The international competition Rietumu FinTech Challenge, which collected applications for the participation of the best projects in the field of finance technologies, was held in Riga for the second time.
The winner of this year, who has received a cash prize of EUR 5000 from Rietumu Bank, is the Latvian startup Nordigen.
Fintech is a sphere which is today referred to as the most prospective for starting entrepreneurs. This is why such projects in the field of financial technologies number not in the dozens but in the hundreds. However, not all ideas are going to be successfully turned into reality. Mentors of the competition were asked the following question: What are the three most important conditions, in your opinion, for a start-up to become successful?
Kristoffer Lawson (Finland), founder of a number of companies and business ideas (Solu, Travelling Salesman Expeditions, Alternative Party, Holvi, etc.), expert in banking technologies, mentor:
‘To organise a start-up, one of the most important ideas is to determine ‘the rules of the game’, i.e. how the team will work and what its culture and values will be. For big companies, such things are usually insignificant, but for small start-ups they are of paramount importance. It is very important to clarify and determine what purposes the company wants to achieve, how people will work together, who will be responsible for what and what rules they will be guided by. It is important to do it while the company is young, otherwise later clients, sponsors and investors can introduce their own rules, and this will not always be to the benefit of the idea.
In fact, there are very many factors determining success. In my opinion, some kind of eccentricity must be present in the project. As a person, who starts new things, lives in order to change the world for the best. A person’s lifetime on this planet is limited, and therefore to waste one’s life on work one does not believe in or does not want to do is a crime; a waste of human resources.
I think that a starting entrepreneur, similarly to a man of art, must change the world, bringing new ideas into it. This really invigorates me personally. You have to understand that there is always a possibility that you will not succeed, but if you excessively worry about the decisions you make at the initial stage, then it is less probable that you will be able to make your most important decision when the time comes.
Thus, the three most important conditions for success are, in my opinion, the company’s culture, the ability to think globally and the readiness to defend your opinion and ideas.
As for money, of course, it is hard to do something without it. Investors, especially in Silicon Valley of the USA, like to say that one’s project can be established in any part of the world. Technically yes, it is possible. But if there is no money and no investors in the region, it is very complicated. And there are many such regions in the world that suffer from insufficient financing. Even in Finland, where there are more funds than in Latvia, the financing reaches 30 million. In the USA such figures are orders of magnitude more. Actually, very few countries can compete with America’.
Andris Berzins (Latvia), founder of the Riga branch of London Technological Incubator TechHub Riga, entrepreneur, business angel, mentor, holder of the prize of the President of Latvia “Personal Achievements in Latvia” in 2016:
‘The first factor is the team. I think this is most important, even more important than the idea, as ideas are changing, and quite often. There is a good expression that none of the original ideas can survive after contacting with a client, having experienced no modifications. Therefore, a consolidated and brave team of like-minded persons is needed which will be able to change the idea and ‘tune it’ to the client.
The second factor is, certainly, an idea which must be innovative and original. What is important, is that it must not just be an idea about a product, but rather a whole business model. An efficient solution, where the developers must offer answers to all possible questions: What kind of product is it? How does it look? What is its functionality? What price is it? What market is it intended for? And so on.
The third factor is sweat and hard work, as 90 percent of success depends on whether you can work a lot and hard. Money comes with work. In fact, a lack of money, in my opinion, is an indicator that something has gone wrong with the implementation of the idea’.
Martins Valters (Latvia), co-founder and CFO of the company Mintos – the winner of Rietumu Fintech Challenge 2015:
‘I think that a product must primarily solve a specific task. This is the first and primary condition for success.
The second condition is that a product must be developed with good quality and that a lot of work must be put into it.
The third is a bit of luck. Different favourable circumstances must coincide in the given place at the given time’.
Evgeny Kazanin (Latvia), recognised expert in the development of companies, CEO of TWINO – the platform for private investment in the European market of non-banking consumer credit:
‘The most important thing is that a product must solve a certain problem either of a consumer or the one who stands between a starting business and a consumer, for example, a bank. Today in fintech, in my opinion, situations occur quite often when young companies try to solve problems which in fact do not exist for the end users.
Another important factor is money. Often insufficient or missing financing may lead to the situation when even a successful product which solves problems of the end user ceases to exist. Just because there is no more money.
Today fintech is fashionable and is enjoying big interest among start-ups. Similarly, several years ago the field of AdTech – advertising technology was at the height of popularity. However the world’s expenses in the field of digital advertising amount to only USD 80 billion and they are used by giants such as Facebook, Google, numerous advertising agencies and a million other successful companies. The market of financial services is much broader. Just think, the volume of unsecured credit in Europe is a trillion euros.
With the development of new technologies and the appearance of the fintech industry, a huge number of starting entrepreneurs started looking at it as a bottomless industry, having a huge number of problems, each of which is still waiting for a solution. The entire of Fintech is based on the idea that all processes currently done manually by the banks can be automated. The entire peer-to-peer is based on the idea that every step – from marketing to the process of borrowing – can be automated. The increase in efficiency at every stage of the process, even by a half or a quarter of a percent, can give a surprising effect as a result – reduction in the cost of goods and services, increase in competitiveness, cheapening of financial resources and so on. By the way, the next technological revolution, in my opinion, will take place in the real estate area, which is even more capacious and archaic than the area of financial services’.
Eugene Dugaev (Latvia), Member of the Board of Rietumu Bank, the third biggest credit institution of Latvia by volume of its assets:
‘Firstly, a business must solve a problem that really exists. A significant deficiency of quite a large number of young fintech companies is that they try to solve far-fetched issues. Whereas a new business must offer a solution of a radically new form: either having no analogues on the market, or presenting an alternative to the existing not so convenient financial service that consumers suffer from using.
Secondly, it must be determined to what extent the service provided by a start-up company is regulated in the country where it is to be developed. This is a very important moment, as a created technological product can turn out to be very interesting and promising, but, in view of the specifics of legislation of one or another state, its developers will not have the opportunity to implement it.
Thirdly, a team of professional and enthusiastic people is needed, who see the goal and clearly understand how to solve it, and can effectively present the information to everybody. When coming back to the presentations provided for the competition, some of the claimants make a mistake by speaking more about the details of product and the technology, and not about how the will change the consumers’ life after using it.
How can one make better use of the money prize granted by the bank? I think it depends on what stage of development this project is at. If it exists on a conceptual level, then, certainly, the money should primarily be used for the legal incorporation of a company. Still, money will always be useful for any starting business, even when it is already operating.
In prospect, I think, everything will move towards automation of the things which present most risks for banks, like inter-bank settlements, which are currently performed with the help of the SWIFT system and which are quite expensive. With time they will move to the electronic environment which will be controlled by cryptographic algorithms. This will open new opportunities on this basis, in particular, to transfer in electronic way not only values, but also contract terms and to provide its accomplishment’.