Posts

Interview with Andreas Lukic about the 2019 FinTechGermany Award

Andreas Lukic, CEO of ValueNet-Capital-Partners GmbH

Andreas Lukic, CEO of ValueNet-Capital-Partners GmbH

In an interview with Frankfurt Main Finance, Andreas Lukic, CEO of ValueNet-Capital-Partners GmbH and jury coordinator of the FinTechGermany Award (FTGA), explains how the award has evolved in recent years and why the “Golden Garage” should be awarded monthly.

What inspired you to establish the FinTechGermany Awards as an annual event?

In the ’90s and around the turn of the millennium, I worked in the USA and England. Upon my return, I noticed that the start-up ecosystem in the Rhine-Main region was rather small. Moreover, there was a lack of private investor networks or other initiatives bringing start-ups, investors, and clients together. Thus, I decided to join a small Business Angel Club in 2002 and became chairman of the Business Angels Frankfurt Rhein-Main in 2006. By now, we review about 900 start-ups a year and invest in about 20 to 30 – furthering the start-up ecosystem is an important factor.

With the end of the financial crisis, interest in founders grew substantially. Initiatives such as the FinTech Dialogue forum – which later initiated the TechQuartier and the FinTechGermany Award the “Golden Garage” – were formed. The award allows us to draw attention to the internationally renowned Financial Centre Frankfurt as an attractive location for founders. We cannot say “We are the coolest, the most creative and have been on the market the longest.” However, what we can say is “We are a Financial Centre – with capital and financial market competence” and we have been for more than 100 years. Furthermore, the investor-driven award demonstrates that we can evaluate to what extent start-ups are financially viable, scalable and likely to provide feasible exit options.

How has the event evolved over the years?

Approximately 180 start-ups are nominated for the FTGA every year. However, interested start-ups can also hand in applications. With about 200 participating companies, start-ups from every market segment are represented. Today, we are established enough to award the Golden Garage, with this year’s ceremony taking place in the Eurotheum. An open jury session also took place as part of the Finanzplatztag.

Which challenges were FinTechs facing in Germany during the early days of the FinTechGermany Award?

First of all, FinTechs are nothing new, but the growing public awareness is. Back in 2005, we would not have been able to initiate such an award – all the necessary resources were not accessible in one place.  However, by now it is standard practice in the financial sector to use new technologies and FinTechs are well-established.

Whereas a few years ago start-ups needed to explore new ideas and enter untapped market segments to position themselves, start-ups nowadays need to successfully become established. They have to penetrate the market to a much greater extent and be able to handle customers, competition, and profit equally well. While fewer start-ups are founded these days, we find a lot of FinTechs that are “partially or fully financed”. That is what has changed.

You have kept track of the progress previously winning companies have made to this day. Have the founders and their companies gained increased attention from investors after winning the FinTechGermany Award?

Yes, founders and entrepreneurs receive greater attention from the public after the award. The attention grows proportionally with the increasing importance of the FinTechGermany Awards.

FinTechgermany Award 2018

FinTechgermany Award 2018

A start-up – whether at the Seed/Early Stage, Late Stage or Growth Stage – always needs unique selling points. Everyone makes a lot of noise. Thus, every competition, every price and every chance of access to partners and networks is an essential aspect for a start-up. However, this effect also works the other way around: The Financial Centre and the players draw benefits from it – by forming a cooperation or increasing their number of clients.

With regards to investors: We must show that Frankfurt is worth locating to. Not just because of the networking opportunities but also because of the start-ups. Actually, we need something like the FintechGermany Awards to happen every month (laughs).

The name “Golden Garage” refers to the early beginnings of technology pioneers such as Bill Gates, Steve Jobs and Larry Page. Are those career paths we can still observe today?  Or are FinTechs already moving away from garages and bedrooms to FinTech hubs and offices around the world?

The garage symbolizes the unconventional founding of which Hewlett-Packard is a prototype. There even is a museum in Silicon Valley called “the old garage”. And yes, this original founding continues to occur.

Three characteristics define a start-up hub:

1. Founding Landscape

When looking at Silicon Valley, it becomes evident that only a few founders were born there.

Hence, there is no “founding gene” that one region has or has not got. It is upon us to establish an attractive start-up landscape. This a consistent factor and the Rhine-Main region has caught up significantly over the past few years.

2. Educational Landscape

This includes universities, but also cultural institutions such as museums. The educational landscape in the Rhine-Main region has a strong focus on start-ups and their founders.

