Blockchain Biometrics Startup Raises $3 Million in New Funding
A #startup aiming to bridge the worlds of #blockchain tech and biometric security has raised $ 3m in new #funding.
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How to deploy funds for Innovation
This is the second post on financials and #funding for #Innovation in large corporations (in the #Financial Services industry).
In the previous post we talked about how one can think about the amount to be invested in Innovation by comparing the investment to the premium of a call option.
This post is about how to deploy capital, possibly in a cleverer way.
Let’s start with describing the status quo in most Financial Services companiesbriefly:
- There is an annual budgeting process (and still multi year initiatives)
- The budgeting process sometimes is so slow that projects cannot even spend enough in the time given which in turn results in management pulling the funds and stopping potentially good projects (bizarre but I have seen it).
- Projects get approved by (central) committees of different seniority levels depending on size. Therefore the approval process can take a while… months sometimes.
- Scope definition and the project’s financial estimates require a lot of investigation. In the end the full amount of the project’s worth gets approved before starting analysis work. As a result projects often ask for high dollar amounts at very early stage…that’s quite risky.
In the context of Corporate Innovation these four points make fast progress of initiatives almost impossible.
To address these issues we propose a capital deployment model for Innovation efforts in Financial Services firms that follows the StartUP / Venture Capital model with multiple funding rounds:
The key to keep in mind here is the iterative deployment of capital. Similar to a startup that gets funding in smaller and growing chunks as risk decreases we believe this to be the right model to be applied inside financial services firms as well.
- Small amounts to ideate using methodologies like Design Thinking may start the journey
- As concepts are developed prototypes may be required to show internal stakeholders the value proposition
- The third stage may involve getting feedback from the external customer for which further funding is required
- Once an idea has some customer validation a real product build can commence and a larger organization and possibly #technology spent is required.
In order to facilitate a quick decision making process and avoid long waiting periods we recommend to have a VC partner like group that can deploy capital at each stage. Ideally they are empowered to take decisions within 48 hours for their portfolio. The Project Owner (like a Startup CEO) in turn gets the freedom to spend the funding he has “raised” until the next milestones is (or is not) hit. Alignment of interest andempowerment are therewith given.
It is important to realize that as with startup funding there is always an option to abandon. For more information with regards to (real) optionality please refer to this good MIT deck.
Of course the devil is in the detail and all of the above is easier said than done; especially Financial Services companies with existing and often stiff processes. But there is hope. If you want to talk more about this please get in touch – at Lightbulb Capital we’d be happy to work with you on this tricky challenge.
[linkedinbadge URL=”https://www.linkedin.com/in/dan-liebau-b136923″ connections=”off” mode=”icon” liname=”Dan Liebau”] is Founder of Innovation Research & Advisory firm – Lightbulb Capital
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Chase Spoofs Slow Payments in ‘Express Funding’ Video
JPMorgan #Chase pokes fun at three-day #payments in a new spot for its express #funding service for business. The service allows card payments using Visa, MasterCard and Discover to be credited to an account the next business day, instead of the old wait of three days. Express funding for business customers launched thisRead More
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Fintech Funding Down 26% Annually, But Future Looks Brighter
The newest Pulse of #Fintech report by KPMG and CB Insights shows that investment in VC-backed fintech companies and startups fell nearly 50% across the globe, with U.S. investment specifically #down 26% from same quarter results last year. The number of deals is also down for the quarter, with mega-round activityRead More
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SWIFT Christens New Round of Funding for Security Measures
#SWIFT remains committed to combatting any cyber breaches, following the endorsement of a new programme,.
FinTech – Finance Magnates | Financial and business news -
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OnDeck Maintains ‘Hybrid’ Funding Approach
#OnDeck Capital Inc. is keeping up with its “hybrid” #funding model to withstand the rockiness of marketplace lending, COO James Hobson said. In its latest earnings report, the lender said that only 15% of its originations were funded through marketplace lending, compared with 35% to 45% in the fourth quarter ofRead More
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State of Blockchain Q1 2016: Blockchain Funding Overtakes Bitcoin
CoinDesk has released its latest “#State of #Blockchain” report, analyzing news and events from Q1 #2016.
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Supply Chain Startup Fluent Raises $1.65 Million in Seed Funding
#Fluent, a #startup focused on #supply #chain applications of the #blockchain, has raised a new #seed #funding round.
fintech techcrunch
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