Archive for the ‘Government’ Category

Fintech a Massive Market Opportunity For Startups

Friday, July 1st, 2016

When it comes to funding startups, fintech reigns supreme.

In 2015, according to Accenture, global fintech investment reached $22.3 billion (U.S.) — up 75 per cent from $12.7 billion the year before. The rush to develop the alternative, online platforms offering financial services is moving more quickly than many other areas of tech innovation.

Banks and brokerages occupy a central position in every economy. In Europe in 2014, the total assets of the banking sector were €26.8 trillion. In the U.S. in 2015: $15.75 trillion.

Who wouldn’t want a piece of that?

Tech startups have started quietly joining the financial sector with the aim of providing a new world of solutions, including payment and loan services, currency and investment platforms, and wealth management tools. These have been the domain of banks and governments for centuries.

One factor increasing pressure on financial services — and creating big opportunities for startups — is a large wealth transfer happening between the generations.

“There is a $40 trillion intergenerational wealth transfer that is in progress, from a generation that has traditionally relied on an in-person advisor relationship to a generation that expects much more of a technology-augmented experience,” top Vanare executives Richard Cancro and Alexey Sokolin said in a recent Financial Technology Partners report.

This transfer combined with the millennial generation’s expectation of a more technology-augmented experience — which traditional banking providers have been slow to provide — is creating a moneyed user base keen to embrace new approaches to banking.  

While regulations remain a hurdle, particularly in the wake of the 2008-09 global recession, fintech startups are expected to jump through every hurdle required to cater to the coveted millennial demographic, which is expected to make up two-thirds of the global workforce by 2030.

For July, we are exploring the vast market opportunity that is fintech.

Our stories will feature insights from key sector figures such as BMO InvestorLine President Julie Barker-Merz, and Adam Nanjee, head of the fintech division at MaRS.

Watch for our interviews as well as explainers and exclusive entrepreneur profiles, as we explore one of the hottest topics in tech today.

Short-Term and Medium-Term Consequences of Brexit on UK Tech

Wednesday, June 29th, 2016

This piece was originally posted on Medium by William McQuillan and is reproduced here with the author’s permission. 

Technology leaders in the UK were one of the loudest voices speaking out against #Brexit. Multiple polls showed the technology sector strongly in favour of remaining, with only 15% in favour of leaving. Over 60 venture capitalists signed a letter backing to remain, with experienced investors like Robin Klein warning that a Brexit could be a Doomsday for the UK startup ecosystem.

The UK technology sector is growing 34% faster than the rest of the economy, and it has been a huge success in recent years — garnering the UK international attention as technology hub, culminating in large exits and pulling in strong talent from all over the globe.

Maybe we, as the tech community, assumed that the rest of country wanted the same things we did. This is perhaps why the outcome has come as such as a surprise to so many of us — the voices that we were surrounded by were not reflective of a large portion of the UK.

Now that Brexit has happened — should we expect large changes? Is Doomsday coming? Currently, there remains far too many uncertainties and undecided variables to make long term predictions. However, there are some considerations worth taking into account in the short- and medium-term for UK technology startups.

Short-term

Uncertainty is the killer for the short term. With Cameron stepping down, we don’t know who will lead the UK economy. Leaving the EU is a concept  —  how the UK subjectively will do it is still to be decided.

The European Union has become so entrenched in many aspects of the UK financial, regulatory, and legal economy  —  the process to untangle those is still unsure. At the moment, this uncertainty is fueling a lot of the huge movements we are seeing in the equity and currency markets.

During unstable periods, most financial investors will move away from technology startups, who are seen as high-risk. This will make it less appealing for angel and high-net worth individuals to invest until markets have stabilised.

This morning, I’ve received 5+ phone calls from entrepreneurs both in and outside the Frontline portfolio  —  all concerned with how Brexit would affect their current round of funding.

If they are a UK company who is raising in US Dollars  —  that is now a positive for them. If they are a UK company raising in Pounds from international investors  —  that is a positive for their investors. Most technology companies are global companies and most venture capital investors are long-term investors, so something like Brexit should not prevent a deal from closing.

