SINGAPORE: Markus Gnirck runs the Startupbootcamp FinTech acceleration programme, which is looking for the next big start-up by offering extensive mentorship for the best ideas from more than 200 entrepreneurs, investors and partners. Does your team have what it takes?

Spanning more than 25,000 sq ft on level three of Block 79 JTC LaunchPad @ One-North, BASH is a new start-up facility started by Infocomm Investments (IIPL), investment arm of the Infocomm Development Authority of Singapore. BASH, which stands for Build Amazing Start-ups Here, is Singapore’s biggest integrated start-up space. It features an event area, co-working space and prototyping labs.

Calling BASH its home is European accelerator Startupbootcamp’s FinTech chapter. Startupbootcamp was founded in 2010 in Copenhagen, Denmark with the idea of supporting entrepreneurs as they grow their start-ups. “We have 13 different programmes and bootcamps across Europe and more than 300 start-ups in our portfolios, making us the biggest accelerator in Europe,” says Markus Gnirck, co-founder and global chief operating officer of Startupbootcamp FinTech.

Startupbootcamp FinTech is the only programme of its kind to attract wide industry support. The accelerator marked its expansion into Asia by starting its FinTech chapter in Singapore earlier this year.

Its partners in Singapore include the Monetary Authority of Singapore, Lloyds Banking Group, MasterCard, DBS, IIPL, Rabobank, SBT Venture Capital, arvato Finance Services, Route 66 Ventures and Intesa Sanpaolo. Last month, the accelerator welcomed PwC Singapore, Pix Vine Capital and Jungle Ventures as its new partners.

Identifying the best
In Gnirck’s view, Singapore has all the components needed to set up a FinTech acceleration programme — entrepreneurs and start-ups, an active finance industry and a mentor and investor community. “The Fin- Tech landscape in Singapore is evolving and, in another few years, it will be one of the major FinTech ecosystems in the world,” he says. “The opportunities are huge because a lot of banks have headquarters here and key decision makers are located within a stone’s throw away.”

In April, the FinTech accelerator chose 10 finalists out of a selection process that lasted six weeks for its acceleration programme. It received 300 applications from Singapore, South Korea, China, India, Hong Kong, the Philippines, Indonesia, the UK and the US for this programme. The selected teams combine several trends in the FinTech space such as wealth management, financial inclusion and blockchain technology.

Teams were interviewed and evalua ted by Startupbootcamp FinTech’s partners, mentors, angel investors, venture capitalists (VCs) and even a psychologist. “We are looking for teams that stand out; so, we have long interviews with them to understand team members and their skill sets and background,” says Gnirck.

The winning teams are based in BASH for three months, where they will receive extensive mentorship from more than 200 entrepreneurs, investors and partners. Each team will also receive a $24,500 stipend, exposure to more than 200 angel investors and VCs, as well as an invitation to Startupbootcamp’s global alumni network and growth programme. In return, Startupbootcamp FinTech takes an 8% stake in each start-up.

Gnirck says the rigorous screening process for Startupbootcamp Fin- Tech’s acceleration programme is necessary, as 80% of start-ups fail. “The common reasons start-ups fail are: not executing their ideas well, not having the network, not being able to convince investors or not having enough traction,” he notes.

The accelerator accepts only teams that have already gone through the initial ideation stage and are looking for further funding. Gnirck says, “The ideation stage is the toughest because you’re taking steps to launch your start-up and you’re willing to take the risks. Luckily, in Singapore, there are many government grants and resources to make this period easier.”

Gnirck advises aspiring entrepreneurs to validate their ideas by looking for mentors in their respective fields and talking to potential users of their product. “Talk to a specific target segment and find out what they’re struggling with and see what kind of product you can come up with to address these problems,” he says. “You don’t have to talk to thousands of people. You just need to talk to a group with coherent opinions.”

Citing the example of payment solutions, he highlights that the market has not seen a payment system that is consistent and works well. This is mainly because these solutions try to address the needs of everyone with a single product. “Payments are consumer-driven. It’s wrong to think you can target everyone,” he warns.

One of the teams selected to join Startupbootcamp Fintech’s acceleration programme is Kashmi, a peerto- peer payment platform for mobile. “We selected them because they have a clear target segment and that is the millennials. The platform allows users to pay through WhatsApp and text messages. It’s very social, so it’s not something that can work with the elderly,” he says.

