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#Payments Investing with Jordan Bettman

Posted on June 25th, 2015

#MobilePayNYC

06/25/2015 @EntrepreneursRoundtableAccelerator, 214 W 29th Street 5th Floor, NY

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Jordan Bettman @BainCapitalVentures spoke about his experiences funding startup firms. BCV does lending from 3-5mm series A to 80mm majority recapitalization.

Jordan, who was interviewed by Derek Webster, concentrated on the opportunities he sees in his specialty: financial services. Jordan was excited by new ventures in insurance (For instance, there is a p2p auto insurance startup in Germany which underwrites using social networks). He also said there are lending startups that show promise.

Jordan talked extensively about commercial payments. He explained that electronic payments to merchants were pervasive, but the complexity of b2b payments has slowed the use of electronic systems. He cited the experience of Home Depot Services which accepted ACH, but subsequently stopped accepting it from commercial builders.

The lesson from this is that both accounts payable and accounts receivable need to be automated for the system to succeed. This is the context for two of their investments: Chrome River (AP) and Bill Trust(AR).

Jordan also talked about what he has learned.

  1. The success of a startup is base on the founder’s ability to navigate issues in a changing world
  2. Consider how the founder handled past mistakes
  3. It now takes 7 years for a company to mature, so you are in for the long haul
  4. Consider carefully the capabilities of established players to respond
  5. Know what the company can do to defend its advantage
  6. Founders have blind spots so it is important they hire quality people to fill those holes

He had views on the future of payment systems

  1. Payment systems are dominated by large scale competitors with big cost advantages, so startups need to be revolutionary. (e.g. Strip can set up an account within 24 hours)
  2. NFC will eventually gain acceptance as a payment method, but it will take time: domestically the current credit card experience is not broken. But the 3rd world, may skip the credit card stage and go directly to non-contact payment. (Similar to the pervasive use of mobile payment methods in Kenya)
  3. Payment tokens (the 16 digit code is translated into a code) might be important if hacking attacks on phones increase.

Jordan closed with the following observations

  1. The NY startup ecosystem has grown rapidly, but still does not have the gravitas of SF, with the possible exception of financial systems
  2. Solvency & fairness are considerations when investing in insurance companies, but it will take time for the regulators to understand how social media and big data affect underwriting decisions.
  3. Plaid is a startup which leverages their expertise in big data. They partner with banks to clean and standardize data.

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