A very happy New Year to all our readers – the beginning of another exciting year of interviews (our third year of publication!) with the founders of some of the world’s most innovative new FinTech startups as well as more established companies, that are changing the world of finance. If you would like to receive an email update whenever we publish (usually once per week), sign up to our Newsletter.
Today we speak to Nick Heller of Fractal Labs – The Automated Financial Assistant for your Business
Our questions are in bold.
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Who are you and what’s your background?
I’m Nick, one of the founders and CEO of Fractal Labs. I’m originally from Canada but I’ve been living in Europe for over a decade. I’ve held leadership roles at Google in Business Development and Partnerships. I have also worked in media at Viacom; built an early e-commerce platform as Founder of Degrees of Separation; and been a trader at RBC Capital Markets. I also serve on the board of several companies and am a trustee at SVC2UK. One of my passions is mentoring startups at early-stage incubators like Seedcamp, Level39 and Founders4Schools.
What is your job title and what are your general responsibilities?
I’m the co-founder and CEO of Fractal Labs. At any early-stage startup, that means wearing many hats. I’d certainly describe myself as well-rounded versus specialized. But my day-to-day is mostly spent managing the biz dev side, doing marketing and working hands on with our 300 clients.
Can you give us an overview of your business?
Fractal essentially codifies the brains of CFOs into an app, leading to smarter financial decisions for startups, and small and medium-sized businesses. We are working to create the ultimate artificial intelligence for financial decision making. We are using technology to give people access to sophisticated financial analysis, transforming the way businesses manage their cashflow and capital requirements.
Fractal clients have really seen an impact on their businesses. Yearbook Machine Founder and CEO Dan Barker said: “Aligning budget data with our performance metrics allows us to closely monitor and measure growth in an automated way, which saves us time and money.”
Tell us how you are funded.
Fractal Labs launched in 2014 and we bootstrapped for over a year. In 2015, we received £800,000 in seed funding from Lifeline Ventures, Seedcamp, iHorizon and Ace & Company. We are also incredibly fortunate to have some of the best advisors in the technology and fintech industries, including Google’s former VP of Engineering Nelson Mattos, former CMO of Sage, Amanda Jobbins, and Ebay’s Chief Strategy Officer Michael van Swaaij.
Why did you start the company? To solve what problems?
Working closely with startups and entrepreneurs in my previous roles, I realized that one of the main growing pains for small businesses is having to make strategic financial decisions when they don’t yet have the means to afford a CFO or financial expert on staff. Because of this, many financial decisions are made in haste, and without understanding the impact on the business. That’s what prompted me to launch Fractal Labs in 2014. We provide small and medium businesses with deeper financial understanding without breaking the bank.
In the UK alone, an estimated 72% of SMES don’t have a financially qualified person on their team, amounting to losses of over £3bn per year and a funding gap of up to £59bn. In two years, we’ve grown faster than we expected. We have over 300 clients signed up across the UK, US, Australia and Canada, and counting.
Who are your target customers? What’s your revenue model?
Our target customers are SMEs that don’t have a financially qualified person on staff and who often rely on their accountants and relationship managers at banks to help them manage their finances. In the UK alone, that’s around 5.2 million small businesses. Product uptake has been strongest among growth businesses earning £500k per annum and up.
Our revenue model is subscription based and we offer a unique sliding scale to help businesses at every stage. The monthly fee starts at £50.00 for a small business.
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
I would level the playing field. Small and medium businesses represent 98% of businesses in the UK, around 75% of the workforce, and more than 50% of the GDP, according to the House of Commons Library. The opportunity to cater their financial needs is huge, however the ecosystem is still very much set up to support larger businesses. Banks should be providing direct access to these massive (yet fragmented) segments by leveraging technology such as Fractal to help these companies succeed.
What is your message for the larger players in the Finance industry?
Embrace new technologies like AI and automated solutions before it’s too late. One of the main challenges for larger companies and banks is the conversion to the digital world and speed of execution. From adopting and rolling out new technologies, to generating proprietary data and using that data smartly, there is a lot of work to be done. The incumbent players should adopt a partnership model where they outsource the development and delivery of forward-thinking solutions that will move the entire industry forward.
What phone are you carrying and why?
I was at Google when Android was first launched and got to see it from the inside so I am a diehard fan. I’m a strong believer in open source programming. I think allowing people to share code and build on top of each other’s work is a great way to keep the ecosystem healthy, competitive and innovative. That said, I actually bought an iPhone earlier this year to get a feel for both. I can’t deny that the user experience on the iPhone is more elegant. But I still use all my Google apps on my iPhone because I believe they are superior software products.
Some of my favourite apps are: Spotify and Soundcloud in entertainment; Evernote and Slack for productivity; the Guardian and Quartz in news; Uber and CityMapper for transport; Telegram for communication; and Fractal, (of course) for finance.
Where do you get your industry news from?
I read the Financial Times and Wall Street Journal for a broad perspective on global finance, and industry specific trade publications such as Finextra, for a closer look at innovations and investment activity in the FinTech sector.
Can you list 3 people you rate from the FinTech sector that we should be following on Twitter?
Eileen Burbidge, Partner at Passion Capital – @eileentso
Taavet Hinrikus, CEO at TransferWise – @taavet
Reshma Sohoni, Partner and C-Founder at Seedcamp – @rsohoni
Can you suggest the name of an Angel Investor or VC that might be interested in being profiled?
Jon Koplin, former Google employee and angel investor.
What’s the best FinTech product or service you’ve seen recently?
I use Transferwise most often because we have offices and employees in London, Zurich and Lisbon. It’s a service that makes sense and saves money.
I also really like Property Partner because it democratizes access to an investment product that yields great returns, yet has been traditionally reserved for those with enough cash to buy property.
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
First, businesses will make better use of proprietary data, allowing them to make more educated business decisions. PSD2 will be a game changer here because businesses will finally be able to easily access their bank data, and in turn, share it with FinTechs who will better service their needs.
Second, the playing field will continue to level out – the future growth is in the hands of small and micro businesses. We will see less reliance on large, incumbent financial institutions, and more specialized, verticalized FinTech options replacing banks.
Finally, the broader use of Artificial intelligence will lower the cost and improve the effectiveness of predicting financial outcomes for businesses, further enabling contextually relevant and timely advice from experts. Machine-powered human judgement, at scale.
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