Founder and MD of (re)insurance platform Slipcase gives an insight into the reality behind tech startup's in the Financial Services world:
I joined the London Insurance Market from University in late 2009 with low expectations of an industry that is not renowned for being dynamic or remarkable, and was pleasantly surprised to find it was both.
I was a London Market Broker, negotiating insurance and reinsurance contracts on international property accounts, ranging from Steel Mills in Europe, to Mines in Africa and Chicken Farms in Jamaica. The variety was incredible, the numbers we dealt with were enormous, and the responsibility to build valuable relationships meant a lot of entertaining. As amazing as this all was, I was surprised by the lack of knowledge that I had in what I 'specialised' in and wanted to come up with a solution.
In 2012, Social Networks were cropping up in various walks of social life, and emerging in business. I over-ambitiously presumed that a closed social network, just for this specific industry, could not only manage all of the necessary information and news requirements, but business networks, industry events and groups, discussions, content interaction etc. My head was so convinced by the concept, I just could not see how this wasn't going to be an overnight success.
I got an off the shelf, GoDaddy-type social network off the ground after spending a week piecing it together and customizing it for the industry and setting up the $20 a month direct debit. Because of my employer's contractual demands on intellectual Property, I handed in my resignation to get the site off the ground as soon as I had received an annual bonus that I presumed would be more than enough to get me to revenue generation - it lasted 3 weeks.
Although the platform grew in its early stages from pestering the contacts I had made from my 2 years in the industry - it became clear that the networking and social elements of the site were petering off after an active start, I grew more and more concerned with the take up of these functionalities, however still naively persuaded myself that this was just a matter of time, that after 10,000 hours the critical mass will come and the site will become what I had envisioned it to be... just keep trucking and everything will be fine.
I read a book that I kept on hearing about, called 'The Lean Start Up' by Eric Ries. Aside from the intricacies of Lean UX and Lean processes, the key message I took was that I had to focus on what was working, and stop being so stubborn with the stuff that wasn't.
Fast Learning and adaptation
Around 12 months into the venture, and with the need to change, our web provider had created a new version of the platform; a sort of off-the-shelf Twitter/Facebook hybrid with options to remove most of the social elements. A 48-hour binge to transfer users over and build the relevant pages and we were now MySlipcase V2 - Slipcase
It was at this stage that we accelerated our growth and started to establish a foothold in the industry. Shortly after that the first cheque came in and not from where we expected it - an American company interested in sponsoring our weekly emails. The cheque was received the same week as the business account ran completely dry; 13 months from day 1, slightly longer than initially planned!
If it wasn't for a lot of sleepless nights, borrowed money, vegetable soups and generous friends this would have been a lot sooner and the story would stop here.
At this time, I managed to secure a new investor/director who I had been courting from day 1 - Alex Northcott, founder of the highly successful Gorkana.com PR database and more recently Roxhill.com. He had sold a couple of years previously and with various overlaps with what I was trying to do, had always been my target and dream investor... this felt like a huge step.
We moved out of the Starbucks on Leadenhall Street and into the Google Campus by Old Street - a TechHub for 2nd stage start-ups. Over the next 12 months, Slipcase generated enough money to pay off debts, look after itself, myself and my first employee who managed the content on the platform. Following a great start to the 2015 year and the introduction of some of the industry's most established organisations as clients, we were now in a financially strong enough position to look at building our first bespoke web platform, around what we had learned our users actually wanted.
Steep learning curves and disaster control
With an unusually healthy looking bank account, I began talks with a software company that I had built a strong relationship with over the preceding year. After a valuation from KPMG, some fantastic advice from a Business Coach that was consulting me at the time, and a couple of months' negotiation - we agreed a deal that would consist of Slipcase parting with the money we had saved in the bank, and 10% of equity in exchange for GBP 1m in software services over the coming years, including a new website and dedicated mobile app on iOS and Android devices. This felt like the dream was at last really materialising.
Without delving in to too much unnecessary detail - after a dreamy month or so with an amazing team of people (predominantly free-lance specialists) putting together the wireframes for the new site and 2 months before my wedding - I was called by the MD of the software company to inform me that their business was being put into administration, liquidated, shut down. All work on the site was to cease immediately.
Fortunately, and most importantly we were able to recoup our equity, however lost the majority of the cash that we had paid up front, which was effectively all of the money, net of costs that the site was able to generate to that date. After spending some time understanding what was actually happening, the realisation struck like a sledgehammer and we had to find a solution ASAP.
With help from my Directors & Business Coach, we were able to negotiate a new, identical deal with a B2B specialist software company. The payment however was agreed to be paid in installments, a close to fatal lesson I had learned from the previous fiasco.
'Everything happens for a reason' is something that your Mum tells you when you fail an exam, when your girlfriend runs off with someone else, you don't get your dream job, etc. But in every possible way, this is how we were left feeling after the dust had settled. During liquidation meetings it became evident that all had not been well at the original software company for quite some time before the deal had been done. Although their designs were fantastic, their products were faulty, their financial accounts were not how they seemed and they were not B2B specialists.
So putting aside the money lost, the lessons learnt and the disaster we narrowly avoided, we have come out the other end in a far stronger position than we ever could have expected: The dream desktop site, a back end technical team, a mobile app launching in September, a growing Slipcase team of digital media experts, an expanding client base of corporate subscribers, a B2B specialist CTO and I suppose most importantly, valuable experience.
We still have a long way to go, but 4 years in and having scrimped, absorbed expert opinions, pivoted and avoided collapse, we have established a solid foundation for the next chapter in our growth - a platform that is essentially the outcome of our experiences, not the product of my imagination.