Founders must be Masters of Three Universes

In my forty-five years in industry, I have spent 33 of it in industry and the other 12 in academic and professional education.  I enjoy both sides of the street and think there is value in having both perspectives.  When I was teaching investment management at university I was also creating and running professional/industry courses on all aspects of financial markets.  I am no longer a Professor at a university but am working on new  training/professional education for entrepreneurship given my role as one of three Chapter leaders in Hong Kong for Founder Institute (FI) and running the ASEAN FinTech industry ‘vertical’ there.

The FI Core Program is basically a business course teaching Founders the key concepts they need to understand and apply to make their start-up successful, and it is industry agnostic. 

I noted that many Founders who were involved with FinTech start-ups came from a technology background and had little or no experience with financial markets.  This reminded me of a previous decade when I ran a large financial markets training business for investment banks in Europe and the Middle East.  We had very good attendance on our courses but I was surprised to see that only a minority were from sales, trading and investing and more were from legal, accountancy and IT reflecting all the other skill sets a large bank must have with the growing regulatory and technology requirements.  But these people, though highly educated and trained, did not have a financial markets background and needed a ‘crash course’ on financial markets and products to be effective inside the bank. 

To be successful in an industry, like finance, you need industry knowledge to identify opportunities and talk knowledgeably with people (customers) in the industry.  So, when we first offered the FinTech vertical we decided to supplement the Core Program with extra sessions to teach FinTech Founders about financial markets.

FinTech Vertical (2012) =

1. Core Program (business fundamentals) +

2. Financial markets knowledge

We used to say that a business was two businesses, the subject matter expertise specific to that industry and the business knowledge that any company must have to be commercially successful.

But times change.  😉

As mentioned, I was running financial markets executive education from 2004 – 12.  What I discovered when I started professional training for start-ups in 2017 was how much technology has changed – advanced – and how it has become all pervasive in everything we do.  This is particularly true in the financial industry, which is an industry of intangibles and so often the ‘first mover’ in new technology.

Here are just a few fundamental changes I have had to update myself on to remain relevant in the financial education industry:

·      New digital assets (RWAs) – though they are in essence just ‘securitisations’ (an old concept) they have grown via a different regulatory regime (much less regulated) that has allowed new players to enter and create new operational systems for settlement and custody

·      Crypto assets (e.g. stable coins) – similar (in concept) to digital assets above but with some significant differences given the stablecoin/ token distinction

·      Blockchain – this is changing ‘the plumbing’ of financial markets operations in a very fundamental way

I now understand there are three (not two) core competencies that must reside in any new company:

FinTech Vertical (2025) =

1. Core Program (business fundamentals) +

2. Financial markets knowledge +

3. Technology knowledge

Much of today’s technology, whether it is SaaS, AI, blockchain or something else will become essential in the running of any business.  We can be certain that the financial industry will be an early user of most and a large user of all over the longer term.  So, having this knowledge from day 1 has become a ‘must have’.

But there is only so much we can throw at a Founder at one time without the risk of overwhelming them.  So, we had to think carefully about the delivery of these three competencies.  My personal view, which you may or may not agree with, is that 3. Technology is about ‘build and implementation’.  Whereas the initial problem identification, market research, and conceptual prototype can be done and designed before we get into the details of the technology used for implementation.  So, we are working with other partners who are specialists in the field, for our graduating Founders to move onto a further, technical accelerator to learn, design and build the actual technology they will launch their MVP with.  We hope to announce these partnerships in the upcoming weeks and months.  But when they are firmly in place, we believe our ‘three competency model’, though demanding to go through, will provide the FinTech Founder with all the knowledge and experience to launch – and that is our goal.

John D. Evans, CFA

Founder & General Manager, SEIML