Evaluating Ireland as the overseas location for your Fintech business
Peter O'Halloran, Fintech Ireland Collaborator, @p_ohalloran 

Choosing a location of strategic importance, whether a headquarters or a regional office for your Fintech business is a fundamental decision and must be taken with the benefit of real insight.  There are a number of requirements which are of key importance to consider.  These include the availability of a skilled workforce, market access, a stable regulatory environment and a functioning ecosystem.

Ireland's ability to meet these requirements is underpinned by membership of the European Union, the Central Bank Reform Act of 2010 (which created a new single body called the Central Bank of Ireland responsible for both central banking and financial regulation) and by the scale of indigenous success which is evidenced in the Fintech 20 Ireland longlist (1).

It is therefore extremely encouraging for a Fintech business in start-up or expansion phase to find a country which has these fundamentals in place and in addition has a political administration with a stated objective to actively lead growth in that industry.  In March 2015, the Irish Government released a strategy for Ireland’s International Financial Services sector for 2015 to 2020, IFS2020.  The vision outlined in IFS2020 is for "Ireland to be the recognised global location of choice for specialist international financial services, building on our strengths in talent, technology, innovation and excellent client service, while focussing on capturing new opportunities in a changing marketplace and embracing the highest standards of governance" (2).  5 strategic priorities are set out in IFS2020 and one of these focuses on Fintech and is as follows: "Drive Research, Innovation & Entrepreneurship in the IFS sector, with a particular focus on financial technology & governance, risk & compliance".   Furthermore, there is real activity in this space in Ireland, with $631 million invested in Fintech in 2015 which represented 22% of the $2.897 billion investment in Fintech across Europe in 2015(3).  

How we can help
At Fintech Ireland our objective is to advance Ireland's unique ability and leverage its capacity, to become and remain a global centre for Fintech and we can help you make an informed decision by bringing the ecosystem to life.  We host seminars where we invite members of the Irish Fintech ecosystem to share their experiences and learnings with you at DogPatch Labs, Ireland's leading co-working space for scaling technology start-ups and the incubator for the Enterprise Ireland Fintech fund.  Through this collaborative interaction, with oversight from the Fintech Ireland team, companies gain a real understanding of how the ecosystem works and gather invaluable network contacts which can be drawn upon into the future.  Fintech Ireland can guide you (free of charge) in reaching your decision and help maximise your potential for long-term success.  How you decide execute is up to you - i.e. whether you do the leg work yourself or need a professional adviser.  If the latter, we know a lot of good people locally.

Multinational Fintech presence in Ireland
Some leading multinational corporations have established Fintech Innovation labs in Ireland in recent years such as Accenture, Citibank, Liberty, MasterCard and Zurich.  There are also numerous global Fintech companies who have established and strengthened their presence in Ireland over the past few years such as Elavon, First Data, Global Payments, PayPal, Stripe, Vesta and YapStone.  This is a clear indication that the ecosystem is functioning and that the talent pool and business environment are conducive to success.

Indigenous Fintech success in Ireland
There are numerous successful Fintech companies which were founded in Ireland and have remained indigenous.  A selection of these include Currency Fair, Ding, Fexco, Fineos, Orca Money and Sysnet Global Solutions.  These companies have all scaled globally whilst continuing to invest in research and development in Ireland.  

Access to investment
The availability of investment for Fintech in Ireland is growing.  In Ireland, there are no Venture Capital firms that focus exclusively on Fintech but there are quite a number which invest in in the space and this is set to grow given the success of companies in the sector and the overall investment in Fintech in Ireland.  A selection of Venture Capital firms in Ireland which focus on Fintech Investment include ACT Venture Capital Limited, Atlantic Bridge, Enterprise Equity Venture Capital, Frontline Ventures, MML Growth Capital, NDRC and Pentech Ventures.  In May 2016, Enterprise Ireland announced a €500,000 fund for Fintech Start-ups. Successful applicants can be awarded up to €50,000 each in equity support and will also get membership to Dogpatch Labs in the International Financial Services Centre (IFSC) and access to the Ulster Bank Innovation Solutions team and industry  masterclasses.  The fund which was setup as a result of IFS2020 was launched by the Minister for Jobs, Enterprise and Innovation Mary Mitchell O’Connor who commented that “Ireland is recognised as a key hub for Fintech innovation and this new fund will make a real contribution to supporting more start-ups and ultimately more jobs in Ireland”.

