The first building to open at the Cornell Tech campus on New York City’s Roosevelt Island is called the Bridge, symbolizing the journey that innovative ideas take from laboratory to start-up funding and then to proof of concept, prototype, and production.
The metaphor applies throughout the technology world, and perhaps nowhere more than in financial services, where investors have to bridge commercial and cultural challenges — call them resistance to change — while staying within regulatory bounds. The venture capitalists, private equity firms, and other investors propelling the fintech wave offer more than proficiency in performing due diligence; they’re also diligent bridge builders.
In fact, two of the firms represented in Institutional Investor’s third annual Fintech Finance 40 — Citigroup and Two Sigma Investments — are among the first tenants at the Bridge. Citi chief innovation officer Vanessa Colella (No. 11) heads Citi Ventures, which beyond investing assigns people from the bank, called catalysts, to help guide entrepreneurs toward growth and profitability. Colin Beirne (No. 24), a partner at Two Sigma Ventures, similarly assists companies in the firm’s portfolio by leaning on the hundreds of Two Sigma data scientists to contribute to conversations.
These are variations on the partnership theme that has long been an integral part of what financiers in the Fintech Finance 40 offer their industry. Many take seats on the boards of companies they back. What is new, and building, is a trend toward more-resolute and formalized approaches, like the use of Citi’s catalysts, to ushering young technology suppliers through the doors of potential customers’ firms and advising them on their roads to maturity.
Steven McLaughlin, managing partner and chief executive officer of investment banking boutique Financial Technology Partners, is in the No. 1 spot. He has delivered on his boasts of being most active as far as the sheer number of deals across the global fintech landscape. To be more effective with clients, he has picked up the pace of “domain expert” hires in insurance (Paul VanderMarck from Risk Management Solutions) and payments (Stephen Stout from First Data Corp.).
“We have proven time and time again that the best outcomes are achieved by combining world-class investment banking advice with deep insights into our clients’ businesses,” McLaughlin says.
There are other examples of strong partnership building in II’s 2017 fintech ranking.
Jonathan Korngold (No. 2), global head of financial services at General Atlantic, cites the growth equity firm’s 37-year partnership record “working exclusively with management teams of fast-growing companies to help them minimize the execution risk associated with accelerated growth.” Advisory activities are baked into 19-year-old FTV Capital (Brad Bernstein and Richard Garman, No. 6), with its Global Partner Network serving as a forum for investment partners, entrepreneurs, and financial and tech executives. Last year, Digital Currency Group (Barry Silbert, No. 16) invited six constituencies into its DCG Connect “community of companies focused on moving the growing blockchain ecosystem forward”: academia, blockchain service providers, corporate partners, institutions, investors, and regulators and policymakers. Meanwhile, the advisory business of seven-year-old Anthemis Group (Amy Nauiokas and Sean Park, No. 7) has been aiding incumbent companies with change management and innovation risks, and helping both established firms and start-ups with bridging cultural divides.
TA Associates Management, a private equity firm that made its first fintech investment in 1999 (Kenneth Schiciano, No. 26), formed a strategic resource group in 2013 to offer operational and financing advice to companies in which it has a stake. And, referring to a SenaHill Partners plan to advise “megabanks” on fintech disruption, managing partner Justin Brownhill (No. 17) says, “David and Goliath are starting to not only co-exist, but actually become friends.”
Surely, the words on the website of Oak HC/FT Partners (Patricia Kemp and Annie Lamont, No. 25) could sum it up for many: “Our investment is a lot more than the capital we provide.”
The Fintech Finance 40 ranking was compiled by Institutional Investor editors and staff, with nominations and input from industry participants and experts. The evaluation criteria include individual achievements and leadership at the respective firms; influence in the community at large; and the size, reputation, and impact of the respective funds and institutions in the financial technology industry — particularly in the current wave of fintech financing. The 2016 ranks are shown (in parentheses); newcomers are designated “PNR” (previously not ranked).
The Fintech Finance 40 was compiled under the direction of Senior Contributing Editor Jeffrey Kutler. Individual profiles were written by Kutler; Asia Bureau Chief Allen T. Cheng; and Research Editor Amy Whyte.