A priority sector
FinTech Leo McAdams, Divisional Manager of ICT & International Services at EI explains the growing importance of the Fintech sector.
Enterprise Ireland (EI) has a dedicated Fintech team in Dublin, which manages over 220 indigenous Financial Services clients with internationally focused business strategies. The Enterprise Ireland team co-ordinates a large and increasing number of Fintech international initiatives with representatives from its International Network, with a focus on both established markets such as North America and the UK, and emerging markets such as China and Latin America. “ Our core focus for this sector is to increase the number of start-ups in the Fintech space, to assist these companies to scale through the provision of services such as equity funding, access to international markets and mentors, which will ultimately result in a return to the state in terms of an increase in jobs and exports”.
“The 220 companies in the FinTech Portfolio represent a wide range of sub-sectors including payments, Financial Software, Insurance, Business Process Outsourcing, peer to peer lending and supply chain finance,” explains Leo McAdams, who is in charge of ICT & International Services at EI in Dublin. “The portfolio also represents companies at different stages of growth, with a growing number of early stage start-ups such as Corelytics, AQ Metrics and Invoicefair balanced by a large number of large scaling companies, including Fexco, Taxback, Fineos, CR2 and lately companies such as Fenergo, which has just raised $75m in expansion capital.
“The portfolio employs over 8,000 people, of which 40 per cent are located outside of Dublin.”
In terms of start-ups, McAdams says that there has been a significant increase in the number of FinTech investments approved by EI over the last 12-24 months.
“The focus areas are also wide ranged, a number are focusing on offering technology to the funds industry, some are aiming at the compliance and risk market. Others are offering "funding" solutions by way of supply chain finance and peer to peer.”
McAdams says that the entrepreneurs have typically originated from traditional Financial Services sectors, with a large number having either a banking background or coming from long established FinTech companies.
“Because they know the industry, the service or product is usually focused on solving problems for Financial Services companies and offering a "have to have" rather than a "nice to have". Having Financial Services experience is definitely an advantage, as it gives the startup immediate credibility, industry contacts and knowledge of the "pain points" and buying cycles.”
A key ecosystem
The FinTech ecosystem is hugely important in terms of supporting start-ups and entrepreneurship.
“Funding is the life blood of all start-ups,” McAdams continues. “Enterprise Ireland is providing equity funding at both the early CSF €50k stage and the HPSU stage. The recent Seed and Venture Capital €65m scheme includes a focus on priority sectors including Fintech. Also, EI in parternership with HBAN, held the first Fintech angel event in June of this year and attracted a large number of FinTech investors. Two of the six companies that presented secured equity funding from the event.”
McAdams affirms that the banks have stepped up their engagement with FinTech companies on a number of levels.
“Both AIB and BOI have traditionally supported a number of seed funds which have invested in fintech companies. They are now providing incubation and co-working space and are also end users as they buy solutions for internal use. Over the last 18 months, three accelerators launched programmes in Dublin, the NDRC pre-accelerator, the MasterCard and Accenture Innovation Labs programme, all aimed at assisting start-ups validate their product offering and engage with financial institutions.”
A strategy for the future
Leo McAdams admits that the governments IFS2020 strategy is hugely supportive of the industry, both MNCs and start-up and scaling indigenous companies.
“It aims at delivering an increase in jobs by focusing on policies and actions that will drive growth, including internationalisation, branding, Funding, Skills, R&I and infrastructure.”
Finally, McAdams says a number of international jurisdictions are putting themselves forward as Fintech locations of excellence, in direct competition with Ireland.
“A large number of these jurisdictions are planning to develop policies that will create a FinTech industry in the future - very few of them can match what Ireland can boast of today in terms of the number of tier one Financial Services MNCs, a vibrant start up and scaling scene, and significant government and industry support for the sector.”