Where this is not true, though, is for any potential M&A activity. Until there is more stability, I expect to see a severe decrease or altogether halt of technology acquisitions in the UK.

In the short-term, folks who are considering joining UK companies from abroad will be less likely to move. Anecdotally, I know two couples (one from the EU, one from the US), both of whom had been planning to join the UK tech sector. Both are now seriously reconsidering whether it is the right place to move now, a lot of their fear powered by uncertainty of the future.

Medium-Term

As markets begin to stabilise, we will see currencies and equities settle — most likely at much lower values than before. This lower-valued pound will mean that UK companies will be less competitive in attracting top talent, one of the most important abilities for fast-growing technology companies.

Free movement of talent is probably one of founders’ biggest worries. Being part of the EU means that a UK company has open access to a talent pool of over 400M people, instead of the mere 60M in the UK. Most likely, the UK will move towards having a relationship with the EU similar to that of Norway. Hopefully, this will mean that trade and immigration will be similar to what it is now.

Depending on how these trade and immigration agreements are made, it could make it significantly less appealing for international companies to have their European HQs in Britain. Many of the largest financials institutions such as HSBC, Barclays, Goldman Sachs, and many others announced prior to the vote that they would be moving large number of employees out of the UK should a Brexit vote occur. Even now, it is being reported that Morgan Stanley already plans on moving 2000 staff to Dublin or Frankfurt.

Some have stepped back on these comments this morning, but I see this as more of a market-calming tactic. I believe that many international companies will look to move operations elsewhere in Europe. This will be equally a problem for the early-stage tech companies based in London/the UK  —  a significant talent drain is never good for the market.

The funding environment for venture capital funds will also be affected. The European Investment Fund is the largest investor in European VC funds and are invested in many UK VCs. If the UK is no longer in the EU, this source of capital will most likely dry up and venture funds will need to seek alternative sources of capital — which is already in short supply. The same will go for the many favourable grants that tech companies receive.

While UK companies will have less capacity to buy foreign companies, they will seem cheaper to international buyers and investors. In the medium-term, this could lead to an uptick in acquisitions or international investments in the UK.

Many other questions remain to be answered: What will happen to UK fintech companies that have EU bank passporting that allows them to operate without obtaining extra banking licenses in other EU countries? Will this lead to London losing it’s fintech crown? How will the digital single market be affected for UK companies?

Currently, London is the centre of the European tech startup ecosystem. However, other European cities will take advantage of these post-Brexit issues. Hubs like Stockholm, Dublin, and Berlin could leverage this uncertainty to attract talent, capital, and companies away from the UK. It could lead to London losing importance in Europe as a tech and startup centre.

As a pan-European investor, today is a sad day for me. However, I hope that this instability is short-lived and that, moving forward, Europe continues to lower barriers for trade and people — so that great companies can continue to grow with as little friction as possible across the continent.

To all ambitious UK-based tech founders, let’s continue to focus on the future — growing your teams, closing your funding rounds, and, as you always do, evolving to tackle any challenge that stands in front of you.

UK Startups Worried About Talent and Funding After Brexit Vote

Friday, June 24th, 2016

After the United Kingdom voted 52% to leave the European Union, the startup community in London and Scotland — both of which voted to remain in the union — has been thrown into turmoil.

Debbie Wosskow, founder of the lobby group Sharing Economy UK, told London tech magazine The Memo: “Make no mistake, the news this morning is seismic. It is disappointing that we are in this situation and there is no doubt that the weeks ahead will be turbulent for many different reasons.”

North of the border in ‘Silicon Glen,’ the situation is much the same. John Peebles, the CEO of Administrate, an Edinburgh-based training management startup with $1.54 million of funding, told The Herald that a great deal of government-backed enterprise funding and talent came from Europe.

