25 financial technology (or FinTech) companies have launched in the past year with help of an organisation called F10. More are on the way, and Julius Baer is in on the ground floor.
On a frosty December afternoon in Zurich’s trendy West quarter, about 200 people gather at a sleek building of concrete and glass. Hipsters, mostly young men with stylish clothes and plentiful facial hair. Some come by bike, one even putters up on a motorised skateboard. As they surge into an ad-hoc exhibition, quaffing capsule coffee and herbal juices, a denim-clad master-of-ceremonies begins bantering in unmistakeable American English to warm up the crowd. While a jazz band prepares to entertain, networking is writ large: smile, handshake, business card, elevator pitch – in English, Swiss German, German and lashings of French.
In search of the new Airbnb – in FinTech
In this mixed air of tent meeting, new-age seminar and tradeshow, testimonies soon follow. One after another entrepreneur tries, in short onstage segments, to win the hearts, minds and wallets of the audience – most of them potential investors, some potential customers, plus a few potential employees. Can this really be a serious way of raising capital? Well, it works in the global heart of IT and Internet, America’s Silicon Valley. Dozens of online firms there have found funding and success at ‘demo days’ like this. Poster child of the process is room-rental company, Airbnb, that climbed from demo-day status in 2008 to a global brand, recently valued at US$ 31 billion.
Turning inventors into product managers
If it plays in San Jose, then it can play in Switzerland – right? That is the premise of F10, a Zurich-based incubator/accelerator that hosted the demo day. Entrepreneurs come to F10 for aid in turning a Fintech idea into a commercial product backed by a solid company. F10 helps them leap from ‘inventor in a shed’ to ‘product manager in an office’. To date, the incu/acco has shepherded 25 companies from concept to reality (see table), with another 10-15 (not yet announced) on deck.
Most are focused on investments, others on backroom operations and a few on insurance-related risk. The odd one out is APPETITA, a ‘virtual waiter’ for use by restaurants and bars.
We’re in the army now – special forces
Incubation/acceleration is a bit like military recruiting school, minus camouflage and weapons. The idea is to transform raw recruits into lean, mean FinTech machines.
Complete newbies spend two days with F10 learning to transform an idea into a product prototype. Techies with an existing prototype go through six months of seminars in customer-definition, product development, marketing and sales plans and legal/regulatory limits that culminate in the demo-day described above. All along, the entrepreneurs are advised by experts and hand-held by tech veterans who have been there, done that. Finally they launch from the nest: so far most seem still to be flying.
F10 doesn’t charge for the schooling, doesn’t take shares in the start-ups and yet does donate office space and modest expense accounts. This offer attracted some 300 applicants to each 6-month class, which by interviews and tests were whittled down to 15 participants. While potential entrepreneurs are plentiful, so too are incu/acco competitors, not just in Silicon Valley, but London, Tel Aviv and Singapore, to name the majors.
What’s in it for us?
Zurich holds its own against these, says co-founder Andy Iten, who came to F10 from its owner-operator SIX Group that also owns Switzerland’s main stock exchange. Above the obvious attractions of F10’s offer and its renowned partners, Zurich is a rare combination of big and small. While home to global banks and insurers – i.e. funders and customers – the city is easily navigable. “Everybody in FinTech here knows each other,” he notes, “and you can be most anywhere in 10-15 minutes on public transport. This is a huge advantage to California, where you can spend hours on hours in a car, often stuck in traffic.”
Fintech‘s potential is clear to banks like Julius Baer and to insurers, accountants and other financial providers. F10 allows them to get close, but not too close. “Our main job is to provide high-quality services to our clients,” says Julius Baer’s Chief Digital Officer, Christoph Hartgens. “Our involvement in F10,” where Hartgens also is a Board Director, “allows us to see and try out new trends and technologies that might benefit our customers.” The bank aims to be a ‘smart follower’ of FinTech, adopting products that improve performance but also are robust and proven. Risky long-shots don’t fit.
Meanwhile, working with F10’s start-ups brings the bank a fresh breeze. “We’re learning from their innovation and entrepreneurial spirit,” Hartgens says, “and we can screen for potential investments at an early stage.” It’s doubtful you’ll see motorised skateboards anytime soon in the halls of Julius Baer, but a touch of ‘demo day’ style is likely. It’s an inevitable element of the FinTech future.