Rumblings about monetizing passive data have been part of the tech sector conversation for years.[...]
Edmonton’s sport culture translates into a competitive startup landscape and entrepreneurial spirit.
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Accelerators in Edmonton: 1
Academic programs: University of Alberta
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Canadian tech ecosystems have gained international attention and are continuing to produce competitive tech startups. With major players like Shopify, Kik Interactive, and Hootsuite, Canadian cities have found themselves amongst the top 20 global tech ecosystems.
Geographically dispersed, and each with their own diverse histories and personalities, Canada’s tech ecosystems have developed their own unique cultures.
TechPORTFOLIO used a combination of data pull from social media conversations and search results to highlight the defining characteristics of Canada’s top 10 tech ecosystems.
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Data analytics is becoming a cornerstone of the financial industry, with startups and established financial service firms looking to give investors clearer guidance with information collected and captured from multiple sources.
Advances in machine learning and artificial intelligence (AI) in particular are providing greater insights and better customer experiences.
AI-powered data analytics not only captures vast amounts of data in real-time, but also helps users understand how different data points relate to each other, providing insights that might otherwise be lost. Faced with a breakdown in brand loyalty as younger customers prioritize user experience, financial services are now racing to leverage data-driven cognitive technologies.
Cambridge, MA-based Kensho, which recently received $58 million in funding from Goldman Sachs, San Francisco-based Alphasense, backed by Tribeca Venture Partners, and Toronto-based Bigterminal are some of the fintech players leveraging AI.
It’s a lucrative market. Equity deals for AI startups, including fintechs, has increased nearly six times to nearly 400 in 2015, up from from 70 in 2011. As of June 15th, more than 200 AI-focused startups raised nearly $1.5 billion (U.S.) in funding this year alone.
“Data is the lifeblood of AI,” Falguni Desai of Future Asia Ventures wrote in Forbes recently. Desai quotes Adrian Lawrence, partner at Baker & McKenzie, in saying: “data and the various rules and processes which both enable and regulate access to and use of that data, stand at the heart of disruptive fintech businesses.”
The market is also “evolving from a descriptive analytics model (rear view mirror view) to a predictive analytics model (insight GPS view),” says Jim Marous, co-publisher of Financial Brand.
“With predictive analytics, we are in a better position to ‘know the consumer,’ ‘look out for the consumer’ and ‘reward the consumer,’” he writes, “learning from previous experiences and predicting future behaviour.”
Bigterminal CEO Adam Rabie says advances in machine learning are allowing fintech platforms like his to do more for their customers.
Powered by IBM Watson, Bigterminal’s solution curates, consolidates, and analyzes financial data from markets, social media, and other sources. The company’s target market includes researchers, analysts, and traders as well as big banks and insurance companies. Bigterminal’s app can be used to conduct research, generate hypotheses, and make decisions based on significantly more data than what financial analysts traditionally use.
Leveraging IBM Watson’s cognitive technology has allowed Bigterminal to do what was previously unthinkable, Rabie says.
“Our machines are computing hundreds of thousands of stories a day, millions of tweets, and trillions of financial data points,” he says. “If it can be smart at finding the anomalies and the connections between them, it can deliver a lot of explanations that are outside of human capacity.”
Other notable financing in the space includes a $325 million Series E round last year for Avant, a personal-loan startup that leverages machine learning. Seattle-based fintech Kavout also recently launched a new investment platform that finds trading opportunities using tools powered by machine learning and big data.
Improvements in cognitive technology, such as relationship analysis and language comprehension, will expand the possibilities for data analytics in finance and banking. As fintechs bring this functionality into their services, they will continue driving disruption in the financial world.
For a free trial of IBM Watson Analytics click here.
Fintech may be hot in Canadian investment circles, but deal-making lags that of other countries, signalling a funding gap that could weigh on the country’s global competitiveness.