The Brexit decision has been disappointing to virtually all Scottish startups, Peebles told TechPORTFOLIO. “We’re in a relatively small market here in Edinburgh, and because there is a lot of activity, many Scottish startups are looking to hire into their team for growth. That’s just become a lot harder, potentially, now that the wider EU may start to require a work visa.”

One feature of the EU is free movement of labor; anybody born on the continent with a European passport can take a job in another European country. Although this is a startup-friendly policy, greatly widening the pool of candidates, Leave leaders campaigned against it.

Fred Destin, partner at venture capital firm Accel, told the Financial Times that the “fluidity, speed and simplicity” of this system was a huge benefit, and that the suggested replacement — a points-style system, like the one used in Canada or Australia — was too cumbersome for small organizations.

Turmoil aside, the European Union itself is keen to push quickly and make the process as fast — if not pain-free — as possible, with the President of the European Parliament looking at legally speeding up the steps, saying that uncertainty is the “opposite of what we need.”

Brexit leaves unresolved issues and no timelines or known conclusions. The labor market and free trade won’t be settled for a long time, and the pound sterling is plummeting.

Some see the final conclusion — when it arrives — as a positive. Jim Duffy, CEO of Entrepreneurial Spark, which describes itself as the UK’s largest free accelerator, says that businesses are trading across the world, not just Europe.

“Entrepreneurs will simply just get on with it and what’s important today is that they continue to focus on planning to ensure that they can navigate any turbulence in the coming days and weeks.”

Peebles agrees. “On the one hand, the instability of Brexit and a potential second independence referendum are unsettling, but on the other hand, we’re lucky that most tech startups are focused on global markets.”

Still, what many are describing as an emotional, ‘lizard-brain’ reaction from the British people is likely to have serious political consequences in the years ahead for the UK and the EU.

Tech’s Gender Problem Means Money Lost

Monday, June 13th, 2016

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.

$28 Trillion

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.

US Postal Service Considers Adopting Digital Currency

Tuesday, May 31st, 2016

You’d expect the likes of Nasdaq and Goldman Sachs to already be part way to adopting digital currency. But the US Postal Service is also eyeing the technology, known as the blockchain, as a way to reinforce its supply chains and grow its share of the financial services market.

The blockchain differs from the traditional banking record in that all financial transaction data are contained in a distributed ledger. This removes the centre of power from individual banks, and vastly increases security as multiple copies of a ledger where one entry depends on another (the “chain” in the blockchain) cannot be interfered with after they are filed.

According to CoinDesk, the Postal Service’s Office of the Inspector General (OIG) released a report that says ‘PostCoin’–either adopted from an established cryptocurrency or created by the government agency itself–could be used by customers to send international money transfers to a far larger number of places than its currently limited scope.

Blockchain technology could even be connected to pieces of mail for supply chain management, for “timely sharing of information and processing of payments”: while the report acknowledges that it may be somewhat impractical to attach a unique sensor to every single item of mail, the USPS could use its size to encourage adoption.

Randy Miskanic, the US Postal Service’s Chief Information Security Officer and VP of Digital Solutions, is urging caution because of security and regulatory uncertainty. This means there might not be a PostCoin particularly soon.

“We will evaluate the use of blockchain for each of the use cases and further review the available opportunities while considering the impact of the technology and financial restrictions,” he says.

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Toronto Diversity Strengthens the “Cockroach Nest”

Wednesday, May 25th, 2016

Toronto was recently named the most diverse city in the world, and this status might help to explain the success of companies like Wattpad and other startups that have helped form the city’s cockroach nest.

A study by the BBC says that while Dubai has 83% of its population hailing from abroad, Toronto has a far wider spread of nationalities – 230 in all – so wide that it took one artist a year to find and photograph one person from each of these countries.

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Why Diversity Matters, a report by management consulting firm McKinsey & Co. reveals a strong correlation between diversity and financial success: companies in the top quartile for racial and ethnic diversity are 35% more likely to have above average returns.

Chris Arsenault, managing partner at iNovia Capital, says that companies that prize diversity within their own culture make better hires and have more fully engaged employees.

