Financial Technology

Financial Technology

February 20, 2013

Core Innovation Capital Presents the 'Three Ds' of Banking for Payment Startup Investing

The arena of payment startup investments is exciting, but what is it that makes the booming payment startup most attractive to investors?

While finding an answer to this question may seem easy amidst breaking news on new technologies, extensive funding rounds and unique ways to resolve the old issues in the payments world, it is really more about the venture capitalists, angels, and individual support that has made the dream of payment startup possible.

In such a scenario, the question becomes pertinent as to what the investors are looking for when they want to broaden the payments portfolio. What are the elements that are quintessential in making payments startup investments successful?

Arjan Schutte, managing partner and founder of Core Innovation Capital, presents a glimpse of payments startup investing from the point of view of the investors.

Core Innovation Capital invests in what it considers to be the most innovative and exciting financial technology companies serving the budding middle class. Since 2004, the company works with one percent of all innovators who make inbound calls. At the same time, the company is also working on the“three Ds” of banking to determine with whom it will work with in the future.

According to Arjan, the “three Ds” that Core IC is actively involved in include digitization, democratization and disruption.

From the perspective of digitization, the firm sees a lucrative opportunity in “digitizing the trillion-dollar cash economy” that is represented by consumer segments. At the same time, Core IC identifies a huge opportunity in bringing democratization into financial services. Furthermore, the company views several large incumbents perched for disruption.

Arjan Schutte adds that in addition to the “three Ds” of banking that the Core IC portfolio companies share, the last piece of payments startup investment puzzle is scale.

An organization needs to play in the payment space through earning revenues in billions of dollars to leverage a real-time growth opportunity. At the same time, the company should also aim at reaching at least one million customers within a few years. In addition, Arjan also touched on rapid innovation in the payments startup industry and whether it has become harder or easier for an organization like Core IC to invest in such space.

Certain companies who meet the criteria for the “three Ds” as specified by Core IC are L2C include: SavvyMoney, a guide to debt repayment; and Progresso Financiero, a company which brings financial services to extensive population of under banked Hispanic segment in the United States.

Edited by Jamie Epstein

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