borders, leaving the world frozen in place. The pandemic was a death sentence for our core business and nearly froze us in our tracks. Instead of stalling, our team built upon the initial success of Credit Passport by expanding the product to serve all new-to-credit, new-to-country, and other thin-file consumers via Cash Atlas – a cash flow underwriting tool that helps every individual access financial opportunity.

As the CFPB introduces regulation and directives driving the increased integration of open banking data, these growth decisions have left us in a better position to partner with institutions during this historic industry transformation. 

4. What measures do you take to create a culture of growth within your company? 

It can be difficult to keep a growth mindset during hard times, especially as a small startup. When faced with headwinds, many companies choose to double down on their existing product strategy. During the pandemic, however, we chose to grow and adapt our product lineup based on where the puck was heading, rather than where it was. This didn’t mean we stopped investing in our core product, but we needed to adapt to survive - and growth was the path to get us there. 

This growth mindset can be seen as risky - building a second product before we’ve fully stabilized the first. But with two key ingredients - a determined team and a rock-solid mission to rally around - we did it. We analyzed every decision, revisited strategies and assumptions, and dove headfirst into our customer’s pain points. We uncovered an unmet need - credit underwriting for thin- and no-file domestic consumers - and a clear connection to our core competencies - experience working with difficult, highly-regulated data sets and world-class analytics. Our resulting product was built on the foundation of the mission we’d outlined years prior - to power a fair and inclusive financial system for the world. 

Our decision to grow during hard times paid off in spades - we now have two core products that are thriving and growing. But beyond the product lineup, what’s really made a difference is our team. We’ve built a battle-tested, hungry team willing to break through walls to deliver for our clients, with a determined set of investors and advisors guiding the way.  

5. What lessons have you learned that you would share to other entrepreneurs looking to scale? 

Over the course of my career, I’ve learned the importance of good company. Much of Nova Credit’s success can be attributed to the network of supporters we have built. So, to any entrepreneur looking to scale, strengthen your connections and lead with a spirit of collaboration.  

To learn more about Nova Credit visit novacredit.com

Retail and Algo Trading: The New Giants Of The Financial World

Meme stocks are often thought of as a joke, but what if you can actually leverage them into something worthwhile? The more I’ve thought about this, the more I’ve realized that they are a natural backer of the marketplace.

Meme stocks find their growth not from traditional financial metrics, but from an explosive rise in value driven by social media hype and speculative investing. Despite conventional attitudes toward it, retail investing and meme stocks have emerged as an effective tool, providing an entirely unique avenue to capitalize on growth opportunities.

Retail investing through the use of meme stocks, along with algorithmic trading, is creating huge opportunities for investors to make money in growth companies. Together, they have become the new giants of the financial world.

Meme Stocks For Growth

Small to mid-cap companies that gain attention from retail investors can get a swarm of trading volume well in excess of their issued stock. They can then use this to issue capital and grow in a way that reduces the cost of financing. This is the method that saved both AMC and GameStop from bankruptcy when the meme stock craze was born. And, it has gone well since, as GameStop saw a 1,200% return in the three years after becoming a meme stock.

Social media is now a catalyst for wealth creation. Savvy investors who leverage insights from social platforms have amassed significant gains, illustrating the platform’s potential to act as a driving force in modern trading strategies.

The traditional approach to investing doesn’t account for the impact that social media can have, but it should be taken seriously. It’s not just a negative influence to be scoffed at. People have made enormous sums by understanding and learning from social media.

Algorithmic Trading Is The Way Forward For Financial Institutions

While retail investors are making a bigger impact, financial institutions seem to be doubling down on algorithmic trading, which are automated trades based on predefined strategies set by mathematical models. Larger pools of capital are participating in these types of trades and using data mining to create a more efficient marketplace. Trades are happening much faster than humans could even comprehend and at lower transaction costs.

Of course, algo trading creates new risks by increasing volatility due to instant reactions to market conditions. This can spiral during tumultuous times and create negative ripple effects. They’re also dependent on the quality of algorithms, which can be questionable for some, so due diligence is always required.

