The world produces 2.5 quintillion bytes of data per day, and that production rate accelerates each year. One of the most important, and most sensitive, types of data being produced each second is financial data – for example, individual transaction information that details how consumers and businesses earn, spend or invest their money. This kind of data has great potential to be used to empower individuals, reduce fraud and risk, increase innovation and support small business growth.
This mission of financial data as a tool for positive social impact was the focus of our latest venture development program produced in partnership with our partners at PayPal and BNY Mellon. Our FinTech US 2018 program curated a select group of eleven startups from across the US that are harnessing financial data to improve the accessibility, affordability, and transparency of financial services.
Village Capital’s programs are also unique in that we teach the participating entrepreneurs how to think like investors, having the cohort itself rigorously assess all other participating companies and ultimately select two companies to receive an offer of investment - a process that we call peer-selected investment. This rigorous peer mentoring and peer selection both reduces bias in company selection, but also improves programming efficacy through helping the entrepreneurs act as both investor and investee. The two companies that were selected this year by their peers are Global Data Consortium and Intrinio.
More than 1.1 billion people around the world are unable to prove their identity. This makes it difficult for them to access services like healthcare and education, and it also means they are locked out of formal financial systems that would enable them to improve their financial well-being.
Global Data Consortium (GDC) is an international electronic ID verification service that offers access to local, in-country reference data for eKYC (Know Your Customer) services in 50 countries. By providing digital identities for formerly untrackable people, they help businesses reach new customers in emerging markets.
GDC has a partnership with MercadoLibre, a popular e-commerce site in Latin America, to reduce fraud. Credit card fraud is rampant in Latin America, and independent merchants on the platform are at risk of shipping items to unknown customers who will never pay. GDC’s verification service is now bundled into MercadoLibre’s transaction review process, which provides an extra level of confirmation for independent merchants looking to do business on the site’s secondary market.
Co-founder Bill Spruill said, “The program was a good experience for myself and my cofounder to spend time looking at how others look at our business - investors, potential partners, and peer entrepreneurs. And it helped us get our head around weak spots in our business and how we fill those gaps.”
He said the peer-selected investment process was valuable as an entrepreneur from a diverse background: “You don’t expect to see [me], the African American founder from North Carolina taking the top slot. Usually, it’s the young white guy. The peer review process was incredibly inclusive.”
Intrinio is an online financial data intelligence platform that democratizes access to over 300 financial data feeds. They provide an alternative to incumbent data providers, which can be prohibitively expensive.
Rachel Carpenter and Joey French created Intrinio after their experience trying to build their own fintech app. They found that accessing the initial data to start the company would cost $70,000. “That was really discouraging,” Carpenter said. So we made it our mission to make sure other fintech app developers don’t have that problem.”
Intrinio’s core customer base is fintech programmer. “If you have an idea to build an innovation in finance or banking, you’re going to need data no matter what,” said Co-Founder and CEO Rachel Carpenter. “We’ve built technology to make it easy and cheap to get access to data.” Initrinio is committed to supporting early-stage companies - independent developers, students and others who are creating the future of the financial system. Their Intrinio Developer Program has given 250 early-stage startups free data for six months. One company in the program is MoneyGeek, which helps consumers make smarter financial decisions.
“We get to watch our data come alive in these apps, and stay true to our mission which is democratizing access to data and giving a leg up to early companies,” Carpenter said.
To make this program possible, we’re proud to have partnered with PayPal and BNY Mellon, true global leaders of financial technology innovation. PayPal’s longstanding commitment to democratizing access to financial services and enabling small business is core to the very foundations of their business, and we’re grateful for their partnership in making this and all of our FinTech programming possible. BNY Mellon is a truly global investments company dedicated to driving positive and systemic financial services innovation and helping its clients manage and service their financial assets responsibly.
MiddleGame Ventures, a venture capital investment firm that focuses on early-stage fintech companies in the US and Europe, helped Village Capital design and facilitate the workshops. The firm, led by partners Michael Meyer, Pascal Bouvier and Patrick Pinschmidt, supported the participating entrepreneurs with their breadth of financial services, regulatory, and investment experience.
PayPal and BNY Mellon were not only enabling partners of the program, but also brought employees to provide mentorship for a cumulative 180 hours throughout the program. Employees from both organizations provided the valuable perspective of incumbents that will play a key role in the future of data.
During the second workshop, the entrepreneurs were invited to PayPal’s San Jose office where they learned from from PayPal’s CTO, Sri Shivananda, on the role that financial data will play in the future of financial services. They also got a chance to test customer and product hypotheses with a diverse group of PayPal employees.
During the third workshop, entrepreneurs received feedback and direction from a wide range of investors and potential partners. BNY Mellon employees gave entrepreneurs their perspectives on how large financial institutions are engaging with emerging technologies and blockchain. In addition to the insights from BNY Mellon employees, senior executives from PayPal provided hands-on guidance and personal perspectives to participating entrepreneurs.
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