The Founders Arena: A Unique Perspective to Accelerating Fintech
In 2022, The Founders Arena examined the opportunities for wealthtech startups. While they identified multiple startup accelerators, many of which are incredibly successful, all have become horizontal or transitioned into other industries outside the wealth industry. Furthermore, none are specializing for the wealthtech sector, encompassing fintech, payments, generative AI, and other technologies designed to enhance investor experiences and solve a wealth organization’s problems today and in the future. The Founder’s Arena aims to solve that problem by focusing on fintech and startups developing solutions for the wealth management industry.
Digital Wealth News recently interviewed Pamela Cytron, President of The Founders Arena, to learn more about their unique perspective on industry specialization and accelerating wealthtech startups.
One Fintech Ecosystem
In looking at the wealthtech sector as an entire ecosystem, the organization put everything under that bundle: banking, wealth management, payment providers, and all these other industry businesses that rely on emerging tech, the rapidness of AI, generative AI, and data. While vast, The Founder’s Arena looks at earlier-stage startups within these categories and uses the power of creating a community and network to solve real, present-day problems at these organizations.
“At The Founders Arena, we identify startups with the right R&D and connect them to the broader wealthtech community and other potential customers at financial services institutions. We also connect these startups to wealth managers and advisors. By bringing these startups into the ecosystem, we solicit the community’s feedback to ensure that those we’re considering for our cohort can solve their organization’s pain points right now,” says Cytron.
She added that The Founders Arena considers startups with product market fit that need further traction and scale. The program focuses on growth-stage startups and The Founder’s Arena’s ability to help startups accelerate their revenue by putting them in front of organizations that can benefit from the technology. Typically, meeting with an organization only happens for a startup later when they’re more established or known within the industry.
Applications Open for Second Cohort of The Founders Arena Wealthtech Accelerator
Qualification For The Accelerator
Recently, The Founders Arena opened applications for its second cohort. Interested and eligible applicants can apply at the links provided in this post, and all will receive a 1:1 interview with a representative from the accelerator. Following the interview, when a startup applies to the accelerator, it is automatically interviewed. However, the applicants will be evaluated based on factors including industry segment fit, revenue generated, and funding raised, among other factors.
“Out of our original class, we had 90 applications from five countries and 17 states in the U.S., with an average ARR sitting at about 1.2 million,” adds Cytron.
The third phase of consideration is that someone or an organization has purchased the startup’s product, indicating product market fit and validating proof of concept. The process of selection is aimed to find startups that not only have potential for growth, but demonstrate alignment with the accelerators objectives.
The ‘Art’ Of Introduction
The Founder’s Arena value comes from the way it leverages partnerships for the cohort with some of the existing stakeholders in the ecosystem, connecting them with relevant organizations and where the startup’s solution would be a value add for an organization. One of the areas that can be difficult for a start up in the wealthtech arena is connecting with these established vendors. The Founders Arena solves for this.
“We look to make introductions, in a controlled environment, to between 35 and 50 institutions. Those institutions can be the startup’s ideal customer profile, from an advisor to a wealth manager, or they can also be distribution partners, depending on the product and their go-to-market strategy,” says Cytron.
‘De-risking’ A Startup
The Founders Arena works with its startups to ensure they have the necessary risk management products – D&O insurance, liability, cyber-risk insurance, and other risk coverage appropriate to the solution. The objective is to “de-risk” the startup to solve for upfront costs. In today’s environment, because the more significant the organization that uses may use the solution, the more costly the onboarding process – even being so pricey it can be for an earlier-stage company is sometimes cost prohibitive, unless this even contractually prohibitive, if no risk coverage exists.
Secondly, the Founders Arena identifies what else a startup must have, not just within the product, the team, and support but also for onboarding a significant institution or a larger bank.
“We help them understand and mitigate that long onboarding process when selling to an institution. While you can get buy-in from all the stakeholders, at some point during that contract process, they bring you into a different area- the procurement area.
During Dodd-Frank, many regulations changed relative to vendor risk. And it was not vendor risk just for startups; it was vendor risk across the wealth organization’s entire vendor management. So, vendor management has become incredibly complex, and startups must understand and address what organizations look for when it comes to risk assessment and doing business with a solution provider,” adds Cytron.
In addition to the minimum insurance requirements, startups must be able to get through the procurement process, manage the ‘de-risking’ process, and build partnerships. Derisking may also include other areas of business operations, such as understanding the difference between spending on public relations versus marketing costs.
Another area of de-risking involves the sales process. Many early-stage companies are run by technology founders who are only sometimes sales-oriented. Often, the sales process is outsourced to a third party, which is a risk in itself- a risk of wasting time and money if no revenue is made. Cytron also adds that there are consequences to startups handing sales over to a third party too early.
“They can miss critical feedback and information about why they didn’t meet with a decision-maker, what the organization was asking for, and why the solution didn’t fit. Before an early-stage startup gets some traction, hiring a third party to help with sales execution can be risky,” says Cytron.
Overall, Founders Arena stands out by specializing in accelerating fintech startups focused on wealth management, providing tailored support and resources. Their application process includes 1:1 interviews and evaluation based on industry fit, revenue, and funding, emphasizing the importance of product-market fit and validation through customer purchases. Through community building and networking, the accelerator fosters collaboration between startups and stakeholders, while also leveraging partnerships to mitigate risks and navigate complex processes. Additionally, The Founders Arena prioritizes sales execution strategies and guides startups towards successful exits, showcasing a holistic approach to long-term growth and sustainability in the wealthtech industry.
