How has working at McKinsey in financial services and strategic investments prepared you to be an Investor at Bain Capital Ventures?
My time at McKinsey was invaluable to my investor skill set today. At its core, the work I did at McKinsey is not starkly different from the toolkit needed to be a good investor; it required approaching a problem with both structure and creativity, while leveraging a mix of quantitative and qualitative inputs to come to a decision. More specific to the financial services space, I was fortunate to be staffed on studies with the top 10 banks, pension funds, and asset managers. I formed deep relationships with the people at those companies, and through those relationships, was able to better understand the pain points in their internal and external processes. Upon coming to Bain Capital Ventures and speaking with startups that either sell to banks or compete against them, I’ve been able to offer a unique point of view around how 'mission critical' their solutions would be.
Your role at Bain Capital Ventures (BCV) is to focus on early and growth-stage opportunities in the FinTech space; what changes have you seen over the past year and what do you predict will be the new “trend” within the FinTech space ?
At Bain Capital Ventures, we invest from seed to growth across a range of sectors. I specifically focus on fintech, which we view as four main buckets - payments, lending, investing and insurance. Five to ten years ago, the earliest FinTech companies came onto the scene and did what incumbents (namely, banks) were doing, but better and powered by technology. Now, horizontal, pure payments, lending, investing, and insurance companies are no longer interesting - instead, it's vertically specific software companies that have elements of FinTech baked into them. It's the software companies that are custom-built to serve bridal shops, bakeries, or barber shops and that have payments (or lending, investing, insurance) as one component of the broader offering. We've been looking, vertical by vertical, at software companies that delight their end users with their highly targeted features and monetize off of FinTech elements.
You are currently working with Finix which provides payments infrastructure on which software companies can own, manage, and monetize their own payments stack. Where do you foresee the payments industry moving in the next 8-12 months?
We're incredibly excited to be working with the Finix team.
One trend we have been seeing is this shift of software companies more deeply integrating payments into their core value propositions. Software companies that successfully embed payments capabilities into their core offering are able to capture more value from the payments stream they create, as well as offer a more seamless experience to their customers. Lightspeed POS is the latest pioneer in the space, becoming a payment facilitator and accordingly rolling out its Lightspeed Payments offering this past January. Prior to launching Lightspeed Payments, Lightspeed monetized on payments through the referral model, whereby the company would refer its merchants to third-party payment processors and receive a revenue share (0.25%) of the payment processing economics. With Lightspeed Payments, Lightspeed will now capture substantially more revenue from its customer base. Pricing its solution at 2.6% of the card-processed portion of its customers’ gross transaction volume (GTV), Lightspeed targets netting 0.65% after accounting for network and interchange fees. Through integrating payments, Lightspeed will effectively capture an approximately 2.6 times higher net fee (versus fee received through payments partners). We expect this trend to continue as more software companies realize the impact on monetization that bringing payments in-house offers.
As a member of the Junior Board for Cents Ability Inc., a nonprofit dedicated to educating and empowering high school students to achieve their financial goals; how do you think these type of nonprofits will change the ecosystem of FinTech companies in the future?
The main mission of Cents Ability is to teach high school students the absolute fundamentals of financial literacy - what does it mean to save money towards a goal? What does taking out debt mean for your financial future? What's a credit score?
These are lessons that are largely untaught to high school students (only 17 states require high school students to take a course in personal finance). Luckily, there are many startups now taking on the role of "life vests" in financial literacy, helping to reinforce the lessons Cents Ability teaches. Take one of our portfolio companies Acorns, for example. Acorns helps people save and invest by allowing customers to roundup spare change from everyday purchases and invest these sub-dollar amounts into a portfolio of index funds. I've seen startups helping students to manage their student debt, create budgets, intelligently allocate income across different asset classes, and the like. These FinTech startups have been and will continue to fill in the gaps evident in the broader infrastructure of financial literacy education. The way I see it, Fintech and Cents Ability together are the dream team to help fight financial illiteracy.
You are also on the Young Professionals’ Advisory Board for National Alliance on Mental Illness for New York City; there was recently an article in Business Insider on how startups are prioritizing mental healthcare as one of the forefront of issues. What do you think is a viable answer to mental healthcare issues in the space?
There is certainly no 'one answer' to fixing mental healthcare issues, but a true first step would be to destigmatize the word 'mental illness'. For years, telling a friend, family member, or colleague you have depression or are bipolar has been said in hushed whispers. If people don't talk about mental illness, there will never be progress in the space. As someone who has family ties to mental illness, I find it so exciting to see a cohort of great minds set out to disrupt the mental health space, effectively making mental health something people now feel more comfortable discussing openly.
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