The New Value Of Public Markets

Algorithmic trading and retail trading are no longer the underdogs of the financial world. If anything—they’re becoming the proverbial sleeping giants.

Before meme stocks and algorithmic trading, the value of the public markets came from being able to buy and sell things freely between all kinds of investors. This provided companies with a reliable method of growing capital as they grow, with efficient prices. But because of technology, that’s changed.

Now, retail investors are flooding the market through fintech apps, such as Robinhood, and algorithmic trading is happening faster than you can blink. This means that the true cost of capital in public markets can be reduced to harnessing the value of retail investors and rapid electronic trading. These areas are where growth companies can tap into the public markets to access capital and fuel their expansion.

While these aren’t growth companies, Bed Bath & Beyond, AMC and GameStop all leveraged retail investors and meme stocks for recapitalization. As AI develops for trading, there will be an even more significant impact on the public markets and the opportunity from algo trading is likely to grow.

There is a high degree of risk, of course, as it’s impossible to know who will be the next Amazon or Facebook, but algo and retail trading are positioned to make an increasingly large impact.

Early Entry Can Create The Best Opportunity

The prospects for companies in these emerging areas are immense. By exploring novel routes into the public markets, companies can not only grow but also overcome challenges and recover over time.

This new paradigm shows us that the public markets aren’t exclusive to successful companies, but also offer an avenue for struggling companies (AMC and GameStop were struggling before they became meme stocks). In this constantly evolving marketplace, understanding these markets is crucial for financial officers. They can consider using their creativity to leverage the power of retail investors, algo trading and, soon, AI to create primary proceeds and reduce the cost of financing.

As corporate finance becomes entwined with social media sentiment, meme stock movements and algo trading trends, one thing is clear: The traditional marketplace is being challenged, stretched and reinvented. It could be time to lean into the perceived chaos of retail investing, the speed of algorithms and the capabilities of AI to embrace the emerging opportunity and potential for growth.

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms.

5 Questions with FinTech Founders - Duetti

Welcome to 5 Questions with FinTech Founders, where we sit down with the next generation of FinTech innovators to hear about how they got started, and where they are going. 

In this installment, we spoke with Lior Tibon, Co-Founder and CEO of Duetti, a music financing platform that enables a wide range of artists to sell master catalogs and individual tracks - an opportunity previously only accessible to a small group of A-list artists.

Prior to Duetti, Lior was the COO of TIDAL, the artist-centric global music streaming service. In January 2015, Lior joined the core team that launched TIDAL under the ownership of Shawn “JAY-Z” Carter and its original artist owners, and has led the company's major strategic business, revenue and operational efforts for over 7 years, up until his departure in May 2022. In April 2021, Block (formerly known as Square) acquired a majority ownership stake in TIDAL. Lior previously worked in the investment banking division of Deutsche Bank in London.

1. What inspired you to start Duetti?

Duetti was founded to bring more opportunities for catalog monetization to a broad group of artists - not just to A-listers. By using transparent and sophisticated data analysis, we are able to offer clear and fair pricing for catalog tracks, providing many artists with additional financial options that previously were not available to them. We are not only expanding financial options for artists, but also investing heavily in maximizing reach for any song that we partner on - all driven by our extensive expertise in music streaming and new music formats.   

Duetti has quickly become an essential business tool for many dozens of independent artists including CVBZ, Sylvan LaCue, and Croosh partnering on deals across 100 tracks. 

2. What problem were you trying to solve in the market?

Duetti set out to address a significant market challenge by empowering independent artists to achieve financial independence and success in an industry where opportunities are often too concentrated at the top. Simultaneously, the company aimed to create new investment avenues in the music industry. Through the use of innovative technology and data-driven scalability, Duetti also aimed to provide artists with the insights and tools necessary to confidently navigate the complexities of the music industry, thereby amplifying diverse voices within the ecosystem.

