How a fintech entrepreneur is transforming finances for SMEs

Freddie Achom, fintech, entrepreneurship, finances, SMEs

A lack of trust by small businesses in the big banks led to the development of fintech invoice-finance marketplace MarketInvoice.

Co-founded by CEO Anil Stocker, the start-up is helping small businesses bridge the financial gaps in their balance sheets, and it’s rocketing towards success. His research showed that small businesses strongly feel that big banks don’t care about their customers, and that there was a gap in the market for lending solutions aimed at SMEs.

The increase in compliance and past banking disasters mean that big banks are just not willing to come up with new products. Stocker was in at the beginning of the new breed of fintech start-ups that began the transformation of the UK’s financial sector.

Turning ideas into reality

The entrepreneurial spirit in Stocker and others like him is the need to take an idea and make it real. In 2010, he took the step into his own business, based on his wish to help small businesses scale up. Focusing on technology to create products to solve the typical financial problems that small businesses face, led to MarketInvoice.

At the time the global economy was struggling – as it is now – and big corporates were extending payment terms. At the same time, banks were sharply cutting overdraft facilities, and SMEs were left facing big shortfalls in their balance sheets.

Technological changes

Technological advances were suddenly opening the financial sector up to a swathe of new start-ups, as well as increasing the accessibility of financial data. By matching a marketplace model with the newly available data, Stocker’s company worked out that they could make it simpler for investors to lend SMEs money against their unpaid invoices.

Invoice financing wasn’t the brainchild of Stocker and his team, but using technology to make it fast and easy is revolutionary for small businesses. It allows them to benefit from faster decisions and access funds quickly.

This frees up small businesses to concentrate on making their product a success, without having to spend most of their time dealing with financial problems and endless bureaucracy.

Pioneering start-ups

MarketInvoice was one of a cluster of start-ups using technology to disrupt and revolutionise traditional financial models. Others include TransferWise, Crowdcube, Funding Circle and GoCardless. All of these pioneering companies were the forerunners of the fintech phenomenon, which brought its own problems.

There wasn’t the entrepreneurial infrastructure that London now enjoys, which means there weren’t lots of fintech venture capitalists looking for their next investment opportunity. It was also difficult to build consumer confidence in the new model of accessing finance. Trust is vital when it comes to building and selling a financial services product and brand. SMEs can’t afford to take big risks as their working capital and cashflow is completely integral to their very existence.

Brexit brings potential problems

The outcome of Brexit is worrying the UK’s fintech sector, particularly when it comes to accessing talent. The departure from the EU could completely stop European talent from coming here, and trigger an exodus of big banks to Europe.

The difficulty in predicting the impact on the overall economy thanks to the political instability also makes it difficult for start-ups and investors to decide on their long-term goals. However, fintech start-up founders are working to represent the industry’s interests. The British Treasury now has a special envoy for fintech and meets with stakeholders to keep the channel between entrepreneurs and the government open.

I recently spoke to European Business Magazine about the European investment market about the effects of Brexit on venture capitalism, start-ups and entrepreneurs. Brexit is a very much new territory for all, founders and VCs alike, but one thing is for certain, founders will continue to seek investment and VCs will continue to deploy. It’s true that there are obstacles in the way that will hamper investment in the short-term, but the show will go on. It’s simply a fact that the world is accelerating and the entrepreneurial spirit and start-up revolution in Europe is showing no sign of abating.

I think that the challenges of the future are in keeping pace, which is why I strongly believe that entrepreneurs should dive into the macro sectors of fintech, proptech, regtech and consumer-driven enterprises as well as collaborative consumption trends. What we need to do is give investors opportunities to disrupt legacy markets and brands and really be in it for the long run.

Second wave of fintech

It’s safe to say that the first wave of fintech has come and gone, and there is a new, better, faster and more impressive group of start-ups coming along behind it. Expect to see much more innovation and changes in the way businesses in the UK do their finances.

Advances in cryptocurrencies, blockchain and smart contracts are changing everything. Established fintech companies are successfully closing the gap between the old order and the future. It’s an exciting time indeed and is only going to continue.

 – Freddie Achom 

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