for talking sake lets talk about the steps to launching a fintech.
have an idea that would solve a real problem for private market fund managers. experienced said problem first hand at the last 3 fund managers I worked at, and an IB.
reason its not been fixed in the wider market: you really need to be working in the market to experience the issue (Ops problem but affects investment decision making), private market: problems are not public knowledge.
reason for solution:
> would save PMs time / improve clarity on trading Strats
> prevents the need to grow the back office exponentially with AUM growth.
> growing market - increased problems recently.
> problem exacerbated by WFH.
> growing regulatory burden.
> would allow fund managers to scale their platform for other Strats.
my exp with fintech: worked closely with developers who built a solution for data in this market. I know them well. and they have been acquired twice in the past few years. in fact I have been giving the owner some shit recently because the level of their service has diminished, which I believe is due to the growing market. tbh I would look to be acquired by these guys.
just had an epiphany while typing this out. just thinking I should pitch this idea to the developers I work with, and get access to their client base as its going to be the exact people. leverage their existing developers. and could integrate with their existing technology.
should I learn to code.. whatever the heck that means... or should I hire some nerd to produce proof of concept before pitching?
edit: Shit - totally forgot to mention. An American firm did come in to pitch their product a few years ago. It wasnt specifically focused on this asset class, but it was a solution - the reason we couldn't take them on - they are backed/affiliated with one of the largest service providers in this market, who is a direct competitor, and the c-suite / compliance couldn't get comfortable with them seeing our data (obviously theyre would have been Chinese walls and whatever, but try telling compliance / regulators that).
I didn't see it mentioned, but a key point I'd ask is: have you done any research to see if there's already an existing solution or another solution that could be repurposed to solve this issue?
Source: I've worked for multiple fintech firms and some of the largest growth spurts each time was simply realizing our tool could be applied in more niche subsets with minimal efforts/modifications. Like PEarbitrage said, feel free to reach out as well.
Shit - totally forgot to mention. An American firm did come in to pitch their product a few years ago. It wasnt specifically focused on this asset class, but it was a solution - the reason we couldn't take them on - they are backed/affiliated with one of the largest service providers in this market, who is a direct competitor, and the c-suite / compliance couldn't get comfortable with them seeing our data (obviously theyre would have been Chinese walls and whatever, but try telling compliance / regulators that).
Sounds like you might be on to something here. I've started my fair share of companies, both tech and not. Feel free to reach out.
Hey agreed with the comment above - before making any big decision I would look at firms like Vistra (acquired for $5B by Warburg Pincus), JTC (listed in LSE), Sanne (public company acquired by Apex for $2B< this year), Apex (owned by Genstar), Intertrust (listed in AMX) and SS&C's fund admin division. What you are talking about sounds like a fund administration solution and there is already some incumbents in the space. Best of luck.
Incumbents exist in everything. This is the big misconception about market analysis. People think that there are actually markets where there are zero existing players. This simply isn't true. A startup may open a new market by creating a new technology or process for doing something that never existed before. However, we have to remember that something else existed before that new idea that allowed things to be done in some way or another.
Let's take the plane as an example. Could man fly before the plane? Yes technically, with hot air ballons but for this example we can ignore those and say no. How did people get from point A to point B? They took cars, trains, horses, or walked. Planes just created a new way for people to travel by moving in the air. Doesn't mean that there weren't any preexisting methods of transport before that.
Thanks, agreed 100%
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