Start-up career
At the heart of it, Gnirck emphasises that the people involved make all the difference. “It’s always said that in a start-up, you need a hustler (salesperson), hipster (creative designer) and a hacker (engineer) but this is not always true,” he says. “We have had a few teams who have the hacker and the hustler and are waiting for the hipster, for example. They come to Startupbootcamp because they need help finding the right person for their team.”

For Gnirck, the best FinTech startup team comprises a professional who has worked in a bank for at least 10 years, a fresh graduate who is willing to learn and a hacker. He says assembling this team is not easy largely because fresh graduates are still hesitant to join start-ups.

“In Singapore, people would rather join a bank or consultancy firm, but I think you can learn way more in one year at a start-up than two years in a consultancy firm. You can have a fun life working for a startup but it’s a low-paying job at the beginning.”

Startupbootcamp FinTech has been giving talks at local universities to encourage more millennials to think about joining or launching their own start-ups upon graduation. At these talks, Gnirck says, students usually show keen interest but, in reality, few end up pursuing this path. “There is a big difference between wanting to join or launch your own start-up and actually doing it.”

Meanwhile, there are also those who want the best of both worlds. “There are people who say they can manage having a corporate life and a start-up life. If you want to launch a start-up, it should either be full time or nothing. At Startupbootcamp, we don’t invest in anyone who is working on their start-up on a part-time basis,” he says.

Gnirck himself did not immediately launch his own start-up fresh out of school. After graduating from RWTH Aachen with a Bachelor of Science in Industrial Engineering in 2011, he did a seven-month stint with Airbus in Tianjin, China, where he was involved in building airplanes. “While I was there, I realised I didn’t want to be in the corporate world,” he recounts.

He decided to start a customisedsuits company with his friends. Called Simplence, the company specialised in selling suits to students and, when Gnirck returned to Germany, he brought the business with him and soon it expanded to cities across the country. This first taste of launching his own business inspired him to be involved in the start-up community, so he sold the business at an undisclosed amount to one of his partners.

He moved to London, as it has one of the most vibrant start-up ecosystems in Europe. There, he became an adviser with EnergyDeck, an energy and resouce management tool that helps buildings run better. The platform allows users to identify savings opportunities and track consumption.

While he was there, he discovered a disconnect between corporates and start-ups and decided to help improve this relationship by running pitch days to bring start-ups and corporates together. It was during this time that he met Nektarios Liolios, and the pair founded Startupbootcamp’s FinTech chapter in March 2014. Liolios is currently based in London and runs the acceleration programme there, while Gnirck runs the programme in Singapore.

When it comes to innovation, Gnirck points out that Asia is far ahead of its peers in the West. “A lot of start-ups from the UK and the US want to come to Singapore because the market potential for launching a FinTech product is much higher than in their own countries,” he says. “People still trust credit cards and cash and, if they have a problem, they will go to the bank. Online banking isn’t very popular.”

He attributes FinTech’s growth in Asia to the presence of a rising middle class. “There’s a whole new society coming up here where the rising middle class has faith and trust in banking. So, as a start-up, you can try out new technologies and consumers will be receptive to it.”

In Singapore, the start-up community is also supported by government initiatives and grants, but Gnirck cautions against using them as an alternative to investments. “I appreciate government grants, but I think they should help only in the early stages and start-ups should not rely only on them. There are also certain criteria to get a government grant, so it is still restricted to a few start-ups,” he adds.

Instead, he encourages start-ups to find the right investors who can help them scale their business. “Every major VC has a representative here in Singapore and they are coming in with new cash to invest. The challenges are to find the right VC. Don’t take from just any VC. Pick one who can connect you to the right people in the markets you want to be in,” he says.

FinTech trends
While opportunities abound in Fin- Tech, he observes that start-ups generally focus on the consumer space. “In Asia, the US and Europe, Fin- Tech normally starts with a business- to-consumer [B2C] model with solutions such as e-wallets, personal finance managers and ways for consumers to save money,” he says.

The drawback of this model is that it attracts copycat start-ups. “What’s happening everywhere in Asia right now is that start-ups are taking an existing model from the US and then launching it here,” he says, adding that China now has more than 2,000 loan platforms because the model is easily replicated.

Gnirck is not against using a tried and tested model. But what really excites him about the FinTech industry in Singapore are the untapped opportunities in the business-to-business space. “I really see the potential in the B2B space in FinTech. The impact is going to be very big. In a bank, you can change so many things and it has an impact on whole societies and economies. It’s one of the last industries besides governments and insurance that can be innovated tremendously,” he says.

He hopes to see start-ups in Fin- Tech hot spots such as Hong Kong, Singapore, India, South Korea and Japan come up with more B2B solutions. This can happen only if financial professionals are actually leaving their jobs at banks to start something on their own.