“As a diverse workforce understands and relates to its customer base, it can also serve to drive innovation, being better equipped to design and develop products and services that meet the needs of a diverse market,” he adds.

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WattPad, a Toronto-based community publishing and e-book distribution platform, is following that exact strategy.

“The majority of Wattpad employees can speak a second or third language,” the company’s founder, Allen Lau, explains in a Globe and Mail editorial. “They are world travellers, having lived in 76 different cities around the world. Many are immigrants or first-generation Canadians. The perspective they bring is invaluable.”

WattPad’s initial growth in English only was slow, but when he started hiring country managers who could not only translate language but understand cultural norms, he was able to expand and adapt his product, tailoring it to content creators depending on nationality. This has resulted, for instance, in WattPad stories being adapted for Filipino media.

 

 

“I believe that Toronto’s diversity gives me an unfair advantage,” says Lau.

“Local startups are now global on day one,” adds Dr. Sean Wise, Associate Professor of Entrepreneurship at the Ted Rogers School of Management.  “Not only does diversity lead to innovation through an exchange of ideas, diversity can allow you to go global.”

For more on the opportunities and challenges facing Toronto as a tech startup ecosystem, read our in-depth analysis, Shopify Takes Vacant Blackberry Throne – And What’s Next for Ontario.

VIDEO: IBM’s Ontario Research Consortium Partnership

Tuesday, May 24th, 2016

IBM provided a $200+ million “sandbox” and access to the country’s biggest supercomputer, along with an abundance of analytical tools as the company’s contribution to Southern Ontario Smart Computing Innovation Platform (SOSCIP), a research and development consortium that now includes 14 universities and 2 colleges.

The result? The partnership has generated $2 billion in pipeline revenue by helping university researchers and startups get to market.

This innovation model, facilitating collaboration between IBM, academic institutions, Ontario Centre of Excellence, and SMEs aims to help establish Ontario as a leading global centre for driving innovation in information technology, health, and urban infrastructure (water, energy, transportation).

By partnering with private enterprise, academic institutions can leverage cutting-edge technology and experience. Learn more about SOSCIP and its economic impact:

“Silicon Forest” Attracts Talent from the Mother of all Tech Ecosystems

Thursday, May 19th, 2016

Tech disruption happens geographically as much as it happens across industries.

Portland, now known in the tech community as “Silicon Forest,” is becoming a big draw for developers as Bay Area high rents make Silicon Valley – arguably the most hallowed of startup ecosystems – less attractive.

As an indication of the trend, the region’s talent pool grew 28 percent between 2010 and 2013, compared to 20.8 percent in Silicon Valley.

Pacific Northwest Benefits

Portland’s affordability is major factor behind the growth experienced in the high tech sector, and resulting increased salaries are contributing back to the city’s wealth. And this benefits the U.S. Pacific Northwest as a whole.

While prospective migrants are attracted to the low cost of living and work-life balance offered by the region, Portland and Seattle, it’s neighbor to the north, are benefitting from employee exits at tech giants.

A tech ecosystem map from Madrona Venture Capital demonstrates how the University of Washington, Amazon, Microsoft and other notable contributors to the ecosystem have spurred the creation of startups, including now established Real Networks and Expedia.

With Google setting up a larger office space in Portland, this trend should continue to bolster the region’s startup prowess and ability to compete with other tech ecosystems around the world.

 

Choosing the Wrong Accelerator Can Get You Nowhere Fast

Wednesday, May 18th, 2016

Accelerators can put startups on a fast track towards growth-stage success, but founders shouldn’t be tempted to apply to a program simply on the basis of acceptance chances. Geography, funding, office space, and mentorship availability are all important, and there are still other factors to keep in mind.

We asked interviewees during our launch week about what’s most crucial for startup founders considering accelerators.

“It is very important to get the right accelerator based on the product that you have,” says Amir Azhari, President and COO of AOMS Technologies, a startup focused on fibre optic sensors for extreme environments such as oil and natural gas wells. The first accelerator he tried, which focused on software and app development, wasn’t meeting his needs.