3. What key music industry trend is impacting Duetti?

Streaming is still a relatively new phenomenon (mass market adoption only took off globally ~5 years ago) and there will be various long term fundamental shifts in the underlying dynamics of the music market as a result. On the creator side, it is easier than ever to release songs into the main streaming platform - but it is also challenging to get noticed. On the consumer side, there are ongoing significant shifts in consumption patterns, with more diversity and willingness to discover new artists. These shifts would ultimately require significant changes in the core fundamentals of the industry - and Duetti aspires to be a key change agent in this context. 

4. What's the best piece of advice you ever got?

Having a strong foundational understanding of core unit economics is key to ensuring long term strategic success. Before we started Duetti, we spent a lot of time modeling different financial scenarios and execution paths, taking into account various market assumptions and other considerations. If there is no path for strong ROI on core unit economics, it is going to be much more difficult to build a lasting business. 

5. What advice would you give to new entrepreneurs on raising capital?

Proving your team's execution capability - especially in today’s environment - is one of the most critical ingredients for fundraising success. Even if a startup requires capital to start scaling, any steps that can be taken to demonstrate an ability to efficiently execute from the start can go a long way in raising capital. This can include building out a pipeline with concrete feedback from prospective customers, alongside detailed thinking around execution plans and tactics. 

To learn more about Duetti, visit duetti.co.

The Importance Of 'Fin' Vs. 'Tech' For Fintech Valuations

In the ever-evolving landscape of finance and technology, the term fintech has emerged as a commonly used amalgamation of two distinct yet intertwined realms: finance and technology. As startups continue to disrupt traditional financial services with innovative solutions, understanding the interplay between the “fin” and tech elements becomes crucial, particularly when considering valuations.

The ‘Fin’ Model

Firstly, there’s “fin,” which are fintech companies on the financial services side of the industry. These are system integrators whose goal is to use other companies’ new technologies to reduce customer acquisition costs (CAC) and increase lifetime value (LTV).

“Fin” companies offer services like credit card solutions, access to more and better types of loans and subprime mortgages. However, the “fin” landscape can become overcrowded due to the lower barrier to entry, leading to stiff competition and potentially lower long-term valuations.

Prominent examples of companies leveraging the “fin” model within the fintech industry are:

The “fin” model looks for substantial long-term growth by reducing CAC, increasing LTV or both.

Despite many successes, “fin” firms (like RocketMortgage) usually don’t compete with the giant gross margins held by “tech” companies in the fintech space. Their ability to deliver better and cheaper products is limited when compared to their “tech” counterparts (such as Bloomberg Terminals). They have a more linear growth trajectory, compared to an exponential growth trajectory for successful tech firms.

The Tech Model

On the other end of the fintech spectrum are tech companies that create new technology to address entrenched problems. They aim to enhance customer experiences, solve legacy problems and generate tremendous LTV. By creating innovative technology, these firms outmaneuver competitors and justify substantial investments to fuel their growth. The result, when successful, is a business model geared toward exponential growth.

Examples of “tech” companies in fintech include:

These companies are in the business of selling operating systems to insurance, banking and other financial industries. They become entrenched with their customers by becoming an essential part of how they do business. They create long-term value and astronomical margins by creating new technology, leading to virtuous cycles and network effects.

While the tech model has more opportunity for exponential growth than the fin model, it comes with its own set of challenges. For one, the tech side is mostly B2B, which means their customers are going to be insurance companies, banks, lenders and other fintechs. This limits the customer pool and can lead to longer sales cycles and a harder time acquiring new customers early on. The potential is huge, but it can take longer to get there, hence the need for more capital and time needed to become profitable.

What The ‘Fin’ And ‘Tech’ Models Mean For Valuation

Despite the differences in the “fin” and “tech” business models, the primary valuation objective remains: secure strong franchise value that lasts. What differentiates these models are the means to achieve this value.

While “tech” companies typically burn more cash initially, they eventually become cash-rich due to their high LTV, thanks to the unique technology they provide. However, “fin” firms face a more limited LTV and usually have higher customer churn rates. These companies need to continue to acquire more customers and achieve growth through low CAC instead of LTV, which limits their network effect compared to “tech” side companies.

