Vesuvio – why this ‘TechFin’ powerhouse is our partner
Why Citizen Shareholders is outsourcing the platform build to Vesuvio
There was a time in the dim and distant past (2010s), where fintechs were all about making use of the tech that the established players didn’t fully exploit. To be successful all you had to do was execute the same algorithm the bank was using, buying a share, transferring some money, just quicker, cheaper, or more conveniently. Your competitive advantage as a fintech was the marrying of your industry knowledge and your ability to deliver tech.
But not all of these marriages were happy. And as the market, and the technology, matured it came to pass that it was possible to have a great algorithm and not so great tech, and a not so great algorithm powered by awesome tech. It turns out that it is not necessary to marry your tech built, and when it comes to building tech, it can actually make more sense to work with a number of different fintechs in order to get to where you want to be. So FinTechs now have the option of employing technology to deliver their algorithms rather than directly employing the people to build the tech.
Thus the rise of the TechFin, tech companies whose founders inevitably have a background in building financial technology for either an old school institution or, a challenger institution. Focused on the tech, their in-house teams have a history of working together to deliver successful productst. This is a far cry from the, often remote, provision of, frequently far flung, instant ‘teams’, where a bunch of people who have never previously worked together are thrown at your project, by some entrepreneurs whose best product is their own billing software. The UK government’s Track and Trace app may not be an example of this, but the results are very similar.
Fortunately, Citizen Shareholders had the benefit of several years experience of being part of Level 39, back in the days when it was a dynamic, thriving, far from socially distanced, community of some of the most exciting FinTechs in Europe., In such a tight knit setting one knew exactly who was being let down by their contractors in Ukraine, who has a CTO that was a technical genius but insists on doing everything themselves, and who was “getting shit done”. A bit like listening to propaganda during a war, it’s not the report of the battle you listen to, it’s the location. If the battles are being fought ever closer to home, you’re losing and, if they keep happening in the same place, you’re not winning. In the spirit of full disclosure, Citizen Shareholders spent a long, long, time fighting battles in the same place, trying to get people to believe in the vision. That battle is almost over, and the next one is about to begin. This new battle is also about belief, not in the vision, but in the ability to deliver the vision.
So back to our story…
One of the FinTechs in Level 39 was focused on building insurance products, unaffiliated to any major players, unencumbered by much in the way of budget, but with a wealth of experience in getting shit done, they built a delivery system for delivering delivery systems. They leveraged their position in Level 39 to build the MVPs for a bunch of FinTechs, often on a part cash/part equity basis. And they delivered. And they grew. Not into a bigger FinTech, but into a TechFin.
They are Vesuvio, founded by Kristian Feldborg. They are best known for their work on insurance products, from onboarding to claims management systems, but they have also built loan origination platforms, worked on accounting software plus a host of other fintech solutions – which now includes Citizen Shareholders.
One of the reasons for their success is the speed at which they can build bespoke systems. The easiest way to explain how they work is to use a watch analogy. Imagine a master craftsman who makes bespoke watches. Everytime she makes a bespoke watch she keeps a copy of each spring, each cog, each spindle, so the next bespoke watch she makes, she still handcrafts all the pieces, but not all of them have to be hand crafted each time. Plus whenever an existing piece is refined, those refinements are magically applied to all the previous bespoke watches. Now, you can have a bespoke watch, that is not only quicker and cheaper to build, but never has an issue with updates.
There’s another issue that should concern us, particularly in these crazy uncertain times: will companies have the financial resilience to survive? It doesn’t matter how great the tech is, how strong the team is, how good the culture is, if you run out of money you’re totally screwed. Fortunately, Vesuvio has come to the attention of the Qatari Sovereign Wealth Fund, the Qatari Investment Authority:, Not only are they investing in Vesuvio, they are also investing in a fund that will invest in companies that Vesuvio is building the delivery system of.
This does not mean that the QIA will invest in Citizen Shareholders (andbut nor does it mean they won’t) but what it does mean is that Vesuvios have created a funding pipeline for their future startup clients. Not only that, but they have established a means for converting the equity they got in return for building a whole bunch of MVPs into cash before even the founders of those companies have. An extremely astute play.
Which brings us onto the final reason for choosing Vesuvio. Their founder, Kristian Feldborg, is very good at business. Vesuvio would like to do for the Asset Management industry what they are already doing for Insurance – but for that they need a ‘beachhead’. Enough is known about Asset Management legacy systems to know that they would be as keen for Citizen Shareholders to build in to them as Citizen Shareholders would be to take on that task. Instead there will be an SDK (software development kit) that lets them build out to the Citizen Shareholders platform. Who then will be in prime position to win the contracts for those Asset Managers that outsource? The people who built the SDK!, What will happen to Vesuvio’s prospects of developing that market if the solution is anything less than excellent?…
In two to three years time, in order to launch the ‘baked in’ version of Citizen Shareholders where the voting rights can be legally devolved, the back end will need to be replaced with one built on a distributed ledger system. That may be built in-house or it may not be; that decision will be made closer to the time, based on emerging information available that is not currently available. But until then the plan is to stick with Vesuvio.
Disclosure: The founders of the Citizen Shareholders and Vesuvio have a strong personal relationship having shared the ups and down of their entrepreneurial journeys over a number of years. And this has solidified the way both companies are collaborating together: a win-win!