Buzzword Buster – Venture Capital

In its broadest sense, a lump of cash which is given to a firm in its early days to allow it to grow, in return for a stake in the company. More specifically, people often refer to Venture Capitalists and Venture Capital firms (or VCs). Venture capital firms usually have a particular remit (i.e. fintech firms, health tech firms, early stage, late stage, etc.).
The idea of a stand-alone venture capital firm which makes money by investing in a portfolio of early stage businesses has been around for many years. In principle, these firms invest in a range of businesses on the assumption that while some will fail, enough will succeed to make the overall venture successful.

More recently, venture capital arms of established businesses have become popular (like banks and insurance companies). These firms have a slightly different remit. They are tasked with finding businesses to invest in which will grow and provide a return on their investment, but also will potentially provide new propositions and solutions for the wider group business. These functions sit between true venture capital businesses, and innovation functions which are focussed on partnerships as a way for start-ups to secure funding and support.

Some VC firms have acquired a reputation for going from friendly business buddies to aggressive (and even litigious) combatants in very short order when a company’s growth projections don’t materialise.

Disagree or want to add something? What does Venture Capital mean to you?

Creating the Solos of the Future?

The creation of innovation labs and digital garages by major brands and enterprises has become commonplace over the last few years and is a trend which shows no sign of abating. The mandate behind them is clear and largely universal, even if specifics around success measures and targets are harder to come by.

To work with small groups of smart people to develop products and ideas which large organisations would not be able to deliver within their existing structure.

Personally, I’m all for these facilities and I know for a fact that many are spawning great ideas (hopefully enough to keep their sponsors happy). Innovation functions which operate efficiently are picking up where research and development functions and propositional designers have failed over the last decade.

The silos of the future

These functions can be a brilliant way of introducing a pipeline of new ideas into a business but there is a problem which is all too often overlooked in favour of the next shiny thing. Without having an overall architectural vision and working hard to make new developments a part of the overall business and technology infrastructure, innovation functions run the risk of creating the silos of the future.

We often look at legacy business and technologies with a smirk as we see stove-piped pieces of product-led technology and operational support which seemingly have no view of shared capabilities and functionality. These often represent the hangover of a series of M&A activities spanning the past few decades. While many of these business lines can be profitable, this is often thanks to the very high margin business they run. The cost of supporting these legacy systems is typically very high and requires specific expertise that’s hard to come by. They also represent a large technical debt which increases the complexity of future change.

Unfortunately, without an appropriate level of planning, each new proposition runs the risk of standing alone within your company’s ecosystem. This is likely to counter any positive revenue impact from the propositional development and lead to a large mediation programme to “tidy things up” in the future. Today’s innovation becomes tomorrow’s legacy all too quickly.

Just enough architecture

In terms of mitigating against this, architecture (both business and technical) is a key consideration but it is important to be pragmatic when delivering this. The agile concept of “just enough architecture” is an important one here. It will vary between businesses but success will come from finding the optimal amount of information to gather to ensure change is done well. Not so much that you have teams of people spewing out requirements documentation, but also enough that it is not merely an afterthought.

By including analysis of key business and architectural objectives you should be able to think through some high level scenarios which show interaction between key actors in your proposed solution. An application overview, with key coupling points can follow this and will allow for future flexibility around integration and expansion.

A good old fashioned business case?

In addition to assessing the “do-ability” of concepts being developed through the innovation function, it is important to make sure teams adequately reflect on whether they should bother developing them at all. Of course, this question isn’t new, and has been the main point of a good old fashioned business case for many years.

I’m not proposing you produce a three hundred page board document with the ins and outs of every growth scenario, but I do think that, even though you’re developing innovative ideas, you should challenge yourself with some key questions and make sure key stake holders agree. If you don’t know the answer to these, I’d suggest stopping and taking stock is a pretty good idea;

  • Who is this for?
  • How do we know they want it?
  • How much is it going to cost if we a) prototype this, b) develop and launch this?
  • How will we know if this is a success?
  • How does this fit into our existing enterprise landscape?

Conversely, for every innovation function which could do with adding a commercial focus, there are others which are incredibly astute and will look to bin projects if they can’t show a return within a year. While these functions are far better at removing dead wood than traditional change functions, there still needs to be some careful planning around how the solutions work within the organisation as a whole.

For innovation functions to truly deliver positive and tangible change into businesses, there needs to be a refocusing from the short-termism and bauble chasing which some have fallen victim too, and a reflection on the value of solid business planning and architecture.

If you get these things right, the cool things you create might just be of enduring value to the business as well.