Canadian fintechs ranked fifth in volume of global VC deals, capturing 24 of 860 total deals in 2015, according to Andreessen Horowitz-sponsored Pitchbook. Canada also ranks sixth in overall funding, securing $117 million (U.S.) of $12.5 billion in global investments, or just under one per cent of funding distributed worldwide.
For a country whose banks and their bottom-lines are the envy of the financial world, those numbers aren’t inspiring. They’re red flags.
The number highlights a glaring issue in Canada’s fintech industry: funding disparity. The funding gap between U.S. and Canadian startups is not surprising, given the size of the U.S. market. The bigger concern is that Canada ranks 13th in average funding per VC deal globally — far behind the world’s most prominent tech ecosystems, and only just ahead of Russia.
Canada ranking ahead of another tech ecosystem titan, Israel: but this is no cause for celebration either. The so-called “smart nation” has seen an increase in number of $20-million plus fintech funding rounds this year. The trend will continue if fintech initiatives such as The Floor gain momentum.
Canada’s lacklustre performance is apparent when you look at others’ statistics: According to KPMG, the U.S. market volume for alternative finance was $113.43 per person compared with $5.82 for Canada, a 95 percent discount, according to a column in the Globe and Mail by entrepreneur Ray Sharma, managing partner of Toronto-based Extreme Ventures. He’s calling for a “much deeper relationship between banks and startups” in Canada to help address the problem.
With fintech adoption set to triple in Canada this year, and considering Canada’s big six banks reported a profit of nearly $35 billion in 2015, the Canadian market is lucrative. So where is the disconnect?
Risk averse VCs, credit regulations around peer-to-peer lending, and shallow relationships between startups and incumbents are all cited as problems. Peter Misek, a partner at BDC IT Venture Fund, recently told Bloomberg that Canada is two to five years behind in fintech.
Banks are responding to the threat of fintech, cutting fees and facilitating online transactions. While Canadian consumers welcome the changes, they’re defensive tactics, not innovative, long-term strategies. The reactive stance suggests Canada’s big banks haven’t fully grasped how disruptive fintech will be to their business.
Startups aren’t the only threats either. More established tech giants such as PayPal, Amazon, and Apple are also infringing on the financial industry’s territory, adding to an already increasingly competitive landscape.
Canadian fintechs might be too focused on the banks and not paying attention their global counterparts, which puts them at risk of falling behind on the international stage.
For example, U.K.-based GoCardless raised $13 million earlier this year and is eyeing the Canadian market. Sweden’s Bambora has made a number of aggressive moves to expand into the North American market, including the acquisition of Beanstream. If regulation changes are imminent, they could open the floodgates for non-Canadian fintech startups.
The words “collaboration” and “partnership” are used often when discussing the future narrative of fintech in Canada, but have yet to yield meaningful results. Innovation hubs within banks are still subject to slow-moving cultures and red tape, and lack the development talent needed to keep pace. Canadian fintechs might be relying on an acquisition strategy that prevents them from become true competitors to the banks.
Neither approach is conducive to much-needed disruptive change.
Whether or not banks and fintechs can transform Canadian banking is still up for debate. One thing is clear: the Canadian fintech storyline needs to change, or the homegrown industry risks falling even further behind.
Saying your business is driven by data analytics is one thing. Using it to your advantage is quite another.
Brands often expect immediate benefits from data analytics, without using insights to help steer their marketing efforts.
About three quarters (74 per cent) of enterprise architects aspire to be data-driven, yet less than a third (29 per cent) say their companies are using it to generate measurable business outcomes, according to a report from Forrester. The report says data insight will be a “key competitive weapon” for companies this year.
This performance gap is driving an increase in demand for streaming analytics and what Forrester calls “systems of insight.” For most organizations, the best approach is a solution that captures customer insight and engagement in real time.
An example is the integration of IBM Cloud and Bluemix, which can deploy cognitive APIs to analyze a high volume of social media data in seconds using streaming analytics.
