It’s been almost a month since I’ve posted something here, hope you weren’t waiting for the next post. Or maybe I don’t find it too bad if you were, but please feel free to write me whenever that happens and give me a nudge, ask something or even to plain and simply complain about it.
Instead of a more focused post, the idea is to do a general catch up, where I let you know what has been going on as well as some developments and ideas potentially impacting the future of this website. Your impressions and feedback are very important to define this future, so don’t hesitate to tell me what you think.
What has been going on
First things first, what have I been doing for the past month? The period passed extremely quickly from my perspective, so it’s also useful for me to look at what’s been done and which seeds were planted for the future. So, the most meaningful milestone reached towards the end of last month: our FinTech portfolio surpassed the € 10.000,00 mark we originally set up. Below I disclose main impressions whilst building it, with good surprises contrasted against arising frustrations, and closing with lessons learned (and learning). In parallel, the company has also been finalizing it’s first annual accounts this month, which is also an important milestone and helps sediment some insights for the future.
Also, there have been some Summer events in planning, executing and hosting. Most relevant for entrepreneurs perhaps was the last StartupDorf’s Gründerstammtisch, which was unexpectedly quite large with over 100 sign ups, plus a few spontaneous offers for extra beer sponsoring. Really nice community event, and the beer was also good. Don’t miss next events, there is one every first Wednesday of the month.
Some personal stuff
On a personal note, it has also been a demanding time. My daughter has started at the child minder – Kindertagespflege in German – and there was a several-week adaptation period (intense for all of us). I’m glad to have that accomplished, even if as a parent there is always something to worry about. In our case, it’s the amount of changes to the child minder team coming up now. Well, I guess that’s a normal part of life with a kid, and I still find it fantastic.
For those who know I’m Brazilian, you might know that my country has an important election coming up this year, including for president. Keeping informed and trying to anticipate what can happen from next year has also been interesting. As a curiosity, the Brazilian government’s transition is actually on New Year’s day since the 90’s, so the next few months will bring a lot of expectation for what is to come in 2019.
Pitching
Another step made recently – this one relating to an important upcoming project for DS – was to submit an application to an acceleration program. There are of course no guarantees of success, but sole the process of writing an application forces you to think of your project’s future and try to put it in its best light, so it’s both enjoyable and productive. I consider writing more details about this project in this space in the future, let’s see.
So let’s jump into my positive and negative highlights of this past year building a FinTech portfolio.
What went well
- Number and variety of platforms I found along the way, this was enriching regarding the FinTech market, with relevant differences between platforms and even more so when comparing platforms versus banks;
- Interesting yields can be found to compensate generally low rates in the Eurozone at the moment, and there is a wide variety of what you can effectively finance. Sure, you need to be ok with some level of additional risk to even get into FinTech as we do, but looking at what’s out there, I believe different risk aversion profiles can find an appropriate platform and offer;
- Not exclusively because of the Euro, investors have the chance to access Financial innovation across the European region, rather than restricting their reach to local initiatives. I know most investors would be scared to send their money to a new finance provider in another country – that’s why we do it for you first! – but the fact good chunks of regulation, tax and others are harmonized only make this process easier than in other regions of the world.
Frustrations
- Building the portfolio took much longer than I expected and wanted it to. Perhaps planning more in advance, dedicating even more hours to researching and investing or even if I could have relied on a website / blog like this very one, we could have reached our goal quicker. In general, however, building a FinTech portfolio consumes time and energy, which will hopefully be remunerated with some generous returns over time, and experience gains;
- Plenty of the FinTechs in Germany don’t prioritize company investors, even though the reason behind that isn’t clearly stated. In many cases I had to look a lot at website and eventually contact them directly to know if it was possible. The case that bothered me the most was Auxmoney, who only accepts “institutional investors” as they call companies “if they invest millions” according to their customer service. Basically they blame the size of my company for not being able to invest with them, even if they take very small amounts from individuals. I find this simply a bad reaction to an interested investor. If there are reasons not to accept small tickets from company investors, that’s fine, just say so. In general, you should try to be nice to any potential client, even if you won’t take them in;
- We still didn’t manage to find a reasonably priced Depot to buy stock-exchange traded investments, especially to buy in AiX Faktor Funds that has been on my target list for a while. Actually, I did manage to find a reasonably priced Online Depot with DeGiro, but they didn’t offer this particular fund, and after checking with a lot of the larger banks I wasn’t happy with the account maintenance fees they want to charge.
Lessons learned and coming up
- Starting with a silly one, don’t reject the idea of calling the company you want to invest with. Especially considering technological businesses, I expected most if not all interactions to happen online. Surprisingly, even when the actual transactions are online, perhaps the most decisive of informations not easily found on the website are often available with a quick phone call. You won’t always hear what you want, but at least you get a reaction;
- Language still matters, many platforms have only offers in their country’s mother-tongue, and many don’t seem to have a strategic international interest. I find this a pity given the variety in investor’s risk-return appetite, it could be decisive to access different FinTechs (why not in different countries) with the concept most interesting to you. Maybe Europe should have some sort of certification including an official seal to encourage the development of such markets;
- One of my biggest interests going forward is what constitutes a decisive success factor for FinTech platforms. I will do my best to keep track of growth, development and eventually problems that the platforms we deal with face, and see which ones really help investors make money;
- Another point for the future, since we reached our original target portfolio size, is how much we still want to grow in the FinTech space and how much we need to balance the portfolio. Even believing strongly in these Startup’s business models, it’s almost sure some of them will bring investment losses at some point. It is extremely important to have a balanced portfolio in general, and as much as I love what we are investing in, diversifying is crucial. Among others, we should consider equity investments, debt with larger borrowers and other investments.
Keep tuned for what’s coming up, more FinTech investments and more.