These professionals generally have an edge over their peers who are not from the finance industry, as they understand the technologies in place and can come up with suitable solutions to tackle any gaps. “Banks are not able to innovate these solutions themselves because of legacy and an aversion to risk. When we talk to banks, what we find is that they don’t have the right mindset and structure to drive their own developments,” he notes.

“Start-ups have an advantage because they have limited resources, and time is money. They are also very lean and agile and can find out from customers what problems they face with the existing infrastructure. Banks haven’t really figured out how to do this sort of human-centric development.”

Things are slowly changing for the better, though. DBS Group Holdings, for instance, has started its own internal innovation programmes to change the way its staff thinks about innovation. “It is difficult for banks to break away from legacy because they are still using technology from the 1980s and 1990s,” Gnirck says.

This in turns affects how a bank accepts new technologies from a start-up. “It really depends on each bank, but one of the biggest challenges a FinTech start-up faces is integrating the product. It still takes 16 to 18 months for the technology to be approved by a bank before it does a pilot. This is very long,” he laments.

Gnirck recommends that, when innovating solutions, start-ups think about adding value or a “new layer” to existing infrastructure as opposed to trying to disrupt the entire industry.

He says, “It’s about adding another layer to help corporates use these channels to drive more revenue. Start-ups are not like the IBM Watson deals, where a technology is built in two or three years and then the whole package is sold to a bank. It’s not a one-off deal,” he says.

While B2B FinTech start-ups may adopt a one-off-fee business model like its B2C peers, Gnirck asserts that the former should come up with a subscription model instead. “Subscription models help B2B start-ups scale their businesses. For instance, if you have a trading floor solution, you can charge your clients a monthly subscription fee per user,” he says.

Looking ahead, Gnirck predicts that FinTech start-ups will continue to focus on coming up with new payment solutions and this could be a trend that will span the next decade. Start-ups are also starting to look at blockchain technology. The blockchain is a shared public ledger that virtual currencies such as Bitcoin rely on.

“Bitcoin is just a virtual currency, but the blockchain technology that underpins it will enable users to do much more than using Bitcoin as a currency. For example, you can use Bitcoin as a token to transfer data instead of currency,” he says. “Start-ups can look at how blockchain technology can be used in areas such as asset management, trade finance and securities.”

Launching a successful start-up may take time, but Gnirck believes start-ups should not drag out failure once they discover that their ideas are not working. “If you feel something’s going down, don’t overpromise your investors and your team. Don’t take loans and, most importantly, don’t lie,” he says.

“Failure is a big emotional pain, but going through the pain of actually losing a company makes you even stronger so you won’t make the same mistakes again. We’d rather invest in serial entrepreneurs even though they’ve failed because this journey that they’ve been on makes the next time way better.”

How SkolaFund leveraged Startupbootcamp FinTech’s acceleration progamme to fine-tune its business plan
Syakir Hashim and Tengku Ahmad Syamil are no strangers to entrepreneurship. The founders of crowdfunding platform SkolaFund were schoolmates at Tampines Junior College. After completing their GCE ‘A’ Levels, the pair collaborated with Mendaki to launch Urbane Academy, an after-school programme for boys aged 11 to 14.

Both men continued to run the programme even when they entered university. Syakir is currently pursuing a Bachelor of Arts in Global Studies at the National University of Singapore while Syamil is studying for a Bachelor in Business Administration and Management at the International Islamic University Malaysia.

Last year, they came up with the idea of launching SkolaFund, a web platform that connects the less privileged to a range of tuition fee and stipend funding sources such as crowdfunded donations, micro loans, bursaries and scholarships.

“I come from a humble family background and I experienced financial struggles throughout my educational journey. Luckily, when I got into university, I managed to get some funding for my school fees,” Syakir tells Enterprise. “Meanwhile, Syamil saw that many students in Malaysia were unable to secure funding for their education and even those who secured loans had to top up the balance by scrimping or going hungry.”

Crowdfunding tuition fees
These factors inspired Syakir and Syamil to come up with SkolaFund. To test out the feasibility of their plan, they entered their idea for SkolaFund into a business-plan competition in Malaysia in September 2014. The competition was co-organised by Malaysia’s Ministry of Finance, and SkolaFund emerged as the champion.

Syakir says, “We received a lot of validation and feedback that we should give SkolaFund a shot. So, we forked out our own cash to hire some Indonesian developers to develop the first version of the platform.”