“Fin” firms are often lumped into the same category as “tech” and are incorrectly valued like SaaS companies. Instead, they should be valued more like financial services companies. This is not meant to denigrate “fin” firms but to value them more realistically. Many financial companies achieved tremendous growth by leaning into tech, but it is a different growth model than creating the tech itself.

Linear Vs. Exponential Growth

When considering the valuations of “fin” vs. “tech” within fintech, follow this simple rule: Successful “fin” side companies should expect linear growth while successful “tech” side companies should expect exponential growth.

Fin companies can steadily grow in a more competitive field by using tech as their advantage. Tech companies are creating entirely new infrastructures and technologies that other companies will base their businesses on, which means years of burning cash and unprofitability for an explosive payoff down the road. Consider API-based payment authentication networks that create API connections with thousands of financial institutions and fintech apps requires significant investment and time before profitability.

Two Paths To The Same Goal

Both business models work, but there is usually less risk on the “fin” side as the tech side makes bigger bets.

Ultimately, you are looking for the same outcome within both models: strong franchise value and long-term customers. Both models are essential to the fintech ecosystem. They’re likely to grow, and could be worthwhile to build and back for decades to come.

Whether you’re a retail or institutional investor, or even if you’re evaluating a compensation plan that includes equity in a fintech company, it’s important to know whether that company is a “fin” or a “tech” company. Consider this question carefully and ask yourself, “Is this company valued in alignment with its true business model?”

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms.

5 Questions with FinTech Founders - Curve

Welcome to 5 Questions with FinTech Founders, where we sit down with the next generation of FinTech innovators to hear about how they got started, and where they are going. 

In this installment, we spoke with Shachar Bialick, Founder and CEO of Curve, the London-based banking platform that combines your credit, debit, and loyalty cards in one smart app.  

Shachar built Curve with a simple mission: to simplify and unify the way people spend, send, see and save money. With over 4.5M customers, 250 employees and partners like Apple Pay, Google Pay, Samsung Pay, and Mastercard, Curve is growing rapidly and is currently live in 31 European countries, including the UK, Ireland, Germany, Poland, France, Italy, Portugal, Norway and Sweden and now also in the US.

Before launching Curve, Shachar built and led several companies in healthcare, finance, e-commerce and mobile telecommunications. Shachar, who holds an MBA from INSEAD, founded his first startup at the age of 21 after leaving the Israeli military. 

1. What inspired you to start Curve?

The idea behind Curve came to mind back in 2006. I had decided it wasn’t the right timing, as I believed either Facebook (who had a virtual currency at the time), or Paypal ( the only company in the world that has the required capabilities), would capture the market opportunity. I was wrong.

After my graduation from INSEAD in 2013, a tectonic shift happened in the EU market, with the formation of PSD2 and the IFR. At the same time, unsurprisingly, the market began to fragment itself, and the ‘unbundling’ that occurred in other markets started to happen in the financial sector in Europe and the UK. While other fintechs went after various parts of the value chain (and continued to fragment the market) Curve believed that eventually the market would rebundle itself, and therefore worked on the proposition of ‘rebundling’ the market – a similar approach to Spotify and Amazon. We say, keep your bank, keep your products. Just connect everything to this one, unified, supercharged experience called Curve.

2. What problem were you trying to solve in the market?

The internet revolution brought with it remarkable value to consumers and businesses alike. Information was flowing more transparently and freely, which increased selection and reduced pricing and unnecessary middlemen. At the same time, new technologies, like the Web and smartphones made our ability to access and interact with various products and services more convenient.

This shift has happened in various industries, such as shopping, music, insurance etc., however it has yet to happen across payments and finance as a whole. Those markets were closely guarded by large gatekeepers such as the banks and the networks, which are largely owned and influenced by the largest banks in the world. Despite this, Curve believes that the market force and consumer needs are too powerful to maintain the status quo, and that eventually a similar shift to what we've seen with Amazon and Spotify would have a domino effect in the financial market. The only question Curve had was “who would be the race car to win the race?"

