1Mby1M Virtual Accelerator Investor Forum: With Alexander Ross of Illuminate Financial (Part 1)

Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Alexander Ross was recorded in July 2018.

Alexander Ross, Founder at Illuminate Financial, talks about his firm’s FinTech investment thesis.

Sramana Mitra: Tell us a little bit about your fund and your investing focus. Let’s get to know one another. Let’s introduce you to our audience.

Alexander Ross: Our fund is called Illuminate Financial. We are a financial market technology-focused venture capital fund. We saw a space in >>>

Thought Leaders in Financial Technology: Rob Reid, EVP of Sage Intacct (Part 6)

Sramana Mitra: When you look around at the trends in your space, could you identify some open problems? If you were starting a company today, which problems would you go and solve and build a new company around?

Rob Reid: First of all, all the easy problems in business have been solved. Reflecting a little bit on what we just went through, now is the time to use artificial intelligence to find diamonds in the rough and drill into information that humans couldn’t do on their own. Let me give you an example. >>>

Thought Leaders in Financial Technology: Rob Reid, EVP of Sage Intacct (Part 5)

Rob Reid: I’m going to start with a very mundane area, and then we’ll go all the way to the incredible. Today, a lot of our customers still do some things the old way. If you’re an accounts payable accountant, you’ll probably divide up all the people you’re going to pay alphabetically. You’re going to pay A through M on Wednesdays and N through Z on Thursdays. It’s a very common practice.

We try to inject new thoughts, but that’s what a lot of people still do. With artificial intelligence, the system will be looking at, “With this particular invoice, we can get an additional 10% discount off of the invoice if we pay within 30 days. We’ll be going to that accounts payable clerk on a Monday and say, “Today is the 29^th day. If we go ahead and pay this invoice today, we can save 10%. I’ve >>>

Thought Leaders in Financial Technology: Rob Reid, EVP of Sage Intacct (Part 4)

Sramana Mitra: One of the trends in your industry is, cloud software companies are starting to offer FinTech solutions. I wrote an article about Intuit very recently. It was a few days ago. It’s called “What is Intuit’s most promising long-term opportunity?” This was an analysis of how they’re offering this QuickBooks financing product whereby they’re basically lending money to their constituency of businesses who qualify.

They’re measuring the qualification by looking at the data that they have. It’s a very well thought through strategy. I really like it. I actually think that that could be an enormous business for Intuit going forward. I’ve had conversations with Brad and Alex over there. What is the thinking around this in your shop?

Rob Reid: I agree with you. That is a great opportunity for them since they’re dealing with very small businesses. To get any kind of additional financing, they have to go to banks or credit unions. It’s not as easy for them to get funds. That provides them a great opportunity.

We typically are working with more established firms. They have enough of a revenue stream and balance sheet so that it’s pretty easy for them to get bank loans from the likes of Silicon Valley. We could be dealing with public companies that have gotten funding from an IPO. That, for us, is not as great of an opportunity as it is for somebody like Intuit. It’s not high on our initiative list. We’d be going up against very established relationships.

In Northern California, Silicon Valley Bank really understands software companies and what it takes to finance them. For us to go and try and compete with them would be pulling us away from what we know best. It would start to draw away from the opportunity that we have in front of us. We’re going through a new change.

Nineteen years ago, we went through the client server to cloud trend. Today, we’re going through the same kind of incredible change as we’re going toward machine learning and artificial intelligence. That’s going to provide exponential improvements over the next few years. We’re making heavy investments in how to take our customers to a whole other level of being able to do financial planning. That’s where our focus is for the future.

Sramana Mitra: Can you walk us through a couple of use cases of what kinds of things you’re doing with AI and machine learning in the space?

Rob Reid: We have talked to our customers about where we’re going. We’re still in the development with some of these things, but I will reflect on the kind of direction we’re moving in to be able to exemplify the power of machine learning and AI.

Thought Leaders in Financial Technology: Rob Reid, EVP of Sage Intacct (Part 3)

Sramana Mitra: Let me take that thought process a bit further. Let’s focus on the software vertical which is the most tuned to our audience. How many companies do you cater to? What are the specific trends in that vertical? For example, people are mostly in the software industry doing SaaS companies. There are all these subscription management software companies. How do you play in that space?

Rob Reid: We have over 12,000 customers. We are now part of Sage. We don’t break out our verticals. I can’t answer your specific question there. There are about 18,000 software companies. We do target all of those. What we’ve done from a financial management perspective is look at all the needs of a software company and how we can be the best. >>>

Thought Leaders in Financial Technology: Rob Reid, EVP of Sage Intacct (Part 2)

Rob Reid: At the enterprise level, what you have is Oracle with their enterprise ERP solution, SAP, and Workday. What’s really interesting is that from an overall targeted addressable market, Intuit is going after the largest segment. If you break out Intuit’s overall P&L, they are the market leader from a revenue perspective.

A very small business generates more money than an enterprise. The midmarket also has a vast opportunity from a targeted perspective. In actuality, it’s actually Intuit, NetSuite, and Intacct that have the big opportunity going forward. We’re providing solutions that only big companies used to be able to afford. Now with cloud solutions, what we’re seeing is the deployment of this technology to millions of companies as opposed to the top 5,000. >>>

Thought Leaders in Financial Technology: Rob Reid, EVP of Sage Intacct (Part 1)

Rob was the CEO of Intacct, which Sage has acquired. Intacct is a leader in small business ERP. Read on to learn more about the trends in that space.

Sramana Mitra: Let’s start by introducing our audience to yourself as well as to Sage Intacct.

Rob Reid: Sage Intacct is an ERP solution provider for the midmarket. We have been an innovation leader for the last 10 years and also a customer satisfaction leader in the industry eclipsing all others. It’s pretty interesting. We moved to being a cloud solution as an industry. The industry used to be called SaaS.

We deliver the best technology we possibly can as well as provide white-glove service so that your customers maximize their success >>>

Thought Leaders in Financial Technology: Erich Litch, Chief Revenue Officer, 2Checkout (Part 3)

Erich Litch: As you get to smaller companies, they tend to make company-wide decisions and want simplification. They want something that’s cheap, quick, and easy and doesn’t over complicate their lives so that they can spend most of their time focused on the business. They don’t have the liberty of hiring teams of people to do specific functions. They need a lean operation. They’re right for something like an all-in-one monetization platform.

If you’re doing anywhere from a $100,000 in sales all the way up to $200 million, you might be one of those kinds of businesses which we call small to medium. Then there’s the microsegment. If you have an antivirus solution or some kind of endpoint security product that is applicable >>>