When combined with Watson’s Personality Insights, 40 calculated personality traits can show you if the people viewing your ads match the profiles of your target customers.
Analyzing continuous, incoming data and stitching that data together over time can also create something special: moving pictures of data that tell a powerful story. The bonus: It’s something companies can immediately act on.
For a free trial of IBM Bluemix click here.
From cryptocurrency to DAO to robo-advisors, fintech is adding new words to the evolving business vocabulary as the industry continues to grow.
As the lexicon expands, here are some key fintech terms you need to know:
Blockchain: A digital ledger of transactions shared across a distributed network. Data on the blockchain is theoretically impossible to change or remove, making it a candidate for a shared secure global infrastructure. It is the technology that underpins Bitcoin.
Bitcoin: A form of encrypted digital currency. Created in 2009 under the pseudonym ‘Satoshi Nakamoto’, Bitcoin is made, stored, exchanged, and transferred digitally without the need for a bank. According to CNN, “though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs” – ensuring anonymity.
Cryptocurrency: An encrypted digital or virtual currency such as Bitcoin. Investopedia notes that because it is not issued or distributed by a central authority, it is “theoretically immune to government interference or manipulation.”
Crowdfunding: Funding a venture through raising small amounts of money from a large group of people, as opposed to seeking funds from a venture capitalist, angel investor, or corporate sponsor. Individuals can provide funds as donations or in exchange for a product or service. Kickstarter and Indiegogo are popular crowdfunding platforms.
DAO: A Decentralized Autonomous Organization (DAO) is akin to a digital organization “formed by groups of like-minded individuals with specific projects and goals in mind.” Its “software operates autonomously” and its by-laws are coded into the Ethereum blockchain, making them irrefutable.
Ethereum: Ethereum is a decentralized, public blockchain platform that ‘runs smart contracts’: peer-to-peer contracts that use cryptocurrency. By leveraging the blockchain, contracts are not subject to “downtime, censorship, fraud or third party interference.”
Fintech: A short form for ‘financial technology’. According to Fintech Weekly, it is “a line of business based on using software to provide financial services. Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software such as banks.”
Mobile Payment: Also known as “mobile money, mobile money transfer, and mobile wallet,” mobile payment refers to “payment services operated under financial regulation and performed from or via a mobile device.” Most major financial institutions facilitate some form of mobile payments including e-transfers and credit card payments.
P2P Lending: Short for Peer-to-Peer Lending, it refers to lending and borrowing transactions that occur directly between individuals, and do not require facilitation or approval from a financial intermediary such as a bank. Examples include Lending Club and Lending Loop.
Payment Gateway: According to Webopedia, a Payment Gateway is a “service that automates the payment transaction between the shopper and merchant. It is usually a third-party service…that process, verify, and accept or decline credit card transactions on behalf of the merchant through secure Internet connections.” Prominent examples include PayPal and Moneris.
Robo-advisor: A robo-advisor is an online, automated advisor that provides financial advice or portfolio management, providing answers based on data and algorithms. Examples include Betterment and WealthSimple.
The 2015 Wimbledon Championships were a battle for hearts and minds. While players were on the courts, the team behind one of world’s highest-profile sporting events fought to “host the best tennis championships in the world – in every way, and by every metric.”
To provide players, journalists and spectators with the best experience possible, Wimbledon partnered with IBM Bluemix to turn insights into powerful narratives.
During the two week period, 48 courtside experts captured approximately 3.4 million real-time data-points on every move and outcome. When Sam Groth hit the second-fastest serve in Wimbledon history, the information was shared with a digital audience instantly. IBM’s Sam Seddon told the BBC that “during last year’s final we were analyzing about 400 tweets a second.”
The data-driven approach served up big results: the partnership achieved 71 million visits and 542 million page views from 21.1 million unique devices.
As the 2016 Championships get underway, Wimbledon and IBM will aim to up their game and deliver an even better experience.
