According to a report by the Technology Association of Georgia, an estimated 120 Fintech firms are either headquartered or have a significant presence in Georgia. The top-10 Georgia based Fintech companies generate an annual revenue of $72 Billion dollars, not including the other 110 companies operating in the state. Joining ASBN today to tell us more about this fast-growing segment is JP James, Chairman & Lead Investor at Octane Systems and the President-elect 2020 of global entrepreneur network, TiE’s Atlanta Chapter.
JP will be the moderator for the Fintech – The Next Five Years track at the upcoming TiECON event for entrepreneurs in Atlanta that will focus on new trends in financial tech industries. Panelists for this track include Suneera Madhani and Jeremy Wing.
TieCON Atlanta 2018 takes place Friday, September 28, 2018 at The Hotel at Avalon in Alpharetta. For more information and registration visit https://atlanta.tie.org/tieconatl/
Use the promo code: ASBN to save $20 on your registration.
Jim Fitzpatrick: Welcome to the Atlanta Small Business Show. I’m your host Jim Fitzpatrick. According to a report by the Technology Association of Georgia, an estimated 120 fintech firms are either headquartered or have a significant presence in Georgia. The top ten Georgia-based fintech companies generate an annual revenue of 72 billion, with a B, dollars, not including the other 110 companies operating in the state. Joining ASBN today to tell us more about this fast growing segment is J.P. James, Chairman and Lead Investor at Octane Systems and the 2020 President-Elect of TiE Atlanta. Welcome to ASBN.
JP James: Thank you.
Jim Fitzpatrick: Yeah, so glad that you’re here. For the people that are watching right now, talk to us about what fintech is.
JP James: The way to think about fintech is you don’t have to do things the old way. That’s really how I try to describe it. For example, if you used to go to a teller and go to the bank, it’s all on your phone now. Right? You can transfer money, you can move money, you can process money, send it around the world almost instantaneously for no cost.
Jim Fitzpatrick: That’s right.
JP James: Instantly-
Jim Fitzpatrick: I have two teenagers that taught me how to use that app very quickly, so that I could transfer money to their account.
JP James: And there’s so many, right?
Jim Fitzpatrick: Yeah, there are.
JP James: You’ve got Stripe, you’ve got Square, you’ve got PayPal-
Jim Fitzpatrick: Venmo.
JP James: … Venmo. And that has just grown exponentially because, one, there’s the internet. It’s been around for a couple days now.
Jim Fitzpatrick: Yeah, that’s right. I think it’s going to stay.
JP James: The cost to do things is not the same. We’re talking like thousand-fold decrease to try to do the same thing that you’d want to do 20 years ago.
Jim Fitzpatrick: Sure.
JP James: This wave has just skyrocketed, where before it was an amazing thing to get a direct deposit in your bank account from your employer.
Jim Fitzpatrick: Yeah, for sure.
JP James: Now, that’s automatic, and now you can say, “Hey, I want to get it on Wednesday, not on Friday.” That’s technology that can basically create this massive convenience for the consumer and it’s a big problem for the banking sector. The traditional old format of how money moves around the world is getting deeply challenged because of fintech, which is disrupting almost overnight.
Jim Fitzpatrick: Why Georgia? And why has this become the capital of fintech companies?
JP James: Atlanta is a mecca, and I will give notable shouts out to Silicon Valley and to New York, but Atlanta has got a unique history whenever it comes to finance and fintech. We’ve been here for a while. It just didn’t happen within the last couple of years, it’s been like 30, 40 years. Why?
JP James: The modem, Hayes, the Hayes modem, the first modem was here in Atlanta, which ended up becoming Scientific Atlanta and just creating this infrastructure of technology for movement of data. Then you had the big payment processors that came here, and now there’s the biggest payment processor in the entire world, Globalpayments, is located here in Atlanta. And that’s created a hub and spoke system of all this explosion of new fintech companies, and then you have all these other adjacent companies like logistics companies. You wouldn’t think of logistics as fintech.
Jim Fitzpatrick: No.
JP James: But think about the number of transactions that get made, whether it’s through Amazon delivering packages vis a vis UPS, well that creates a system where logistics and money and capital move together and you have a fintech hub. You’ve got a lot of these big companies that are based here in Atlanta, but then you have this great surrounding ecosystem, both with the school systems, like Georgia Tech-
Jim Fitzpatrick: Yeah, that’s for sure.