This article was originally published on The C Suite

Buzzword Buster – Angel Investor

Angel investors are individuals who provide much needed cash for early stage start-ups. While there are no hard and fast rules, typically angel investors provide substantial capital injections to early funding rounds, after founders have exhausted their own funds. They may also do this via private arrangement prior to formal funding rounds.

In return for providing capital to largely untested (and even unestablished) businesses, angel investors usually gain significant chunks of equity. Founders who are only interested in the funds provided by these individuals are usually missing a trick, because often the greatest benefit an angel investor can provide to a small business is the insight and experience they have gained from their often extensive career.

The name, quite obviously, comes from the idea that these investors are guardian angels selflessly defending the growth and prospects of start-ups against the varied corporate interests which surround them. While not intentional, the name is particularly apt as these people typically have a direct line to the gods of start-ups everywhere, the VC firms and scale enterprises which can make or break you.

Disagree or want to add something? What does Angel Investor mean to you?

Buzzword Buster – Omnichannel

With a prefix stemming from the Latin, Omnichannel technically means “every channel”. It is used in strategic powerpoint decks across the land to emphasise how incredibly flexible companies are with the types of communication they facilitate for their customers (post, email, web, face to face, social media etc.).

Although the word technically means every, companies are rarely literal with this and usually wont turn up at your house or send a carrier pigeon with your annual statement strapped to its leg. Firms really mean “every channel which is convenient and economically viable for us as a business”. In Latin that roughly translates to et omnem canalis pertinet negotium nobis dispensative viable which is, in truth, a bit of a mouthful.

While lots of firms have developed omnichnnel approaches for new business acquisition, many fail to carry these strategies through for returning customer journeys and legacy business lines. There is also a lack of appreciation by many for the need to be able to manage a single journey across multiple devices at different times (cross-device journeys).

It is only in observing actual customer behaviour and utilising data collected on digital body language and interaction that firms can hope to develop holistic and competing customer experiences which go beyond the simple enhancement of a sales journey.


Disagree or want to add something? What does omnichannel mean to you?

Buzzword Buster – Bootstrapping

Finding its origins in computing, bootstrapping has traditionally been seen as a self-starting and self-contained process or element of software. In the artisan roastery scented innovation language we find ourselves surrounded by, bootstrapping means a self-starting start-up designed to run without capital injection.

Bootstrapping obviously has its benefits, in that founders can maintain a significant equity stake further into the development cycle of the business. The self-contained nature of successful bootstrap businesses is leveraged to drive revenue until the enterprises have enough money to start paying for more staff, increasing marketing spend etc.

While some bemoan the lack of aspiration of bootstrap businesses for not wanting to go after the “big prize” of venture capital funding, for many there is a recognition that VC funding is only a prize if you can ultimately drive a successful business. Boot strapping is a great way of figuring out the core engine room of a business and its viability in the market before too eagerly giving away equity.

N.B. Bootstrap is also a front-end web development framework originally developed at twitter as a framework to encourage consistency across their internal tool development.


Disagree or want to add something? What does Bootstrapping mean to you?

Robo-Advice is failing. Intelligent Advice is Next

Robo Advice is failing

Robo-advice has been a persistent buzzword recently and never seems to be far from the trade press even though much of the activity has been predictable repeats of the same old formula:

  1. Provide a risk assessment of some sort
  2. Drive consumer to risk rated portfolio of cheap passives plus a not-so-cheap discretionary charge
  3. Claim that this isn’t actually advice because you didn’t understand enough about the customer
  4. Rinse and repeat


Equally predictable is that the asset inflows and mass customer acquisition promised by robo 1.0 have failed to materialise. I can’t say I’m surprised by this, as there is a core failure at the heart of this model. Providers typically set out to sell rather than help their clients understand more about their financial lives and work out what is right for them.

There is also a more prosaic challenge around target market segments. I have long said that retail banks and scale brands are likely the only firms who can make a real success of the endeavour. Successful robo-advice requires a proposition which is fit to distribute to many lower net-worth clients while most of the nouveau discretionary managers are typically targeting the fertile but incredibly hard to attract high net worth segments.

On the plus side, behind closed doors, some organisations are beginning to embrace the fact that there is more to advice than just driving a decision to an investment portfolio. I have met with one established FS firm and a couple of start-ups recently who are approaching automated advice from the point of view of helping the customer understand their financial life to drive better outcomes. In all of those cases, I’m really excited to see the output (all of which should be in market in 2017).

