“Currently the Corporations Act is prohibitive for small startup business looking for funding, which is why we formed the Crowd Funding Institute of Australia (CFIA).”
Insights on Innovation
INTERVIEW with Matthew Pinter
Samuel Tait for I/O
With New Zealand legislating progressively for equity crowdfunding in early 2014 they have leapfrogged Australia with the Abbott Government only now starting to review the system so that that mum and dad investors can participate. With further disruption on the horizon for the financial services and investment industries we sat down with Matthew Pinter, Director of equity crowdfunding platform TMeffect and Chairman of the Crowdfunding Institute of Australia to see how innovation is driving startup investment forward.
I/O: What is your definition of innovation and what is innovation’s role at TMeffect?
Matthew Pinter (MP): Innovation is a mandatory aspect of our issuer review process, in which TMeffect’s equity crowdfunding and Angel investment network relies upon identification of financial ‘unicorns’. These ‘unicorns’ are startups that will surmount the improbable and achieve a series of miracles that disrupt major markets. Our job is to identify and support these types of businesses, which in turn builds investor trust in the startup community. It’s not an easy task, but we are fortunately to have one major advantage; the crowd. In a world where the customer is in control, the crowd enables us in turn to disrupt incumbent financial services providers.
I/O: What does your day-to-day look like as Director at TMeffect?
MP: People often ask is it like shark tank? In a word, No. Firstly we aren’t looking for ratings and working on drop dead offers. The brand TMeffect deliberately invokes teamwork, where we are only paid for success. No two days are the same, and no matter what templates you use the next ‘deal’ isn’t going to fit the last spreadsheet. It’s a challenge you have to love as its own reward.
I/O: How do you approach innovation at TMeffect?
MP: Working in Fintech innovation is a high-risk area. Currently the Corporations Act is prohibitive for small startup business looking for funding, which is why we formed the Crowd Funding Institute of Australia (CFIA). The CFIA has enabled us to get face to face with government and policymakers to work though the issues and help bring our legislation into line with International best practice. It’s a long process as the law is little changed from the age of the telegraph and stagecoach.
I/O: Have you taken on board some of this approach from other industries?
MP: We are very fortunate to work with talented founders all day, which invariably rubs off on our team. The dynamic is infectious and needs to be given a six-day working week.
I/O: What do you see as one of the biggest problems facing TMeffect at the moment?
MP: We are waiting on draft legislation to enable a Crowd Funding Australian Financial Services License akin to the model in New Zealand, USA, the UK and the like. We expect an AFSL will not provide a license to print money, however we are confident our ability to source quality issuers will build brand leadership overtime. Due to hard work, industry support and growing demand we are happy to advise that the Australian government has committed to adoption of an Equity Crowdfunding framework in the spring session of parliament 2015.
I/O: How is innovation helping address this challenge?
MP: Ha, I’m not sure if I can give that much away! Surprisingly our politicians are not that difficult to work with, providing you have done your homework.
I/O: How do you assess whether an initiative is going to work?
MP: This is a serious question, particularly due to the inherently high risk involved in startups. In simple terms, we are assessing the team; are they committed, do they have prior success, is there evidence of grit and determination, how do they respond to adversity, secondly we are assessing the problem they seek to resolve (i.e. is the pitch something different, novel or inventive), then we assess likely competitor response and so on.
I/O: What are the biggest hurdles you face in delivering innovation at TMeffect?
MP: We love innovation, so the hurdles are more about what to change and when rather than if. We have the luxury of working with alongside innovators so it’s not difficult to make change with the smart and dedicate people we have on our team.
I/O: What roll does the customer play in innovation strategy?
MP: We pay a lot of attention to what our customers have to say in the innovation pipeline, be they an issuer, investor or referrer. This can get tricky particularly around problems such as valuation and confidentiality.
We provide value to these customers as matchmaker and work with multiple feedback sources such as incubators, advisors networks and investors. Therefore we need to filter problems with regulatory requirements from problems we can resolve without missing the message. This can be difficult particularly in a digital format.
I/O: What three pieces of advice would you give to businesses to help their innovation projects be successful?
- Really own the issue you are solving. Not just from one perspective, find as many ways to look at it as you can.
- Don’t expect others to agree with your perspective. You need to gather a team of fans/friends/family behind the venture before taking it to the wider audience.
- Expect knock backs. If everyone you ask says you are doing something ‘awesome’ then you are undoubtedly avoiding people who can and will add something to your plans.
I/O: What 3 companies do you admire for innovation?
—END – Insights on Innovation—