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Azhari joined the RIC Centre, in Mississauga, Ontario, Canada, which he says worked better because of its manufacturing focus.“[They] introduced us to different potential investors who might be interested in our technology,” he says.

Sonia Strimban, Manager of Venture Operations at the MaRS Discovery District in Toronto, adds that accelerators help avoid isolation. “There’s a compounding network effect. If you’re not part, you’re missing out in introductions and meetings with potential investors. You have to be part of the community to receive the exponential effects of the momentum.”

Matt Roberts, associate director at the Business Development Bank of Canada’s IT Venture Fund, agrees that accelerators provide an important role, particularly with filling missing skills in your initial team. “They’re more often than not providing advice and feedback to allow founders to do some of that early sales and marketing themselves, or giving them advice and connections to make the first hires they need.”

But perhaps the best value you can get out of an accelerator is working with those already established. According to Strimban: “Founders like to learn from each other. There’s an element of trust they have with other entrepreneurs… It’s invaluable knowledge that will save you so much time and effort if you can benefit from the experience of others.”

/newsrooms Launches TechPORTFOLIO to Cover Economic Value of Startup Ecosystems

Monday, May 16th, 2016

Startups have ended the industrial era and have become the net job creators in many major markets across the globe.

To follow this disruptive change, /newsrooms has launched TechPORTFOLIO, a social media-driven destination that covers the economic value and financial benefit of startup ecosystems as they emerge locally, nationally and internationally.

TechPORTFOLIO will explore the most important transformations impacting technology, business and economic growth,” says Robert Delaney, VP Managing Editor, TechPORTFOLIO. “We’re researching and writing about many layers of the ecosystems. TechPORTFOLIO will compare and contrast geographies, approaches, companies, and investment trends in order to understand and evaluate how startup ecosystems are changing.”

TechPORTFOLIO combines journalistic coverage and data analysis to profile startups, entrepreneurs, investors, academia and governments shaping startup ecosystems.

TechPORTFOLIO will use IBM Cloud and cognitive technologies, including data and machine learning, as part of its journalistic approach to deliver insights relevant to the companies, startups and governments involved in the global startup ecosystem.

“IBM Cloud is the leading platform for data-driven cloud and analytics that enables organizations to meet market demands and open doors to more responsive and innovative ways of doing business,”says Nevil Knupp, VP of Cloud, IBM Canada. “By providing the best cloud and cognitive technologies, we are helping TechPORTFOLIO connect to the developer and startup audience and transform the way news is delivered.”

“The Canadian startup space is thriving and supporting a culture of innovation with organizations, like TechPORTFOLIO, allows IBM to contribute to a thriving tech environment that can strengthen Canada’s position as an ideal place to research and develop new technologies,” says Lila Adamec, Program Director, Developer Ecosystem & Startups, IBM Canada.

TechPORTFOLIO will be a new kind of publication that incorporates data, social media and technology into its operating model and ongoing publishing,” says Leigh Doyle, Managing Editor, TechPORTFOLIO. “Editorial instinct and subject matter expertise will take us a long way in our analysis and storytelling around tech and startup ecosystems. When we combine those with our data and social media expertise, we’re able to go deep into subjects in ways that were not possible before. That’s exciting.”

About TechPORTFOLIO:

TechPORTFOLIO covers the economic value and financial benefit of startup ecosystems as they emerge locally, nationally, and internationally. TechPORTFOLIO combines journalistic coverage, data analysis, and profiles startups, entrepreneurs, investors, academia and governments shaping startup ecosystems. The site is available at http://techportfolio.net/

TechPORTFOLIO is owned and published by /newsrooms, a network dedicated to providing continuous content marketing and social media coverage for brands. Our managing editors, writers, correspondents, creative producers and analysts draw from the insights and experience of the world’s best newsrooms to deliver content and coverage across a wide range of industry categories.