So you’re sick of your banking job? Before you make the leap to fintech, realize that becoming an entrepreneur is extremely hard. If you ask any founder of a fintech startup, they’ll tell you the journey is not easy. The challenges that you face include financial, human resources, sparking client growth, luring investors, intellectual property and long sales cycles. That said, the rewards can be great.
The value of fintech investments in the United States nearly tripled in 2014, to $9.89bn from $3.39bn in 2013, according to Accenture and the Partnership Fund for New York City. With so many angel investors and venture capitalists willing to throw money at promising fintech innovators, now could be a good time to start planning to make your entrepreneurial dream a reality.
“At startups what you’re doing today is not always what you’re going to be doing tomorrow – what your job is, what the needs of the business are can change pretty fast,” said Stessa Cohen, research director, banking/investment services at Gartner, a research firm. “The pace is different."
Here are some of the top fintech incubators and accelerators in the U.S. that should be on your radar screen.
Co-founded by the aforementioned Accenture and the Partnership Fund for New York City, the sixth-annual FinTech Innovation Lab begins next month in New York, helping to build partnerships between six fledgling fintech entrepreneurs, experienced technology businesspeople and senior-level bank executives. They participate in workshops, panel discussions, user-group sessions, networking opportunities, one-on-one meetings and culminating in June with presentations in front of venture capitalists and financial industry executives.
Supporting institutions include Bank of America, Barclays, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.
Last month, Deutsche Bank opened an innovation lab in New York City, its fourth location after Silicon Valley, Berlin and London.
The newest lab in Lower Manhattan’s Fulton Center facilitates experiments with new technologies focused on areas such as artificial intelligence, cloud technology and cyber security.
The labs are designed to help the bank evaluate and adopt emerging technologies and contribute to the bank's digital strategy.
Initially launched in London, Barclays expanded its accelerator program to New York last year in conjunction with Techstars. A bank spokesman said the objective is “to help innovators develop new disruptive fintech technologies, particularly in the investment banking, wealth management and credit cards industries.”
Running July through October, the 10 participating fintech companies will get access to Barclays APIs and data, as well as guidance in building and refining their business models.
Barclays also launched Rise New York last year, a physical site that houses Barclays Accelerator and a co-working environment, event spaces and meeting rooms for fintech companies.
Wells Fargo hosts a semiannual six-month accelerator program in San Francisco that connects fintech entrepreneurs with industry experts, mentors, bank professionals who are potential customers and venture capitalists who are potential investors. The bank offers successful participants up to a $500k investment for a minority equity stake in their company.
Particular areas of focus include analytics, big data, credit, deposits, marketing, mobile, payments, security, robotics, wealth management and wearables.
“I would suggest you have a working product or be able to get one in place while you’re in the program,” said Yao Huang, managing partner of The Hatchery. “The best way to leverage the bank [sponsoring the accelerator] is through deployment of your product there or turning on their reach.
“In order to do so you need to have a product place,” she said. “Folks are less likely to help if you don't have something already.”
Based in Silicon Valley is BNY Mellon’s Innovation Center is a new technology research-and-development facility centered on cloud computing, big data science, cryptocurrency, cybersecurity, the Internet of Things, mobile and wearable computing. It collaborates with the Silicon Valley Financial Services Cloud to host various networking events.
While not exclusively focused on fintech, Y Combinator has provided seed funding for various fintech startups, especially those wanting to launch web/mobile applications. It pioneered a biannual three-month boot-camp model, bringing founders to Silicon Valley to provide mentorship, workshops and funding, as well as connect them with potential investors and acquirers on Demo Day, where all participating startups present their products and services. Only a third of applicants are typically accepted.
The Hatchery runs an innovation lab, B2B Ventures, incubating early-stage companies in partnership with larger companies with resources spanning tech, business, IP, negotiations and financing – all the way to exit. The program is built around a data-centric approach to entrepreneurship to help bring founders with complementary skill sets together, build product, supply funding and find customers.
“We gather first a corporate partner, technical and business cofounders, a plan to implement, financing and a roadmap to exit,” Huang said. “We look for entrepreneurs and companies that have found a niche in the banking industry that represents a huge pain point they’re willing to pay for to solve.
Ynext Incubator is run by Yodlee, which was acquired by Envestnet last year. Participants looking to grow their fintech businesses get access to the Yodlee Interactive APIs, mentorship, technical consultations, strategic guidance, marketing support, funding and networking events.
A Boston-based nonprofit organization backed by Fidelity Investments, F-Prime Capital, Thomson Reuters, Silicon Valley Bank, Amazon Web Services, EY and Intel, FinTech Sandbox provides fintech startups with free access to financial data and resources, along with mentorship and introductions to potential clients and investors.
Many banks, wealth managers and other financial services institutions have a presence in St. Louis, which is where SixThirty is based. Managed by the cofounder of Square, Jim McKelvey, it invests up to $100k in the early-stage fintech startups that it selects for its annual accelerator program, plus a slate of business-development programming, along with scheduled networking opportunities with mentors, potential investors and financial services executives.
A four-month program in New York, ERA offers intensive workshops, $40k of seed capital and follow-on investment in future rounds, plus exposure to angel investors and VCs.
Anthemis Foundry is investment and advisory firm Anthemis Group's design-focused fintech incubator. Its portfolio companies include Atom, Azimo, Betterment, Currency Cloud, Fidor Bank and Moven.
Others worth looking into include Plug and Play FinTech, Georgia Tech’s Advance Technology Development Center (ATDC), QC FinTech, Scivantage FinTech Incubator at Stevens Institute of Technology and Coin Apex. The latter is a New York-based fintech incubator focused on Bitcoin and cryptocurrency consulting for startup ventures.
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