Curve is building an operating system for money. Its mission is to empower its customers to reach financial freedom by continually raising the bar of the customer experience through selection, pricing, and convenience. These are universal truths and jobs-to-be-done.

3. What measures do you take to create a culture of growth at Curve?

At Curve, there are three parts to performing efficiently.

First is instilling our 10 leadership principles – a set of values and standards for all employees. We hire based on these principles, and manage performance based on these principles.

Second, by decentralising decision-making and hiring people with the right attitude and very high potential. Grit, tenacity, inventiveness, ownership are merely examples of attitudes and traits we look for in our people.

Third, by making sure we hire and retain talent that exhibits the culture we want to see. We follow our principles to hire our people, and retain them. In addition we operate the Keepers Test; which essentially means we constantly track our employees and pose managers with the hypothetical question: ‘If Alice got a job offer from Facebook tomorrow, how much would I fight for her?’ Whatever the answer – be it a change in salary, equity, role or even simply words of encouragement – it is actioned immediately. If the answer is that they they won't fight for her, then Alice is taking an A player spot, and therefore her manager needs to reconsider her position at the company.

4. What lessons have you learned that you would share with other entrepreneurs
looking to scale?

First time founders think about the product. Second time founders think about distribution. Start with distribution first. Product-market fit (PMF) is a beautiful combination of Market-Product-Channel-Pricing. Without figuring out the channel and pricing (aka business model), you won’t be able to identify PMF, regardless of the alignment you identify in the market-product axis.

Change the leader, change the Culture, change the impact. If you don’t see the impact you expect from your leaders, there is likely a cultural issue, and the source is likely your leader. Everyone has a low quarter. Support them. But if the problem persists, you must take action.

Building culture requires culture density. Hire for the culture you want to see. Ensure people have the right attitude to the stage of your company.

Delay scaling people as much as you can. You’d be surprised what you can achieve with a small team. Criticise and review every new role requirement. Prioritise decentralisation over hierarchy.

Plan, organise, lead, control. Build the relevant systems that would allow you to achieve operational excellence. The POLC (planning, organising, leading, controlling) framework is one I like to use, as it’s the one that empowers my people the most, yet ensures we have the right systems in place for each key part of the execution.

5. What advice would you give to new entrepreneurs on raising capital?

First time founders think about valuation. Second time founders think about control. Ensure you structure your rounds such that you optimise for control. So often, I see founders focusing wrongly on valuation, rather than control. As the founder you are the living spirit behind the company. If you don’t structure things well, you will lose control pretty quickly, and may even experience a down-round in a down-market.

It is always best to raise the first $$$ with a SAFE. This enables you to balance the pricing risk based on your initial execution, while providing an upside to those who believed in you initially.

Think hard if the type of business you want to build is such that it is relevant and requires VC money. Running a startup vs. running a business is very different. A startup has expectations of increasing value 40-100 fold in a relatively short period of time. Can your business (read: market) support such an increase, and are you willing to commit?

Being great requires a lot of sacrifice. Ensure you understand it and up for it.

To learn more about Curve, visit curve.com.

5 Questions with FinTech Founders - Arta Finance

Welcome to 5 Questions with FinTech Founders, where we sit down with the next generation of FinTech innovators to hear about how they got started, and where they are going. 

In this installment, we spoke with Caesar Sengupta, Co-Founder and CEO of Arta Finance, a digital family office that uses technology to unlock the financial superpowers of the ultra-wealthy.

Caesar has a passion for using technology to bring access. In his last role at Google as VP & GM of Payments & the Next Billion Users initiative, he led Google Pay, which went from 0 to 175M+ users in ~5 years. He also built other hit products like Files and Camera Go, and he helped start and led the development of Chromebooks. Previously, Caesar worked as an engineer at Encentuate (acq IBM) and HP Labs.

Caesar holds fifteen patents in Operating Systems Design and Expert Finding Systems and earned an MBA from the Wharton School and an MS in Computer Science from Stanford University. He resides in Singapore.