3. Finance Chain
A financing landscape must be created in which start-ups are able to get access to all forms of investments – from 1,000 to 10,00 to 100,000 Euros. That is why I always emphasize the investor-driven award and the jury’s capital market competence. Financing is our future topic. A golden garage is characterized by the fact that it a place where I can get settled while also getting my company financed. When looking at Facebook and Co.: at some point, someone gave them between one hundred and five hundred thousand dollars. At the same time, that business angel had an idea of where the start-up was heading. In the FinTech sector, we are on the right track today.

 

Andreas Lukic is the founder and managing director of ValueNet-Capital-Partners GmbH, a private equity and consulting company founded in 2000. The company focuses on investing, financing and M&A transactions in management buyouts/buy-ins as well as company successions, occasionally invests in growth-oriented companies from the corporate, SME and start-up sectors and supports their corporate development. Mr. Lukic is a member of several advisory boards, CEO of Business-Angels FrankfurtRheinMain e.V. and has been an active business angel since 1999. In addition, he supports renowned and ambitious artists as part of Schirn Zeitgenossen, Frankfurt. Please find more information on Andreas Lukic here.

The FintechGermany Award is the ideal platform for knowledge sharing

Interview with Philipp Sandner on the FinTechGermany Award 2019

“Regulation is probably still one of the biggest challenges for young FinTechs in Germany,” says Philipp Sandner, Head of the Frankfurt School Blockchain Center. In a Frankfurt Main Finance interview, he discusses how the FinTechGermany Award can support young FinTechs to overcome regulatory challenges.

What is especially important to you when judging applicants for the FinTechGermany Award?

The primary focus is on their business model. With regards to FinTechs, the degree to which the idea is innovative is of utmost importance. The implementation of the business model, its cost-effectiveness and especially the integration of new technologies, such as Blockchain and Artificial Intelligence, are decisive factors for whether a FinTech can survive on the market. Among other things, the Frankfurt School Blockchain Center advises and assists young, highly innovative companies using these new technologies to implement and commercialize their products. We firmly believe that Blockchain technology will have a significant impact on the financial industry, and of course on the prospects of success of FinTechs that are applying for the FinTechGermany Award.

What are the biggest challenges for FinTechs in Germany? How can start-up companies better supported? What can platforms like the FinTechGermany Award do to help?

Regulation is probably still one of the biggest challenges for young FinTechs in Germany. Due to the interaction with the financial market, BaFin often requires FinTechs to adhere to strict regulations. However, due to cost pressure and a lack of staff, it is more difficult for start-ups to meet those requirements than for large financial institutions. Hence, it is crucial to provide young entrepreneurs with know-how and to show them ways in which, for example, they can adapt their business model so that the need to meet BaFin’s standards is reduced or even rendered obsolete. Platforms like the FinTechGermany Award foster that knowledge transfer.

How will the German FinTech ecosystem evolve in 2019? In the next 5 years?

Within the next year, a continued or even extended application of Bafin regulation to FinTechs might lead to a market consolidation and force some FinTechs to retreat from the market. Despite the potential for consolidation, I believe FinTechs will continue to have greater significance – unlike banks or other large financial institutions they can more readily and agilely make use of innovation and new technologies. Banks need to be prepared for serious competition from smaller companies, weakening their monopolistic position. Therefore, banks should be encouraged to work more closely with FinTechs in order to foster innovation and keep pace with new technologies. Thus, it can be expected that large financial institutions will increasingly cooperate with FinTechs in the upcoming years. In the meantime, topics such as Artificial Intelligence, Machine Learning, and Crypto Assets will be of crucial importance and likely to determine whether a business model can survive on the market.

How can Frankfurt become one of the leading Fintech hubs in Germany or Europe?

First of all, places must be created where young companies can creatively test their ideas and obtain needed advice. Such platforms not only provide for the exchange of information, but also allows them to get in contact with potential investors and partners. Unfortunately, there are far too few opportunities in the Financial Centre Frankfurt. This infrastructure is much better established in other European countries and the rest of the world. In Germany, enough funding to provide for a sufficient number of facilities for young companies needs to be granted by the federal government and federal states. At the same time, knowledge transfer is indispensable. Many decision makers are not yet prepared for the imminent paradigm shift that is to come in the financial industry. This is unfortunate as it threatens their business model and hinders the utilisation of increased financial strength to further innovation in partnership with FinTechs. The Frankfurt School Blockchain Center contributes to the transfer of knowledge and regularly organizes seminars, events and large-scale conferences to focus on new developments and raise awareness of issues like blockchain.