One of the more unwelcome approaches AgeWage has had was from an insurer just prior to lock-down. “maybe we should have you as one of ours“, the words still make me bristle six months later.

Most large insurers have  hubs which incubate innovation and act in concert with their early stage venture teams to buy in expertise where it is cheaper. These represent an opportunity for entrepreneurs who lose their nerve and vision to return to the corporate world , usually leaving their backers high and dry. All too often budding businesses get purchased, their Intellectual Property ingested and the husk of the business spat out and discarded.

I am calling this the colonisation of Fin Tech. It is seldom in the interests of consumers as the disruption of the Fin tech is typically in its independence from the mainstream.

The value of remaining independent

The trouble with Fin Techs is with cashflow, they can seldom become self-sufficient and innovate. They rely on inward investment either from Government Grants (Innovate UK being the main conduit) or  a combination of angel investment, private equity and strategic investment. Angels are called angels because they do not seek to take control of the business but allow it to grow organically, private equity tends to demand a quick return on investment while strategic investors threaten the integrity of the founder’s vision by demanding control of where the business is going.

If a business can tough it out till it has strong revenues , it has a much greater chance of meeting its original purpose and most of the Fin techs I come across are characterized by having strong social purpose. Looking at those who are growing fast and they retain their purpose because they remain independent. The financial backers of Pension Bee (State Street) and Smart (L&G, JP Morgan) are not interfering with the strategic direction of those businesses.

The home-grown start up v the incubator

There is another business model, one which I puzzle over, where a Fin Tech is funded from outset by strategic finance and incubated to deliver innovation faster than could be achieved in-house

This is an advert for one of the London “accelerators” – Founder’s Factory. We went through a period in our development where we hopped from accelerator to accelerator, flattered by the attention but going nowhere. It is all too easy to become obsessed by fluffy terms such as ‘innovator” and “entrepreneur” and take your eye off your customer’s ball.

Many of these incubators are simply training grounds for the management consultancies who teach their customers how to be “agile and pivot”. We found ourselves being offered free consultancy in return for acting as crash-test dummies. I have spent some appalling evenings being told how i should develop my business . When I looked at myself after it was like seeing the results of a cheap haircut from an advert for “models wanted”.

One of the weirder side-impacts of COVID-19 is that it has dispersed the congregation of Fin techs from the warehouses of Shoreditch and Hoxton and required them to recreate themselves online. AgeWage for instance has reduced its reliance on shared work-spaces and become an online community stretched over two continents.

Tough as the learning is, finding ourselves independent of a work environment has sped up our rate of innovation , we have hired three new staff , (none of whom I’ve ever met) and our overhead has been slashed. We are currently paying no rent, have no travel expenses, hotel bills and our P11D last month was zero.

Instead , money is being spent on things that benefit our proposition and that means our customers.

The value of boot-strapping

We are , perhaps belatedly, learning the value of self-sufficiency. Glamorous as SEIS/EIS and crowd-funding  are, there comes a time in a business’ progress when the business has to become self-reliant. Over the summer we have had offers of money we have turned down and for good reason.

We can continue the expensive business of being in the FCA sandbox and developing products that help people understand their pensions. But we can only do this because we are now generating revenues from our business customers.

It is extremely tough to make it yourself but it has compensations. One of those compensations is to tell predatory “incubators”, you really don’t need their “help”.

To my 500 investors , I ask you to be patient and test our product!

You can test AgeWage’s retail app here