SDK.finance is glad to announce the official start of the Campaign “Uniting Incumbents and Fintech Startups”. We will talk to Fintech entrepreneurs to explore the nature of changes they bring to the industry, find out how agile are becoming traditional banking institutions. We will try to identify points at which both can meet or are already benefitting from synergy effect. And, of course, Fintech Influencers are more than welcome to join the discussion.
N: Can you tell us a little about yourself?
I’m a geologist by education but I found my true passion in entrepreneurship. Before starting NoviCap in 2014, I was Managing Director at Rocket Internet in Asia-Pacific, where I was able to launch a number of high growth startups. Currently, I’m also advising the European Commission on innovation and entrepreneurship matters.
N: Why did you focus your attention at Fintech?
Fintech today can be compared to retail 10 years ago. The sector was primarily offline and no one was talking about Amazon. What we are seeing today is a totally different landscape with e-commerce revolutionizing this sector. And although the financial industry is more complex and is a lot more regulated, it is starting to follow a similar trajectory. We aim to be a part of this financial revolution with NoviCap.
N: What is NoviCap exactly?
NoviCap is an online marketplace which allows SMEs to sell their outstanding invoices to professional investors and gain access to working capital within 48 hours, thus creating a win-win situation between SMEs that need fast financing and investors that are looking for quick returns.
N: Can you pitch your company in 5 words?
NoviCap is the “Daft Punk” of finance.
N: Meaning you are “harder, better, faster, stronger”?
Very close: the three pillars of our value proposition are speed, flexibility, and transparency.
Speed matters most because typically, the process to set up a factoring facility with a bank takes weeks. NoviCap has made it possible to use invoice finance in a matter of hours. Flexibility is also key, because unlike traditional factoring, our clients are free to choose which invoices to discount through NoviCap. Transparency is another critical issue that cannot be compromised, that’s why we offer invoice finance with no small print whatsoever.
N: What’s unique about the solution you provide?
There are lots of companies doing alternative finance/lending but most of them are missing the tech in Fintech. What I mean is that you can achieve a certain scale without technology but to grow further you need a strong focus on tech and automation. As for NoviCap, we are a very tech driven company. We offer users an experience that doesn’t exist on any other platform: to assess the cost of financing, pricing and risk instantly. Another unique aspect is why we started. We saw the need SMEs had to receive finance solutions without depending on the bureaucracy and small print of traditional institutions.
N: What is the scale of the problem you are solving?
The estimated volume of global invoice/factoring market is $2.3 trillion. In Europe, our primary market for now, the market size is over $1 trillion. But apart from tapping the existing market we are also trying to make it bigger, targeting clients that have credit difficulties with banks. Just like Uber, we aim to take clients from existing traditional companies while attracting new users that never considered using taxis (either because it was a hassle or because it was expensive).
N: Can you list NoviCap’s key milestones?
First of all we raised seed funding in 2015, the biggest seed round in Spain to the tune of $2 million. But fundraising is just part of the story and often becomes a vanity metric. What is more important is building something very unique like being able to assess and price instantly. We want to be an aid for SMEs, be able to help them grow their business thus helping grow the economy.
N: What are your next big goals?
Now active in UK and Spain we will continue to expand our footprint through Europe. The key target is obviously to reach profitability.
N: Have you considered partnering with a bank?
It’s currently not in our pipeline but something that could potentially be of interest for sure. Customer acquisition remains the main challenge for Fintech firms, and appears to be one of the strongest sides of incumbents.
N: Can you name top 3 Fintech startups that contributed to the ecosystem most?
When it comes to alternative lending I cannot omit Lending Club in the US – they have done tremendously well and brought a significant impact to the ecosystem. Another company that transformed the industry is Paypal – the first fintech company. And the name definitely worth watching now in Europe is Funding Circle. It’s worth noting though that markets are very different, you can’t simply compare Europe with the US, let alone China.
N: Lending Club is a company that spurred a portion of controversy. What do you think of that?
FinTech startups need to accept the fact that they will be subject to the same regulatory scrutiny as any other financial institution. Compliance is key for any FinTech and transparency is a must since trust is hard to gain. If you can’t cope with that, pick a different industry.
N: What do you think will be the major changes in the Fintech space 5 years from now?
I’ve grown cautious to make forward-looking statements, but I hope we will see a good amount of Fintech startups grow up to the size of small banks. Some companies won’t achieve escape velocity and fail because their market appears to be too small, too slow or too expensive to acquire. Or too much hype, in the case of no sound business model. I also expect banks to start actively monetizing all the huge amounts of data at their disposal. Lastly, I hope to see regulators drive change with innovative regulation as well. For instance, PDS2 is already putting additional pressure on incumbents and fostering innovation.
Thank you, Federico, for sharing your story with us! Want to tell us how you are advancing the Finance Industry? Contact me directly.
About NoviCap: NoviCap is an invoice finance platform which allows SMEs to access the capital locked in their long-dated invoices. NoviCap provides invoice finance in a fast, flexible, and transparent way while offering professional investors the opportunity to invest in short-term asset yielding above-average returns.
NoviCap is a Barclays Techstars Accelerator alumnus and is based in London and Barcelona. They are backed by top-tier international investors including Partech Ventures, Techstars Ventures, Tekton Ventures, Cabiedes & Partners and ACE & Company.
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