SkolaFund is designed to allow undergraduates to crowdfund their scholarships annually. Undergraduates who need a scholarship apply on Skolafund.com by submitting a copy of their matriculation card as well as university acceptance letter. Verification checks are made and, once approved, a 30-day crowdfunding campaign begins.

After a campaign is fully funded, campaigners must update their sponsors on their progress every semester before SkolaFund disburses the tuition fees directly to the schools and the students’ stipends to their accounts. Syakir says, “We don’t allow campaigners to raise funds for the full university programme because it may make them complacent. We don’t impose a grade point average that they have to maintain because we acknowledge that not everyone is starting at the same level.”

If a campaigner fails to raise the target sum, SkolaFund will offer the balance in the form of student loans. Syakir says: “We’re working with some banks to offer the remaining amount to the students. So, we make loans the last choice instead of the first choice for students.”

While students can also set up similar campaigns on other crowdfunding sites such as Indiegogo and Kickstarter, Syakir points out that the sponsors on these sites are looking to fund new ideas and innovation. On the other hand, SkolaFund is purely about enabling campaigners to achieve their dreams of higher education.

With the first version of the platform, the duo decided to apply for Startupbootcamp FinTech’s three-month acceleration programme. “We wanted to join the programme because we didn’t want to run SkolaFund like a charity,” Syakir says.

“When we studied the way charities work, we found that they could be run more efficiently. For example, when it comes to charities, out of every $1 they collect, up to 30 cents go to administrative cost. With SkolaFund, we charge a 5% processing fee to pay for all our costs. Campaigners will have to crowdfund that 5% as well.”

Meanwhile, Syakir and Syamil, who are students themselves, found it difficult to persuade investors to invest in SkolaFund. “When we were seeking funds to build the platform, investors were not convinced that two students would be serious enough to run a startup,” says Syakir.

Guidance from mentors
This obstacle prompted them to sign up for the acceleration programme. During the six-week-long selection process, the pair learnt more about the start-up ecosystem and met other strong teams. “Many of the other teams had years of working experience and there were so many great ideas. We were mentally prepared not to be selected, but we made it clear during the rounds of interviews that we would still work on SkolaFund even if we weren’t,” he recalls. To be fully committed to SkolaFund, the pair roped in another partner to run their Urbane Academy venture.

Syakir is thankful that SkolaFund is one of the 10 start-ups selected for the programme that commenced in May. “Time passes quite fast when you’re in the programme. Startupbootcamp brings in a lot of mentors from the FinTech space. We’ve had mentors from places like Oracle, Google, DBS,” he says.

“If you start a business without this programme, you may think you’ll succeed; but the thing is, when you meet more people, get more feedback and ideas and build more connections, you find out more ways to make your start-up better.”

On average, Syakir meets four to five mentors a day throughout the programme. If there is a “mentor speed dating session”, he gets to meet about 20 mentors within the span of a few hours. “The mentors are very willing to help and connect you with someone they know,” he says.

His key takeaway from the programme is that SkolaFund is “sort of an acquired taste for investors”. “We have a strong social angle and a lot of investors look for highly scalable profitable businesses. So, only a few really love the idea,” he says. “Some mentors were concerned that we were too social.”

To work around this issue, Syakir and Syamil are not pitching SkolaFund as a social enterprise. “Investors don’t like working with social enterprises because they have to focus on two bottom lines. For a normal business, you only need to focus on your profits but, for social enterprises, you need to focus on the social impact plus profits, and this is distracting,” he explains. “Instead, we embedded the whole social good aspect into the DNA of the company. So, we focus on just one bottom line and that includes revenue, number of users and hits.”

The programme also helped the duo fine-tune their social media strategy. “Getting our content viral is important for SkolaFund. On average, every campaign that we start gets at least 2,000 retweets on Twitter. So, we have at least 100,000 people seeing our campaigns just on Twitter alone,” he says.

For now, SkolaFund is open only to university students in Malaysia. Its first campaign raised RM5000 for a one-year scholarship within three days of going live. There are no immediate plans to launch in Singapore, as students in the city-state have access to a variety of scholarships and grants to fund their education.

In July, SkolaFund will be launched in Indonesia. Syakir and Syamil have plans for the platform to be the biggest higher education financing platform in Asia, with goals to enter Thailand and India within the next 12 months.

“The beauty of running SkolaFund is that we found out that Southeast Asia is a very giving region. The sponsors we approached don’t expect to get any returns from funding a student at all,” says Syakir.

This article appeared in the Enterprise of Issue 684 (July 6) of The Edge Singapore.