Earlier in 2016, the financial services technology firm Fiserv launched a startup accelerator called INV, in partnership with other industry players like US Bank, Spain’s BBVA, Banco Sofisa of Brazil, and the news site Bank Innovation.
A big part of the mission, says Matthew Wilcox, Senior Vice President of Marketing Strategy and Innovation at Fiserv, was to break down some of the barriers that prevent Fiserv’s 13,000 clients — mainly large financial services institutions — from working with early-stage companies.
“I spent 15 years at a financial institution” — Zions Bancorporation in Utah — “that wanted to work with smaller companies that we felt had good ideas, and were solving for important problems. But it was just hard for us as a bank to work with them directly,” Wilcox says.
So instead of simply collecting a group of promising startups and offering them free office space and mentorship, Wilcox tried to focus the first cycle of the INV accelerator this summer on making it easier and safer for big institutions to work with them.
Five startups participated in the first go-round of INV, and a second group of five just entered the program in December. Here’s what Wilcox has learned from the initiative so far.
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• The accelerator received about 120 applications for the first and second cohorts. “They were clamoring to work with us. The desire from these fintech companies to work with Fiserv to help them bring things to market – we thought it would be high, but it was through-the-roof high.”
• The accelerator wanted to get applicants from the best companies from around the world, so there was no requirement that participating startups move to a particular city for some period of time. “We wanted to be geography-agnostic,” Wilcox says, though recruiting focused on fintech hotbeds like Silicon Valley, New York, Europe, and Israel. That meant that there were “lots of videoconferences, GoToMeeting sessions, and conference calls.” The companies were also invited to come in person to several Fiserv-organized conferences that gave them exposure to the company’s client base. Wilcox says that Fiserv debated making investments in the startups that were chosen, but has decided not to — so far. “We wanted start to see if the value-add we provided was compelling enough,” he says. “Up to now, the value has been there for the companies,” but there could in the future be a mechanism for making investments. (Below, the accelerator’s standards for admission.)
• Wilcox initially thought that Fiserv’s banking customers would interact with the startups in more of an exploratory mode, to “get a pulse on innovation,” in his words. “The desire from the banks to actually do stuff was higher [than we expected]. It certainly changed our approach from learning and understanding the companies better, and moving more to, ‘How do we get these things in flight [as pilot tests]?’”
• With the second class, Fiserv decided to narrow the focus of the program. The first invited applications from startups working on anything related to financial services. The second cycle “tried to narrow the categories to things like authentication, and alternative ways to pay,” Wilcox says. “We still got about the same number of applications, but they were more targeted.” In choosing the second class, Wilcox says there was much more discussion of “how we envision an applicant will benefit from being in the program.
• "In the first cycle, Wilcox says, “we spent too much time having the fintech startups talk about what they’re doing, and why they’re doing it, and less time on jumping right in to understanding the opportunities for collaboration with Fiserv and our partners. We also spent too much time trying to make their initial concepts work. What we’re planning to do in the second round is, if there’s an immediate recognition that it’s not the right [business] model for us or the banks,” help them think through how they might be more attractive to other sorts of financial services companies.
• One of the things that proved most beneficial to the first class of five ventures, Wilcox says, was helping them navigate the privacy policies, security concerns, indemnification penalties, and other requirements banks have for working with vendors. “We spent a lot of time helping them try to understand what that looks like,” Wilcox says. “We brought in people from our legal team to give them a high-level overview.” And Fiserv is also willing to consider ways that startups can work with banks under its umbrella, rather than jumping through all those hoops on their own.
• The accelerator doesn’t have a full-time staff, but Wilcox says that there are four Fiserv staffers who directly oversee it, and a network of 10 to 12 people that review applications or provide input to chosen startups. Most of the bank partners that are involved with INV “have one or two people investing time in it, probably somewhere between 25 percent and 40 percent of their time. They can provide a reality check, saying that something may be a great idea, but here’s what you need to do to make it fit within our business model.”
• “We’re starting to create an alumni association, bringing back the people from the first class to talk to the next class,” Wilcox says.
• Operating the accelerator “has created some structure and governance about how we work with startups,” Wilcox says. As a company, “we’re not limiting ourselves to talking just to companies that are part of the accelerator, but it has given us a forum to work with these companies in a much more dedicated fashion. It really has opened the doors.”