Markus Gnirck – Fintech Startup Ecosystem in Singapore
Fintech Startup ninja & advisor, Partner & Co-Founder at tryb, Markus Gnirck tells BeFast.TV how he sees the future of Fintech in Asia
The interview was transcribed from the video-audio records.
Markus Gnirck: Hi, thanks for having me.
BeFast.TV: Let’s start from the top and talk about Startupbootcamp Fintech?
Markus: I’d love to. Startupbootcamp Fintech, if to be very brief, is the leading platform to connect startups and banks. What happened in the last few years is that a lot of the banks were interested in working with start-ups and vice versa. We have platforms in London, New York, and Singapore at the moment to work with banks as well as helping startups collaborate with the banks. We’re connecting ecosystems across the globe to bring in all the stakeholders such as the government, investors, startups, and banks to create partnerships and some substance in the Fintech world.
BeFast.TV: I have a question about Fintech, the term itself. Does Fintech mean financial technology?
Markus: Yes that’s correct.
BeFast.TV: How can you identify what the criteria are; how do you access startups? I mean, how do I know if this start up is a Fintech one?
Markus: First of all, Fintech is a nothing new, Fintech has been around for about 30 years. There have always been technologies building for the finance world, but now it’s different. The last 5-8 years, new infrastructures, new technologies, new business models came up to create a new Fintech wave. Which includes London, New York, and other centers like Singapore and Hong Kong, where it is happening now.
A lot of entrepreneurs are moving to the Fintech space with new ways of creating products, coming up with the new experience to the consumers. As an example, the focus can be on a very niche problem like lending or payments, and the goal is to improve the situation. Whereas the traditional institutions cannot identify these gray areas, or struggle to innovate and come up with new solutions fast.
It is typical for entrepreneurs and startups to be agile, to create something that consumers and customers want. There is a new kind of Fintech coming up in the last few years that has been dominating the space as well as challenging the banks, which is good. Due to current technology development, e.g. blockchain, entrepreneurs can address some major problems of the industry and solve them, not without the help of banks most of the time. But overall it is a good trend and pace of improving.
For us, we define Fintech very, very broadly. Fintech is everything from the entire consumer space around lending, payments, but it also goes to, interesting enough, to the whole back-end of the banks. The infrastructure around capital market, settlements, custodial and asset management has a lot of inefficiencies which can be solved. I think the new trends of FinTech go into the B2B side; whereas previously the trend was on the consumer and personal finance, now it’s going to be to B2B and infrastructural side of the banks.
BeFast.TV: There are two layers or two types of Fintech startups right now. The first group is trying to solve the problem of masses, end consumers. The others are just trying to improve the situation between the businesses, am I right?
BeFast.TV: However, is it only about improvements or the startups want to get into the markets and substitute the real banks. What is your opinion, Markus?
Markus: Yes, it’s a big conversation going on at the moment. How much can you substitute, how much can you replace, how much can you make more efficient, how much you have to work with the banks too. I don’t think there is any way to replace the existing system completely; you will always have the banks around. The infrastructure will be there to handle money. Banks are very good at one thing which is handling money; they know exactly where to deposit money, as well as create a structure around it.
However, I think that the entire banking experience, the entire environment around the banks and their services is changing and transforming, especially if we are talking about payment channels with their customers. I am referring to the disruptors like Alipay, Facebook, Google, who now come in with their market power to say: we’re going to create our own payment channel for our huge number of consumers.
BeFast.TV: Markus, let’s come back to the Startupbootcamp.
When did you launch the bootcamp in Singapore?
Markus: We launched Fintech program in London 2 years ago, then we came to Singapore in January 2015. The reason why we set up London first, because it is the Fintech capital, and many significant FinTech innovations started from there. Then we wanted to go to the East to see what we can do here. We talked to major financial ecosystems in Asia like Hong Kong and Singapore. After all, we found out that Singapore has on its agenda a future for Fintech to happen. Players like DBS and MasterCard invited us to come and helped us create the ecosystem.