Reference
Fintech Ireland has held a number of these events in the past and one of the participants, Credit Agricole, kindly provided a reference: "Back to France, after a great stay in Dublin, full of amazing meetings, I would like to thank you for the nice moment you gave to the Credit Agricole delegation.  The participants mentioned the interest in your speeches and the passion transmitted.  You contributed to the success and satisfaction of this learning expedition", Sylvain Potier, Chargé D’Affaires, Banking, Scoop. [NB: Neither Peter Oakes, Peter O'Halloran, Fintech Ireland nor any fintech company we showcased at the Credit Agricole event  received any fee or other consideration for our work on the day!] 

Find out more
To understand what Fintech Ireland can do for your business, please visit www.fintechireland.com  and get in touch.  Sign-up to the free Newsletter at http://www.fintechireland.com/get-involved.html 

(1). Irishtechnews.net - Fintech 20 Ireland
(2). IFS2020 - A strategy for Ireland's International Financial Services Sector 2015-2020.
(3). Accenture.com - Global Fintech Investment Growth Continues in 2016 Driven by Europe and Asia.

Get in contact with the author here Peter O'Halloran, Fintech Ireland Collaborator, @p_ohalloran  

Thanks to John Gilligan and Joe Singer of NovitasFTCL for sharing with Fintech Ireland this research on Growth, Profits and Valuations of Fintech Companies with us.  

By analysing the historical financial performance of 819 fintech companies, the research provides guidance to owners and managers of Fintech companies on their relative performance, enabling them to see how others in the sector are doing in terms of growth and profitability

It examines the relationship between financial performance and valuations by considering the correlations:

• between share price movement and underlying performance for public companies,
• between the valuations achieved for private companies and their underlying performance prior to exit  
  

Complimentary copies of the research can be downloaded from www.novitasftcl.com

I think that the research will be well received by owners and managers of, and investors in, Fintech companies on their relative performance, enabling them to see how others in the sector are doing in terms of growth and profitability.  It should also prove useful to regulators trying to understand the burgeoning fintech industry.  The Report covers 22 topics, see below:

• Private Fintech Financial Overview
• Private Fintech by Company Age
• The Performance Of Publicly Listed Fintech
• The Performance Of Public Vs Private Fintech: Revenue Growth
• The Performance Of Public Vs Private Fintech: Profitability
• What about the Performance of Individual Companies?
• Software Including Banking & Liquidity, Capital Markets And Wealth & FundsTech
• Data & Analytics
• Payments: Including Cross Border Payments
• Services & Other: Including BPO & Consultancy
• Does Performance Vary By Company Size?
• Does Performance Vary By Company Age?
• And What About By Ownership?
• Growth of Small Fintech
• Individual Performance Of Small Fintech Vs Established Fintech
• Individual Performance Of Small Fintech
• Individual Performance Of Small Fintech By Ownership
• How is New Fintech Doing
• Individual Performance Of Small Fintech Vs Established Fintech Vs New Fintech
• Correlation Between Growth In EBITDA And Share Price is strong
• Financial Performance Drives Valuation Multiples
• Performance Of Acquired Private Fintech

Complimentary copies of the research can be downloaded from www.novitasftcl.com

 NovitasFTCL - has been advising the shareholders of European financial technology companies for over a decade and we hope you will find the information in our research interesting and informative.  NovatisFTCL is Authorised and Regulated by the Financial Conduct Authority.

Thanks to Orca Money for sharing these useful graphics on Marketplace Lending (Risk v Mitigation) and Innovative Finance ISA.  The graphics are below, however you might find the quality of these graphics better on Orca Money's website at:

• Orca Money's 'Risk v Mitigation' graphic available at https://www.orcamoney.com/p2p-lending-risk-mitigation

• Orca Money's 'Innovative Finance ISA' graphic available at https://www.orcamoney.com/ifisa-infographic

The UK Peer-to-Peer Lending (P2P) market is maturing with a number of new investment instruments on the market offering different methods of investing in P2P. BondMason is one of the first P2P asset managers to enter the market. They actively select P2P investments, building portfolios and allowing retail investors to ‘effortlessly earn 7.0% p.a’. Asset Management seems a logical progression for the P2P market, so here is a deeper look into the BondMason investment offering.

Bond Mason Review: Key Investor Statistics

BondMason is offering retail and institutional investors access to the P2P market through a managed portfolio.

Figure 1 (above): BondMason Review

BondMason’s targeted return of 7% appears appealing, particularly since they are outperforming their targets with a past performance of 8.6%, since April 2015. Although BondMason favour asset-backed P2P investments they do invest across a mixture of borrower types, including: consumer, business and property.

How does investing in BondMason work?     

Simply put, after depositing funds into a BondMason account the investor must entrust the BondMason management team to invest their funds across a number of P2P investment opportunities. The diagram below provides an overview of how BondMason operate: 

Figure 2 (above): BondMason - How it works?

