FinTech Demo Day 3.0

Last week was the FinTech Sandbox Demo Day 3.0. I didn’t have any expectation for the event, but am pretty interested in the space and was curious about what was happening here in Boston. The event was held in Hatch Fenway, a space I’d never visited before and organized by F-Prime (one of our clients here at InkHouse). I was impressed by the crowd, which was probably close to 250 people.

Following some general hobnobbing, the formal program got underway. John Fawcett, the CEO of Quantopian (a crowd-sourced quantitative investment platform with more than 90,000 members), shared the story of his path to fintech. Following Fawce’s comments eight companies were given five minutes each to tell their story and demo their technology. Here are brief capsules on each.

Alpha Hat - This was the first of several companies providing analytics tools. Their story was based on the iterative process of asking increasingly refined questions. The demo showed how the company’s technology worked using Excel as the before model. They explained that any changes to the data in their system would automatically cascade through models, updating without cumbersome manual updates of multiple spreadsheets. One of the points they made that stood out was their belief that every question is better informed than the preceding one. That makes sense to me. What made less sense was their description of themselves as “Google Docs meets Instagram for financial data analysis.”

Satoru - Satoru was one of the more interesting companies at the event. The problem they seek to solve - helping small businesses better manage cash flow - is a vexing one for many entrepreneurs. I know many business owners who struggle to deal with unexpected expenses or finding the funds to purchase materials or kickstart a project. Satoru solves this problem through a combination of analytics and automation. The analytics help understand when a business is likely to have a cash surplus and when it is likely to run a deficit. The automation kicks in by moving funds during times of plenty into a newly created account that can be tapped in times of need - all automatically. It seemed like a very cool idea and one you could imagine becoming much broader and cooler over time.

Panalytics - There are some things that are drier than others. A cracker vs. a slice of bread, for example. Some might argue that regulatory compliance is pretty dry - but they’d be wrong. Panalytics is taking an interesting approach to solving a big problem. How big? Since 2008 more than $200B in fines have been levied against financial service companies. In many cases this is because the software being used to monitor compliance is old and frankly just not that effective. The company tackles three big problems facing the industry: siloed surveillance that doesn’t look broadly enough across an organization, inadequate violation identification and workflows that don’t match the needs of either compliance teams or regulators. Their demo was impressive, illustrating the ability to identify when potentially violating information entered a system in real time, allowing problems to be stopped before they became violations.

Amenity Analytics  - When Nate Storch came up to speak I noticed that all of the speakers had an entrance song. I can’t honestly say I recall who got what but it just struck me as odd at the time. Thought I’d just mention it. Amenity is another analytics tool that pulls data from various sources and delivers it as “investment-grade” analytics. They described themselves as the confluence of machine learning and human intelligence. The product (which has a very barebones interface) allows people to drag and drop operators together to create natural language queries that can churn through huge volumes of data to present useful insights. It was interesting and I could imagine applications far beyond the world of financial services and fintech.

Koyfin - There’s not much to see at this company’s website yet so don’t say I didn’t warn you. You can sign up to get more info if that’s your thing though. Koyfin is another set of investment research tools with a data visualization element. Now I am perfectly willing to accept that my lack of investment/analytics chops make me a poor judge, but that isn’t going to stop me. This being the third research tools company at the event made me wonder just how many would be needed and survive their infancy. As they described the product they rightly pointed out that many of the currently available tools suffered from at least one of three flaws: expensive, limited functionality or a terrible user experience. While I wasn’t bowled over by the Koyfin UI, it did boast some pretty cool features, mostly around sharing information. Via email, for example, a pasted chart is live and the recipient can open and play with the data themselves. They also feature a pretty robust Slack integration that looked cool.

VendorMach - It wasn’t immediately apparent to me what made VendorMach a fintech company. Their mission is to help establish trust between buyers, suppliers and banks. They describe themselves as a network-driven platform to solve the supply chain problem. (Perhaps you see why I was scratching my head.) The other thing that was notable was the flood of buzzwords that came barreling out into the audience: neural networks, metadata, clustering, cloud. The concept of a trust scope to help improve the relationships between buyers, sellers and funding providers all makes sense but it seemed more general than many of the other companies at the event. I will say that the company’s founder, Chaney Ojinnaka, was wearing the most awesome sports coat; I meant to say something while I was there but didn’t get the chance.

Apernita - Let me say right up front that this was my favorite company at the event. Maybe it’s because I like the whole marketplace lending space and these guys seemed to have a laser-like focus on a very specific group of borrowers: app developers. They describe themselves as providing “capital as a service for digital SMBs.” A nice and tight description. App developers are living in a volatile and fast-paced world. They’re also not necessarily looking for giant tranches of cash. Both these things make funding a challenge. Apernita makes it possible for marketplace loans to flow to these entrepreneurs. Every month millions of dollars flow through Apernita to these companies. More than 2000 active apps have received funding. So far, there have been zero losses or defaults. That’s a pretty stunning track record. They attribute it to some hardcore data analytics. Color me impressed.

Income& - Income& is offering another asset class to P2P or marketplace investors: the Primo. What’s the Primo you ask? It’s a Prime-Rated Individual Mortgage-backed Obligation. Primo is a much easier thing to say. The idea here is that these are mortgages that can be invested in on a fractional basis, providing a well-performing fixed income investment. It all made sense as they were explaining it in a general sense; but as they drilled down into the details (and believe me, they have a ton of details that can be drilled down into) it became a harder sell. Their target demo are the 10,000 baby boomers who retire every day. Yes, these people are looking for the performance that Income& promises, but the level of research and engagement expected of investors seemed like a bit of a roadblock for the casual investor. A neat idea but automating it might make it more attractive to a wider audience.