Intelligent advice is next

But what next? If, on the whole, robo 1.0 has been a failure, what are firms doing to make the next wave of robo advice a success? There are a number of key threads one could pursue here. Integration with wider financial ecosystems, brand affiliations with non-FS firms, multipurpose messaging platforms like Facebook messenger and Wechat and the marrying up of investment advice with the wider universe of financial services all spring to mind but as a technologist, there is one that I’m even more interested by.

Artificial intelligence

Firstly, let’s get the basics right. Artificial Intelligence is a bit of a misnomer in its current usage. AI really means a system which is capable of the same kind of intelligence and thought as a human. We are a long way away from that on all fronts, but what we are seeing enormous inroads into are aspects of specific intelligence. i.e. computers doing certain defined tasks as well as (if not better than) a human.

Machines are getting smarter at getting smarter

There is one particular aspect of AI which could have a really big impact over the next few years, and that’s machine learning. Essentially the ability for predefined pieces of software to build on and improve themselves without the requirement for human intervention. I won’t dig into the details on how it works here, but there is potential for enormous disruption in the investments sector.

We have already seen firms like Bridgewater building AI into and these will certainly be based around machine learning. Financial markets are complex and changeable. By allowing a software system to modify itself based on direct feedback from the network, the hope is that over time, these systems become first as good as humans are at stock picking, and then better. One of the perks of AI is that, while human’s have a cognitive cap, in theory machines don’t, so they can get smarter and smarter at their jobs.

So if that’s the bleeding edge of asset management, how does this get connected back to retail customers? Well, financial planning ultimately is about matching consumers needs and goals to tax efficient products and identifying investment options which sit within these. If we have developed a system which gets smarter and smarter at playing the markets, there is nothing stopping us developing one which manages tax efficiency for investors. In fact, this represents a much easier challenge especially with PSD II on the horizon (regulation which will force bans to open up and share data about consumers).

Reading the regs

But what about the way regulation and tax law are applied to investment and product decisions? Currently, if you want to understand the full detail and implications of the various regulatory frameworks, sourcebooks and tax laws you have no option but to put in the hard yards of research, or hire in smart people who have already done that. In most cases, you end up having to do both.

The work that big tech firms (IBM ,Microsoft, Google etc.) have been doing around natural language processing means software can already understand human freeform speech and text and manage the translation of this across multiple language bases with a system which teaches itself how to continually improve what it is doing. It won’t be long before we have a system which can actually read the regulatory framework, understand the difference between rules and guidance, feed in the entirety of tax law and make interpretive decisions based on the full data set.

A different type of software

Throw in a few other related developments in the AI space, and we are rapidly approaching a point where we can move away from having to define siloed systems which deal with tax efficiency, investment picking and customer management. Instead, we will be looking to develop unconstrained self-improving systems which can learn about retail customers, and their differences from professional investors, ascertain which aspects of the regulatory framework would apply to their subject and execute a series of cash movements, product opening instructions and investment trades on their behalf, all the while, making sure it stays within the bounds of the firm’s regulatory permissions, or indeed, applying for new ones if necessary.

If you had absolute confidence that a tool would give you the correct recommendation regardless of context, then the jobs of advice and investment management change. Ironically, as time goes on, the challenges will become less about the technical capabilities (which will march onwards) but more around the regulatory construct (because NOTHING in the FCA handbook is based on regulating something which you don’t understand) and the risk appetite of firms to adopt such approaches.

Ultimately though, we could see the emergence of a genuinely intelligent advice. Delivered via computer algorithms for next to no cost, and solving the challenge of complexity which currently requires the employment of thousands of intermediaries, advisers and experts of all shapes and sizes. Of course, in this future vision of automation and AI, the human touch points for interaction will be vital in building empathy and confidence.


This article was originally published on ––intelligence-advice-is-next/



Buzzword Buster – Fintech

An amalgam of finance and technology, fintech does what it says on the tin. It was among the first of a huge range of portmanteaux adopted by start-ups from almost every industry. Healthtech, scitech, traveltech and regtech are other examples. I’m waiting for the advent of techtech to prove we have truly disappeared down the rabbit hole.

Fintech can serve as a useful term to group innovative start-ups working within financial services. Unfortunately the businesses are so diverse (from payments to robo advice, to insurance and trading systems) that the classification becomes so broad as to become all but meaningless.

The phrase has also been repurposed heavily by tech firms who have been operating in the financial services space for many years. For many of them, it is a nice PR friendly buzzword that suggests they are far more progressive and innovative than they actually are.


Disagree or want to add something? What does Fintech mean to you?