It is important to note that the underlying assets are the same whether investing directly through a P2P platform or through BondMason. It is the loan selection process which differs.


Benefits of investing through BondMason
Due Diligence: If conducting investment due diligence is daunting, investors would be advised to employ professionals. Stephen Findlay, CEO of Bond Mason, commented that they undertake a strict due diligence process. ‘We approve 1 out of 3 platforms and 1 out of 3 loan opportunities within the P2P platform. Investor funds are diversified across a minimum of 50 loans.’

7% Targeted Returns: BondMason targets a reasonable 7% net return. This is net of a 1% annual fee and a 0-2% bad debt estimate.

Double Diversification: Investors in P2P are commonly recommended to diversify across a number of loans within a platform, however, it is less commonly highlighted that investing across a number of peer-to-peer lending platforms also adds to diversification. By investing through BondMason investors are able to diversify their funds across a number of P2P platforms and across a number of loans within the P2P platforms. This is called double diversification. 

Reduced Cash Drag: Cash drag is a consideration that is often overlooked when investing in P2P. Cash drag is created when funds sit in an investor’s account earning no interest, waiting to be lent out. This generally happens when there is too much investor capital on a P2P platform for the level of borrowers on the platform. This is a common occurrence on platforms such as Zopa, particularly around the end of the tax year when more investors come onto the platform wanting to invest. BondMason reduces the effects of cash drag by investing their own capital in loans prior to these loans being made available on the BondMason platform.

What are the risks?
In addition to the common risks associated with investing in P2P there is one principal risk associated with investing through BondMason that should be considered.
When referring to the peer-to-peer lending industry as a whole, Cormac Leech, a P2P analyst at Liberum Investment Bank recently stated:  

“Fraud risk is the biggest issue because you basically have to trust the management that they're doing what they say they are"

The same is true for investing in BondMason. The principal risk is that the BondMason team make bad investment decisions. For investors it is therefore important that they have faith in Stephen Findlay and the BondMason team to invest funds as they say they will. This leads to questions around the composition of the BondMason team. On the BondMason website it states that Stephen Findlay and his seven-person team have over 50 years' combined investing experience. Taking a further look into the CV of Stephen, he has gained an impressive career as both an entrepreneur and Wealth Manager, notably holding key positions at Fidelity.
Possibly not a risk, but more of an annoyance, is that investors are unable to see the underlying loans or P2P platforms which BondMason invests in prior to depositing the min deposit of £1000. For some investors it would be comforting to see the logos of some of the top platforms which BondMason are dealing with before depositing the £1000.

Conclusion
Asset Management is a logical step for the peer-to-peer lending market and the BondMason proposition appears to be a good one. Targeting above market rates whilst offering investor diversification may be a good option for retail investors. Ultimately, the investor will need to trust that the BondMason team can select loans that deliver the promised 7% targeted return.

€50k funding now available for international entrepreneurs

Early-stage companies in manufacturing and the internationally-traded services sector from around the globe are being invited to consider doing business in Ireland. Enterprise Ireland has launched a competitive fund aimed at supporting worldwide start-ups and entrepreneurs who are willing to relocate to Ireland.

Under the terms of the Competitive Start Fund (CSF), successful candidates will receive €50,000 in cash to support their business development. Interested applicants have until 3pm, GMT, Wednesday 6 April to express their interest and submit an application.

Shortlisted projects will be invited to travel to Ireland to pitch to the evaluation panel on Wednesday 1 June. Travel costs, up to a maximum of €1,000 per applicant, will be covered by Enterprise Ireland. Candidates successfully awarded the funding will be required to move to Ireland, however Enterprise Ireland will also offer assistance to entrepreneurs who need a visa to live and work here.

Qualifying sectors include: manufacturing and internationally-traded services, such as the following subsectors: Internet, Games, Apps, Mobile, SaaS, Cloud Computing, Enterprise Software, Lifesciences, Fintech, Food, Cleantech and Industrial Products.

The maximum support available is €50,000 for a 10% ordinary equity stake in the start-up company. This investment shall be released in two equal tranches, the first of which will be released to successful applicants only when they provide confirmation of additional new cash investment for equity of €5,000. This new investment in equity of €5,000 by the successful applicant is to occur after the relevant call close date.
 
If you what to know more get in touch with us at [email protected] before close of business on 4th April if you wish us to assist with your application. Please put "€50k funding now available for international entrepreneurs" into the header of your email.  Alternatively you can approach Enterprise Ireland direct at www.enterprise-ireland.com before the closing date.