Earlier this month the TAG Corporate Development Society held a great event (as usual). It featured a panel of CEOs of fintech companies who discussed how they have used innovation, capital, and a customer-first philosophy to drive shareholder value and market presence. The moderator, Jim Douglas of Fulcrum Equity Partners, opened the session with information about the huge presence of fintech companies in Georgia. For example: a) the fifty largest Georgia-based fintech companies generate more than $72 billion in annual revenue; b) fintech companies employ more than 38,000 individuals in Georgia; and c) Georgia is home to a number of fintech industry giants such as Equifax, Global Payments, and the recently acquired TSYS and First Data.
In addition to the fintech giants, the Atlanta metro area is also home to many start-ups in this space —three of the four panelists were CEOs of local fintech start-ups. Since a huge challenge in most fintech verticals is avoiding commodity-type services, one aspect of the discussion was examining how each company adds value for their customers. The panelists agreed that in those situations “it’s a race to the bottom.” For example, CEO Mike Gaburo explained how his company, Brightwell, is focusing on an underserved market, the financial needs of out-of-country workers here in the US. While a variety of companies offer the ability to make individual-to-individual money transfers as a part of their services (for example, Western Union), Brightwell is focusing on money transfers in the context of cross-border remittances and the broader financial needs of non-US individuals working in the US.
A common factor among the start-ups on the panel was that while each company approached funding differently, none of them raised any outside money until they had an established business model with substantial customer discovery, proof of concept, and most importantly, revenue. For example, Jeremy Wing, the CEO of Payscape, described the business model of his company, whose core service is merchant processing. They stayed ahead of the game by strategically choosing key market verticals, offering an all-SaaS solution, and owning the full technology stack. Payscape started doing business in 2004, but they grew organically and did not take on any outside funding until earlier this year when PE firm Parthenon Capital committed over five hundred million dollars to the Payscape platform, in part to fund the merger of Payscape with NXGEN. There is a valuable lesson here, as I see many start-ups pursue funding before they have fully vetted key issues such as customer discovery, path to profitability, and a full analysis of competition in their chosen market.
All in all, this was a great event – top-notch moderator and panelists, and the logistics were all handled smoothly. Kudos to the TAG Corporate Development Society!