For a free trial of IBM Bluemix click here.
For a free trial of IBM Watson Analytics click here.
Fear of the ‘unicorpse’ is mounting and, as it does, VCs are demanding better numbers from founders, reports Business Insider. With increased pressure to perform, startups are scrambling to demonstrate financial viability…even if that means redefining the word ‘profit’.
Based on data from the Wall Street Journal, The Verge reports that 15 of 50 IPOs showed sales figures that were far lower after going public, than what was initially reported to the SEC. Furthermore, “a total of $760 million simply vanished once these firms were subjected to more skeptical accounting.”
How is profit being redefined?
According to Bloomberg, using gross versus net margins and revenues, excluding equity grants and taxes, and including figures such as employee stock compensation are tactics being used to paint a rosier picture for investors.
Sean Behr, founder and CEO of Zirx, told Bloomberg, “No matter how many ways you say you’re kind of profitable, if your bank account ends up lighter than when you started—eventually, that doesn’t work.”
As VC skepticism continues to grow and valuations are tempered, ambiguity surrounding what is and isn’t ‘profitable’ will diminish. Startups will be required to present clear term sheets and profitability statements, and the metrics behind them could become standardized. When that happens, startups that can’t demonstrate profitability will join the unicorpses.
Only 17% of Fortune 500 CIOs are women, according to data released this year by the National Center for Women and Information Technology. The stat is roughly in line with a 2014 study showing that women account for only 11% of executive positions at top Silicon Valley companies.
While Facebook COO Sheryl Sandberg and HP CEO Meg Whitman are well known, the overall lack of female founders, executives, and venture capitalists limits the value of the tech sector.
Female entrepreneurs generate 20 percent greater revenue than their male counterparts, while receiving 50 percent less VC funding, according to a 2012 report in Harvard Business Review, citing Kauffman Foundation data.
Explanations for the under-representation of women in tech abound. Some cite an over-reliance by VCs on existing networks, who are mostly male. Others bring the problem back to elementary and secondary education, when girls may get less encouragement in STEM courses.
Whatever the case, the under-representation of women is an economic detriment, regardless of the industry.
A recent McKinsey report stated: “In a ‘full potential’ scenario in which women play an identical role in labor markets to that of men, as much as $28 trillion, or 26 percent, could be added to global annual GDP by 2025.”
Given the numbers, gender equality should be a funding priority in tech ecosystems across the world. So why isn’t it?
Craig Newmark, founder of Craigslist, argues that venture capitalists in tech ecosystems are not putting their money where their mouths are, citing issues such as a lack of female-led startups when the data doesn’t support those claims.
Though acknowledging the true problems is an important first step, systemic, measurable changes are needed: from STEM education, to recruitment processes, to funding. Otherwise, we hinder both social and economic progress.
As unicorns go out of style with VCs, the glossy, idealized cultures of startups will need to change.
A recent article from TechCrunch notes that free-flowing VC funding has softened startups and perpetuated cultures that focus more on small wins like offices and sought-after hires, rather than big wins like building a strong customer base and generating revenue.
Unlike mythical unicorns, cockroaches don’t require palatial offices, onsite chefs, and playgrounds consisting of pool tables and arcade games. They are perfectly comfortable with a dingy basement, relying on scraps for sustenance.
This shift in culture may be a trade-off in attracting top talent, but one that should benefit startups in the long-run. Miriam Diwan, a former portfolio manager and the co-founder and CEO of NowMoveMe, tells Inc. that “the employees looking for Facebook or Google levels of perks are not the best fit” for startups.
Similarly, YCombinator president Sam Altman says “the people who get hurt most often are employees at these startups who look at these valuations and think they aren’t pretend.”
Cultural change can be difficult for any organization. A key challenge for startups is to ensure that changes are aligned with long-term strategic plans and organizational values.
/newsrooms publication.
