Automation, digitalization and artificial intelligence are having a massive impact on business and societies.
As a consequence of this shift of paradigm, a brand new study from Grow VC Group argues, we see the rise of protectionism.
So, how to make the most of these turbulent times?
The current debate is increasingly becoming more intense and complex and in order to better figure out what’s going on we decided to meet, in the aftermath of Barcelona’s Mobile World Congress 2017, Jouko Ahvenainen, a top 100 digital business influencers in the world, co-founder of Grow VC Group and an advisor for many governments worldwide.
Oliver*: Hi Jouko and thank you for joining us.
Jouko: Hi Oliver*. Thank you.
O*: We are living in time of massive changes experiencing a clash between two opposite movements: technological disruption, more interconnection but also a proper political turmoil caused by the rise of populist movements. What’s the role of FinTech in such an environment?
J: It is a very difficult question to answer as there are many different contrasting forces as you mentioned. From a financial perspective, since 2008 many governments have been regulating to increase their level control on the system. By contrast, many others have been regulating in order to open new opportunities for new players which could challenge the traditional finance sector.
For example, in the US there are very mixed opinions on what President Trump can mean to FinTech. Many believe President Trump will mean less regulation thing which will open new opportunities for new players. However, at the same time others think less regulation will mean more power for traditional players.
I would say that FinTech forces are making the world more global. Moreover, as we pointed out in our report, FinTech is creating more complex networks which are more difficult to control by governments.
O*: How the future will look like?
J: Generally speaking, the future is a combination of many factors. I think that for certain aspects it is not so difficult to predict what it is going to happen. From my perspective what is difficult to predict it is timing.
O*: What do you mean?
J: Let’s consider the finance industry right now. I believe that new kind of finance solutions are coming. There are similarities with what happened with the retail industry and the e-commerce including companies like e-Bay or Amazon.
Nowadays, traditional finance companies are losing their power while new services are emerging. The difficult question to answer is how long it will take.
O*: Does it depends on politics?
J: Politics and regulation, of course, have an impact on this. In this respect, another element to take into consideration is the fact that power is distributed in new ways as the market will be more fragmented but, at the same time, those fragments will need to be interconnected.
O*: Are there other factors to be considered to predict the future?
J: Yes, data, data analytics and AI are new areas that will offer many new tools and also empower customers in financial services, so they create one disruption for the market, and will have an impact on the whole sector and can challenge the position of the traditional players.
O*: You launched the first equity crowdfunding platform in the history of alternative finance. How the future of crowdfunding will look like?
J: First of all we have to talk about the definition of crowdfunding as it is not so simple as it could seem. I would start off saying that there are different marketplaces with regard to the lifecycle of a company. To me, the market will go through an increased level of specialization and possibly there will be different marketplaces for different stages of companies. But…
J: I think about the fact that while for growing companies it is easier to make an investment decision supported by the history of that business, revenues, and financials, for early stage companies the challenge is related to the fact that it is a guess most of the time based on hope and faith. Moreover, the impossibility to have liquid secondary markets, because the evaluation of such companies is so difficult to be made, as well as due to the dimension of investments which is generally small, making business with crowdfunding is quite problematic. Bigger players in the market know pretty well what I am saying.
Startup equity crowdfunding alone is not so great business.
O*: You mean the likes of Crowdcube and Seedrs…
J: To my view, equity crowdfunding could play a more strategic role with other services like accelerators in order to support their own entrepreneurial project as well as the entrepreneurial projects they support, or some other financial or professional services to startups, i.e. startup crowdfunding can be more like one tool in a service set than stand-alone business.
O*: However, crowdfunding it is not just about how to support the lifecyle of a company. Any interesting out there?
J: Right now, I think that the most interesting segment to look at is real estate crowdfunding. This could be a remarkable business in the short term.
O*: So, what are your plans for Grow VC Group?
J: Crowdfunding will play a small role in our future plans. Definitely we see a lot of opportunities in the FinTech area, offering enable technology and finance models to all kind of financial services. Another important business segment for us is Data as a whole. I believe that there will be a lot of new data services. For example, we are working with partners to develop tools to analyse real estate investments both for big millionaire investors as well as for small investors. For us it is really important to provide tools through which people can get control of their investment data. I think that the most promising opportunities will emerge from the market. For instance, how consumer will take back control of their data. Nowadays, companies spanning from TLC to the internet collect and use our data to carry out their business but consumers do not have still access to their data.
Consumers will eventually ask for more tools to take back control of their data as it is unfair that others own your own data but you. Blockchain is starting to help people in this respect.