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?

Innovation in Insurance – Personalised pricing and the risk to pooled risk

I was on a panel session at the Benefex Client Winter Forum recently and was asked what I thought the biggest technology driven changes in financial services would be and how they would impact employers and the services they provide their staff. While everything about the world around us is changing at pace, there was one area in particular which stuck out like a sore thumb. Insurance.

In the workplace context, insurance is vital to most benefits packages. Life cover is standard, and health and critical illness cover are also increasingly popular enhancements for staff. Additionally, while pensions saving has moved towards defined contributions, there is still a key insurance contract for most people in the annuity that we buy when we retire.

There is change afoot however, in the way insurance is sold and priced, which could have a profound impact on employers and employees alike.


The amount of data available about individuals (and by extension, society as a whole) has exploded in recent years and the more recent additions of wearables, connected homes and increased mobile usage have taken us to a point where, for most people, there is a wealth of data ready to be mobilised by firms.

On a day to day basis, we see this data being put to good use. Our shopping experiences are tailored based on what retailers know about us. Our web searches are focussed in on our location to make the results more relevant. Our email accounts strip content to create reminders for events and travel plans to stop us missing important dates.

Insurance providers of all types are now trying to make use of this data in order to provide more competitive and accurate pricing for customers. The basic principle is that with more data known about someone, the pricing can become more specific and tailored, reducing the risk and ultimately ending up with a keener price for both the client and the insurer. It also has the associated benefit of reducing the likelihood of non-disclosure and policy fraud. Or at least, that’s the idea.

For insurance providers, this is really the continuation of a trend.


All traditional insurance business is based on the principle of pooled risk. When you take out life insurance, for example, you are becoming one of a group of people with the same policy. The insurance company has made a series of assumptions about your group. They think some people will die earlier than you will, and some people will die later than you will.

They calculate what they believe to be the likelihood across the book of business, and price the policies within this book to reflect those assumptions, and a bit of profit of course. Up until recently, the way insurance companies looked to derisk themselves from the unknown was to shrink the size of the pool and to manage multiple pools to balance risks across well understood books of business.

  • I’ll only insure drivers over 55, and younger than 75, because I can obtain a range of data sets which show that, historically, that group has been safer drivers than the average.
  • I’ll only offer this annuity to people who have recovered from critical illnesses because I can make some firm assumptions about their longevity.


Now though, with the prevalence of data, insurers are looking to move away from traditional pooled risk groups, and instead assess risk on an individual basis. On the surface this might appear to be a positive step. Car insurance is a nice example. Drivers are in control of their speed and driving style, so it seems reasonable to assess them as an individual and price accordingly based on real time data. Better drivers get cheaper policies and vice versa.

Applying the same principles to life insurance and health cover is a much thornier issue though, and there is a high risk that large sections of the population would essentially become uninsurable as a result of these developments. On an individual level this is obviously worrying and could lead to a number of challenges, but for employers, there is an added layer of complexity.

While many firms are used to dealing with renegotiating and quoting for workplace cover policies, I’m pretty sure very few have thought through how to handle the case where a high percentage of your staff can’t get health or life cover. In order to manage this, employers are likely to need to think of strategies which allow them to collect data on their workforces, via connected devices and fitness trackers.

This data would have to be anonymised (especially with GDPR around the corner) but will provide employers with a way of proving a general level of fitness for their workforce. In a few years, it is likely that this is the only way an employer will be able to get a reasonable workplace policy without it being prohibitively expensive.


This blog was originally published on the Benefex Blog here

Buzzword Buster – API

API stands for Application Programming Interface. It is basically a bit of software which is made to allow two computer systems to talk to each other. For example, if you have a system that holds the customer records in a bank, and a system which lets a customer manage their budgeting, you could write an API to pass messages between these two bits of software.

There are numerous ways of implementing API’s which provide a range of broad functions such as accessing libraries and frameworks, interacting with operating systems and applications within an estate, and interfacing to other applications via web services (covering protocols like REST, WSDL, SOAP).

The term has transcended from the technical world (where it was quite happy minding its own business) to the wider world of business. You’ll frequently find people throwing it around in conjunction with words such as strategy, interoperability and disruption.

Unfortunately, the admission of API into the modern lexicon of business, while justified, can lead to complacency. API’s, especially web services, are undoubtedly the framework connection which will enable the development of our massively interconnected future.

Sadly, a lack of standardisation across companies and industries means the quality of APIs are massively variable. This impacts the ease of physical integration, the ability to understand the data contracts within them and the usefulness of the business logic written into the software.

APIs of today can be everything from a panacea to integration nirvana, to a badly thought out and I’ll structured set of junk code which helps no one in any meaningful way. Sadly they are all too often the latter.


Disagree or want to add something? What does API 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?