BeFast.TV: Do you have some startups on board already?
Markus: We had 11 teams that came through for the three months’ program. Eleven teams we picked out of more than three hundred applications. We had a very wide pool of applications all over Asia. Eleven teams from 9 different countries came to Singapore, graduated from the program in July 2015 and so far it’s very successful. We have 16 teams in total got funded already. But we expect to see even better teams for the next year program.
BeFast.TV: How do you find the founders? Did you look for them or did they find you?
Markus: Lucky enough we have built a very good brand. Our Fintech accelerator is quite a well-established player in Europe; we’re very active in Asia to make even more noise. There’s always a factor where they come to us, but we’re active in the ecosystem too. We did a fast track tour to 15 different occasions across Asia, Japan, India, Australia, China, see what’s going on; especially on the ground. Local entrepreneurs and mentors come and talk to us; discuss at what point we can help them. We created some noise in different markets; that helped us as well as a lot of entrepreneurs get to know each other.
BeFast.TV: How do you exactly help founders?
Markus: Good question. So we usually select the top 10 teams for the program for the three months’ program. They come to Singapore, they get desks, they get space to work with each other, we run a program every day with master classes and workshops to polish the entire startup till they are ready to work with banks.
What happens next is the most important thing, we give the entrepreneurs access to the right people within our network of business partners. We have nine corporate partners in Singapore: CNB Bank, RHP, PWC, DBS, MasterCard and other funds. They are ready to work with startups.
I think at the end of the three months we’re creating a synergy between banks and startups. The ideal outcome is a partnership; this afterward triggers funding. It’s important for us to bring the key players, as well as the government donors into the same space as the startups to make it work together.
BeFast.TV: How much does Startupbootcamp earn from the deals?
Markus: We take 6% of the equity. But for our selected startups we become a full-time team member for three months. We are with the team all the time to help them. In return for the entire package including introductions and events, we take 6%. We also give them $25,000 Singaporean dollars, but the true value is the exposure, connections, and mentoring.
BeFast.TV: How does the program here in Singapore differ from the one you have in London?
Markus: We started last year in London, where Fintech was already happening. There are other players already running Fintech accelerators there, we just joined the market. Our Fintech accelerator in Singapore happened to be the first in South East Asia. We came here and said ‘We are here to do Fintech across Asia’, and that gave us a big exposure which we didn’t have in London before.
The startups in both ecosystems are very similar, but the solutions that they offer are different. London is heavy on the B2B side. London is known to be as a capital of finance, it’s absolutely natural to work with the banks. Here in Asia, it’s a mix of B2C and B2B solutions mostly due to the presence of emerging markets – so many different consumers who are required and can adopt the FinTech technology.
Still, founders based in London have more advanced entrepreneurial skills. In Singapore I think there is a certain talent gap, the problem is not in particular in finding good entrepreneurs, but in finding right people as angels, coaches, and mentors, which is an important component from my point of view to support the ecosystem. And in London there are more talents available ready to work with startups at the moment. The startup ecosystem in Singapore is still young, the whole environment of mentoring is developing, but I think in terms of the entire infrastructure for startups, London and Singapore are very similar. Singapore caught up a lot in the last few years in creating an infrastructure for startups to develop their projects.
Another difference is when you say “You are in London,” you are doing things in London way and for London. Singapore – “You are in Singapore”, but in reality, you’re in Malaysia or Indonesia. So Singapore is a hub for the whole region. Our entrepreneurs came to the program in Singapore for a few months, but they’re also traveling a lot to the Philippines to other customers around the region, sometimes even to India. So the ecosystems are different because of their geographical surroundings.
BeFast.TV: Why did you choose Singapore as favorable spot? Why not Hong Kong?
Markus: I’m not a big fan of any competition to be up front. I think each ecosystem brings something unique to the table. Singapore is very strong at wealth management. Hong Kong is known for trading. Every time you need to be aware of what we are good at, what can we bring, where can we add value. For us, Singapore was a simple decision by looking at how efficient and quick the government brought us over to build the Fintech ecosystem. As I said earlier the agenda for Fintech was more apparent in Singapore than it was in Hong Kong back then.