1. What inspired you to start Arta?

Arta came about from an idea that brewed within a group of us who'd been at Google for quite a while. Over time, we found our conversations branching out from the day-to-day grind. We started talking about life after work - retirement, investing, goal-setting and such.

As we were climbing the career ladder, we started noticing something about the big wigs, the folks who'd been there since the start of Google. They seemed to have financial superpowers we were just not privy to - access to unique opportunities, tailormade solutions and a network of people with similar ambitions. That got us thinking: could we bring these superpowers to the masses, us included, by leveraging technology?

Over the last few years, as technology and AI reached a tipping point, we felt it was time to jump in and make it happen. And that's how Arta was born. We're here to use AI and technology to bring these financial superpowers to a wider audience.

2. What problem were you trying to solve in the market?

Handling money and finances is a critical aspect of everyone's life, but let's be honest, the financial world as it stands is imbalanced, opaque, and strangely complicated.

I'm a firm believer that technology, and particularly AI, has the potential to make financial superpowers - the exclusive opportunities, profound knowledge, and access to experts - which currently seem reserved for the ultra-wealthy, available to far more people. This is precisely the mission we've embarked on with Arta.

Many of us at Arta have devoted our careers to utilizing technology to extend accessibility and bridge gaps. Our experiences span diverse projects, like Chromebooks, which revolutionized personal computing by making it more affordable. This not only lowered the cost but allowed thousands of schools to introduce 1:1 computing to millions of students. Then there's Google Pay, which now serves hundreds of millions of users worldwide and has played a pivotal role in economies like India's transition from cash to digital payments.

We want to make wealth building easier and more accessible.

3. What lessons have you learned that you would share with other entrepreneurs
looking to scale?

Think in terms of problems and pain points. I'm truly proud of the team we've assembled at Arta, and I'm confident in our ability to create top-notch products and solutions, second to none. However, the crux lies in identifying and understanding fundamental, prevalent challenges. Issues like over-concentration of financial assets, or the lack of a comprehensive view of your financial landscape. These are genuine concerns faced by a multitude of individuals.

Our goal is to delve deep into these challenges, comprehend them, and then devise insightful, compelling solutions. It's not just about creating a product; it's about crafting an answer to these deeply-rooted issues. This is what we aim to achieve at Arta.

4. What measures do you take to create a culture of growth within your company?

The majority of our team, in a way, has "come of age" together. Many of us worked together to build Google Pay from the ground up, with many of us having previously collaborated on ChromeOS. This shared journey has fostered a distinct culture, which we've carried over and continue to cultivate at Arta. We even went a step further by penning a culture doctrine, outlining the virtues and principles we hold dear. We abide by it wholeheartedly, and it has proven to be an effective filter or magnet, assisting others in deciding if Arta aligns with their own values and aspirations.

We actively engage in discussions about our culture, its evolution, and how we can continually refine it. We firmly believe that a strong, open culture is not static, but an entity that grows and evolves with us.

5. What’s the best piece of advice you ever got?

Surround yourself with people you look up to and admire. Our concept of a digital family office might never have surfaced if we hadn't been exposed to the world of family offices and financial superpowers, thanks to the accomplished individuals in our circles and those who blazed the trail before us. There's immense value in learning from those who've “been there, done that.” Their knowledge and experiences can be an invaluable guide in our journey.

To learn more about Arta, visit artafinance.com.

The New World Of Banking Apps: How Neobanks Can Evolve

Historically, mobile banking apps (also known as neobanks) such as Chime and Varo have catered to low-account-balance customers. This is fantastic for their customers, as it gives them access to a kind of banking they have been lacking for decades—generally without penalizing overdraft and minimum balance fees.

These banking apps also pioneered early paycheck access, pre-funding direct deposit paychecks before the ACH transaction settles. Big banks have followed suit and are now offering the same services themselves, a good example of neobanks leading the way.

However, neobanks are likely to hit a wall in their profit-creating abilities, as low-account-value customers don’t necessarily have the need for higher-profit-margin services, such as mortgage loans. Below, I’ll go into how banking apps can overcome this challenge, the future of neobanks and how more profits can be derived.

