by Gary Conroy, Chief Product Officer
I’ve been fortunate enough to have been involved in the largest Irish FinTech deals. TransferMate Global Payments secured a valuation of over €350m at the time of a €51m minority equity investment from ING and AIB in 2017/2018, and Realex Payments was sold to Global Payments for €115m in 2015. Both companies have similar characteristics – entrepreneurial driving forces in Terry Clune, Sinead Fitzmaurice and Colm Lyon; neither is VC backed, instead choosing to grow organically through paying customers; both have been profitable since inception.
What can FinTech entrepreneurs learn from these companies? Here’s my top 5:
1) Plenty of Fish
The nature of early stage investing means taking multiple bets that are high risk but also high reward when they come in, delivering outsized returns. To be sufficiently attractive to investors, the potential market size must be sufficiently sized to be able to support such outsized returns. So, are you fishing in a pond or an ocean?
TransferMate is fishing in a very large ocean – $150 trillion in B2B transfers per annum. https://www.pymnts.com/news/b2b-payments/2018/global-trade-psd2-money-transfer/ Additionally, over 90% of these transfers are processed by traditional banks, hence it is not only a very large market, but also one which is ripe for disruption. Happy fishing!
2) No Shortcuts to Success
Just because you’re in a large market doesn’t mean winning is easy.
For many FinTechs, before they can sign up the first customer they must secure regulatory approval. In building a globally licensed business, TransferMate needed to gain global licenses, which it has achieved across Europe, Canada, the US, Australia and New Zealand amongst others. TransferMate started its regulatory journey in 2010 as a Payment Institution in Europe. In 2017, the company completed the journey to achieving full license coverage in the US after being awarded a license in New York. It’s a long road.
However, licenses are only table stakes. One of the differentiating factors that makes TransferMate succeed is its technology. Real-time exchange rates, a RESTful API, a robust treasury management, and proven existing connections to the world’s leading ERP and accounting systems – all these are product features that sets TransferMate apart from the competition.
3) A Partnership of Equals
A large part of achieving global regulation is ensuring that TransferMate is not reliant on any partner – for access to the market, for the technology, for treasury, for payments. The same is also true for sales – building a direct sales capability is crucial. Building a great product is not enough. TransferMate has had a sales-oriented culture from day one.
The second part of the equation is how to fulfil the needs of a partner typically much larger than a scaling FinTech? The answer here usually lies in technology and expertise. TransferMate brings a unique proposition to ING and AIB’s exporting customers to allow them to collect international invoice payments. It doesn’t compete with the bank’s existing product sets and provides the banks with an additional revenue stream. Who doesn’t need that?
4) Get Your Money Right
Regarding funding, founders should be looking a year ahead in the early days. A sufficient cash runway allows entrepreneurs to focus on the business without distractions. Customer adoption is key here – do you have customers that want to use, and are willing to pay for, the service. The more you can build a revenue stream early, then the better terms with which you will be able to access funding.
TransferMate was supported by the Taxback Group, built the business profitably, had the long term vision to invest back into the business and build the global license footprint. Ultimately, the company didn’t require any funding, but secured investment for two reasons. Firstly, the funding was crucial to rapidly accelerate international expansion plans. Secondly, ING and AIB investments came with strategic partnership deals, with skin in the game.
5) Be Unreasonable
Be yourself, but be unreasonable. Be ambitious and attempt to change the world.
TransferMate Global Payments are attempting to change the way cross-border payments are sent and received – it’s a quest a reasonable person wouldn’t attempt.