Now Hong Kong is the same as Singapore; pro-Fintech. I would see more of building a bridge between Singapore and Hong Kong. Startups are moving along these ecosystems a lot too; it’s all about scalability nowadays. Startups have to scale fast, and scale from London to Hong Kong, from Singapore to Sydney.
Singapore has an advantage at the moment because it’s very easy for a startup to set up a company, very convenient place to meet investors. It’s quite favorable for raising money too. There are a lot of early stage investments here in Singapore, where you could raise seeds rounds quite quickly. I also think that there are more open doors here, whereas in London it was quite difficult to meet the regulators or the government. Here you can literally go across the street and have a chat with them. That’s what I like in Singapore.
BeFast.TV: Can we talk more about the investors? The comparison between them: Asian investor – in Singapore and back in Europe – in London.
Markus: Again, it is hard to compare because Singapore investor ecosystem generally is quite young; probably 5-10 years old. It was the government that had to subsidize funds and VCs to kick off the initial investments into startups.
Where in London or America it’s been around for 50 years. Singapore has just started this entire investment ecosystem here. Hence I think the government has done a good job – now we see a lot of early stage companies coming to the market; we have more than 20 early stage VC funds in Singapore itself. You have a lot of funds coming out of Indonesia, Malaysia, the Philippines, Hong Kong.
The important question is where is the capital for my startup to growth. And there is still not enough capital to grow a company to bigger extends, and we’ll see capital coming up in the ecosystem eventually. But at the moment the startups are all in the seed stage, the majority of them. Now we’re seeing more and more B and C companies coming up, and they require more capital to scale across the region. In general, there is a crunch on the market, which is good for the ecosystem transition. But, again, so far, there’s a lot of available capital from either angels or early stage VCs.
BeFast.TV: Markus can you please tell us about yourself? Why did you decide to join the startup journey?
Markus: It comes back to a bigger question for me, what is coming up as a society, as an economy. Frankly, when I was 19 I worked in Africa for a year in an AIDS orphanage, I was working with the local tribe, helping HIV children. What really triggered me back then was that you can only build a sustainable economy and society if you support local SMEs and entrepreneurs.
Back then, I was already inspired by not just dropping money as a foundation on entrepreneurs, but creating an existing forum for the entrepreneurs needs to prosper. Since then I’ve always been thinking, I like to work with startups that build an economy. I think looking at the millennials now, looking at the new generation of people; there’s definitely a trend towards being more divisional, being different, being unique.
Why Fintech? Because there’s a new spirit of people, the entrepreneurship spirit clashing with the very conservative, the risk adverse culture of the banks, and this excites me a lot. We have this culture clash of two different worlds. I think to be in the middle of that and really find out how to crack Fintech is something that excites me.
BeFast.TV: I believe you mentioned that most of the founders of Fintech startups are coming out from banks or big corporates. What makes them change their paths and turn into entrepreneurs?
Markus: There’s a very common trend right now. When you have worked in a bank for 10, 15 years, you got fed up, and after 15 years you think to yourself “I walk away now, or I stay with the bank until I retire.” That’s the way we get talents in FinTech. The people who know the pain points of the corporate, and can fix them. I think that’s the way of moving forward.
So far Singapore has been very focused on consumer finance and copying ideas from the west. But I see the second wave is really coming – the new startups that solve deeper problems.
BeFast.TV: You have recently set up a new firm called tryb, and left Startupbootcamp FinTech. What was your reasoning and what’s next for you?
Markus: A few months ago I decided to set up a private equity investment partnership with three other Gentlemen in Singapore. We named it tryb, essentially bringing all the different tribes in Finance together, to create new tribes, without all the noise and fluff that happens at the moment in FinTech. We felt that there is a lack of good investors in Asia that understand finance and tech, and are able to help scale businesses across the region. So, we are investing in everything from early to later stage and work alongside the founders (i.e. private-equity style) to add value through our network.