First, The History Of ‘Neobanks’

There has long been an underserved population in the United States largely ignored by the banking system. These consumers have been subject to high fees, a lack of bank branches in their neighborhoods and other practices that have excluded them from mainstream financial institutions.

In a first attempt to fill this gap, some companies started offering prepaid debit cards that people could purchase in stores. These cards also had checks attached to them that allowed people to pay bills. This was the first step in offering banking services to these communities, but it was still limited.

With the fintech revolution of the 2010s came the onset of mobile-first banking. Neobank apps offered a quick bank account signup. These types of apps had no minimum balance or overdraft fees (generally up to a certain amount anyway), and they even offered small interest-free loans that kept people away from predatory payday lenders.

This model attracted millions of customers. Neobanks started generating profits through interchange fees, which were higher for them compared to large banks because of the cap on interchange fees for banks with over $10 billion in assets. The interchange fee business model works up to a certain extent, but problems can arise. One problem is that digital banking attracts higher rates of fraud and disputes. The cost of handling just one of those disputes can wipe out the smaller lifetime value of a low-account-value customer.

How Can The Neobank Model Evolve?

Neobanks first need to consider revenue models beyond just interchange fees. Banks that originate mortgages make much more money than they do on interchange fees. The same is true for credit card and auto loan interest. This is what you build a bank for.

So, how can neobanks get their customers to look to them for these types of services? The answer is by aligning with their customers’ values and lifestyles, which in turn helps them build a closer relationship. Rather than being a one-size-fits-all neobank whose main benefit is being easy to sign up for and having fewer fees, neobanks that morph themselves to fit neatly into their customers’ lives will create more of these kinds of opportunities.

For example, one of our portfolio companies is a banking app for Black and Brown professionals. Instead of an online bank, they aim to create a community and a movement. With that, they will have greater opportunities for offering value-added services to their customers and driving greater profits for the bank.

Another neobank provides value-added services that help seniors manage the assets they’ve accumulated over their lifetimes via its banking app. It offers services such as faster access to Social Security checks and plans in the future to provide frictionless access to senior discounts through its debit card.

Another Opportunity: Neobanking For High-Account-Value Customers

Neobanks have a largely untapped opportunity: high-account-value customers.

Post-SVB collapse, high-net-worth individuals may be more inclined to split their cash deposits across multiple accounts at the FDIC-insured limit of $250,000. If you had, for example, $10 million in cash, this could become difficult to manage. Technology—and neobanking—could solve this.

Imagine a mobile banking interface where all of your accounts were connected across multiple institutions. With the data connectivity that API-based fintech and embedded finance technology enable, this is very doable. Better yet, the solution could be to have one neobanking app that automatically splits your deposits across multiple accounts for you, shows it to you and manages it as if it were a single account.

Another issue is that many large banks don't have a customer service option tailored specifically to high-net-worth people who have complex banking needs. These same neobank solutions that split deposits across multiple accounts could also offer a concierge-like service at scale through the use of AI algorithms and API-based financial data connectivity.

Change Is Coming

Over the next 10-15 years, I expect a wave of entrepreneurs try to solve these three banking industry problems—and change the way we interface with the banking system.

• Driving greater profits in neobanks through value-added services. Neobanks will need to expand into credit offerings to generate revenues beyond interchange fees from debit cards. Creating stronger bonds and brand loyalty with their customers will help them build these revenue streams.

• Creating seamless banking across many accounts. Expect to see API connectivity and embedded finance solutions change the way multi-account banking is done.

• Creating concierge-like banking at scale. Connected financial data fed through smart AI algorithms will offer personalized solutions for more complex banking scenarios. This technology would provide private banking solutions to high-net-worth customers at scale—many of whom feel ignored by large banks.

One thing is certain, change is coming to the banking system. The collapse of SVB and First Republic Bank exposed some areas that are ripe for disruption and opportunity. Watch for the emergence of entrepreneurs attempting to fill those gaps by solving the three problems above.

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms.