These four VCs weigh in on the sectors they’re focused on in 2018, plus the future of ICOs
Monday, November 20, 2017/
“For a period of time, Australia was backing fintech with the definition of fintech being debt or finance, but over the last few years that’s changed,” says Rampersand VC fund managing partner Paul Naphtali.
Addressing a crowded room of fintech enthusiasts at FinTech Australia’s recent Intersekt conference, a panel of high-profile venture capitalists discussed everything from blockchain to China in an exposé on their current interests in the fintech space.
Lead by Reinventure’s Simon Cant, the panel consisted of Naphtali, Creditease partner Nina Zhou, Cognitive Finance Group founder Clara Durodie and NAB Ventures managing director Todd Forest.
Each took a moment to reveal what areas of the vast fintech space they had their eye on when it comes to investing.
“We’re looking at how do we solve customer problems and challenges, and the underlying technologies that do that,” Forest told the conference.
“Those areas include homeownership and affordability, agritech and its sustainability, and ways in which we can help SMEs grow and innovate.”
Despite being one of Australia’s largest banks, Forest also said NAB was keen to invest in direct disruptors to the banks, saying the fund was looking for investments which could “accelerate our business”.
Agreeing with Forest, Zhou said her Chinese fintech fund was also keen on the SME space, saying it was a “sizeable investable market” with a lot of attractive areas.
“The SME market is an incredibly attractive one from a payment and lending perspective, and also a holistic financial services aspect – not only for companies but for entrepreneurs too,” Zhou said.
“We’re also interested in capital markets as it’s very much an archaic infrastructure-led space, and also wealth management – particularly in the Australian region.”
“In the next 5-10 years, I think the majority of wealth management growth will come from this region.”
Both Naphtali and Durodie were bullish on the artificial intelligence (AI) space, with Naphtali joking the fund couldn’t see a pitch which “doesn’t have AI, machine learning, data, or blockchain in it”.
But Durodie, with her company focused on AI solutions in fintech, wants to ensure companies’ AI pitches have substance.
“The main area we’re interested in, in broad terms, in applied AI solutions,” she said.
“Real AI. Not just for the sake of marketing or selling, and not just AI on a business plan.”
On blockchain, Bitcoin and ICOs: “Who the hell knows?”
There’s been a flurry of activity in the blockchain and ICO space in 2017 and the four venture capitalists revealed their opinions on the tech, as well as the idea of coin offerings as a method of funding startups.
“In my Uber on the way to this conference my driver asked where I was going, and I said I was going to a fintech conference. After explaining what fintech was, he asked me if Bitcoin was going to go up,” Naphtali told the crowd.
“I told him, who the hell knows?”
However, despite the price of cryptocurrencies such as Bitcoin and Ethereum skyrocketing over the past few months, the investors weren’t concerned with the currency side of the technology, focused more on the “central tenet” of the blockchain – decentralisation.
“We’re seeing a lot of activity with the distributed ledger side of the blockchain solving real problems, but if you put aside the crypto aspect, with many of these businesses the question is is there a real problem it’s trying to solve?” Zhou said.
“And does it need to be solved with the blockchain?”
Naphtali believes there’s “no question” we’ll soon see killer apps on the blockchain, but right now it’s impossible to tell what they will be.
“I do know that historically, capital has been built through good businesses, and while with ICOs the idea might be there, the discipline of building a business isn’t,” he said.