JP James: … being a major engineering hub of getting great quality talent. And Atlanta is so cheap. You travel around the entire country to big technology marketplaces like Silicon Valley and like New York. Forget trying to live in Manhattan. But there is this massive explosion of entrepreneurial talent that’s being fostered because of the cost basis, but then also having the payment processors and all these other adjacent companies being able to reinvest back into the community.
Jim Fitzpatrick: Right. You’re the President-Elect of TiE Atlanta Chapter in 2020. Tell us about what TiE is and then what your role will be as president.
JP James: TiE Atlanta is … They used to call it the best kept secret of Atlanta. TiE’s been actually here in Atlanta for 20 years. The global organization was started 25 years ago by some multi-billionaire Silicon Valley entrepreneurs who wanted to really give back to the community, foster entrepreneurship, mentorship, in investing in these companies, both on a youth entrepreneurship side and then as you grow your company to help support you along the way.
Jim Fitzpatrick: Okay.
JP James: More recently, myself and our current president Paul Lopez, we got together with one of our other founding members to create TiE Atlanta Angels, which is one of the committees that I kind of run. And in less than one year, we’ve already deployed 1.9 million into early stage investment companies.
Jim Fitzpatrick: And what’s the definition of early stage? Is it a company that sees it by time, or is it by revenue? How does one know they’re early stage?
JP James: I wish I could tell you a very specific answer, but they’ve been able to get to the marketplace with whatever their widget or product or services is, and they’re starting to show scale, so they’re growing at a consistent rate, but they need more capital to continue that growth rate.
Jim Fitzpatrick: Right.
JP James: For the entrepreneur, it’s a very entrepreneurial, friendly environment. If there’s any investors out there, or people who are potentially thinking about investing, but just haven’t done it before, it’s a great welcoming environment to kind of teach you how to invest, and really, there’s no barrier to entry. There’s a small donation to the foundation and there’s no fees going forward. It’s really about building community and there’s a commitment though. That’s the big difference for entrepreneurs.
JP James: When there’s a person who wants to be an angel, they’re going to commit a soft $10,000 that they’re going to invest in a year. 12 months later, I’m going to be calling them if they haven’t invested and say, “Hey”-
Jim Fitzpatrick: You’re out of the club.
JP James: ” … we’ve cleared all these deals. They’re real companies. They’re great companies. Not really a lot of excuses, because we want you to invest 20 companies over several years, not that one moon shot deal.” It’s a win/win from both side.
Jim Fitzpatrick: Sure.
JP James: As an investor, you’re looking at a bunch of great fantastic filtered deals that have some runway and are growing and need scale. On the flip side, as an entrepreneur, you know these people have to invest. They’re looking actively to invest, and they’re not just pulling your chain and just leading you on for months at a time.
Jim Fitzpatrick: Right, right. On September 28th, you’re sponsoring and monitoring a fintech panel at TiE’s annual TiECon conference in Alpharetta. Tell us about this panel and what attendees will take away from it.
JP James: I have the great privilege of moderating this panel. One of my companies, which is a fintech company, called Octane Systems, we’re an automated platform for consumers to get loans. Not only in the US, but we’re expanding globally from that standpoint. The question that I’m going to be asking and focusing on is, “What is the future of fintech in the next five years?” Really, both on understanding what’s going on, but where you, as a potential investor or entrepreneur, should build a company in that space, or where should you be investing today to get the returns over the next five years, and what are some of the pitfalls in that process?
JP James: I mean, we’re going to be going through an election cycle, potentially two election cycles over the next five, six years, so you want to kind of understand what are the dynamics of the economy, what happens in a recession, but cross-correlate with it with a great investment opportunity in the fintech space and how to navigate it.
JP James: Our panel are industry veterans in fintech. When I say veterans, pretty much anybody who’s been in the space for more than five years, who’s been successful on this leading edge technology is a veteran.
Jim Fitzpatrick: Okay. [crosstalk 00:08:05] five years.
JP James: Yeah, unfortunately the technology’s moving so fast, that five years is honestly ancient history. Being able to figure out what’s going to happen in the next five years is very difficult, but finding the people who are in it and living it and seeing the application of those technologies, all those buzz words like machine learning, and what is fintech, and what’s crypto-currency? Those kind of questions, where you’re like, “I’ve heard these words, how can I actually build a company or invest in the space and not lose a lot of money, but be able to get a great return?” That’s kind of what the focus of the panel’s going to be.
Jim Fitzpatrick: Awesome. Well, we look forward to it. We’re also going to be the media sponsor of that, so we’ll be out there doing interviews and I’m sure we’ll catch up with you, if you’ve got some time, to get you back on the show.
JP James: Absolutely.
Jim Fitzpatrick: We would love it. That’s September 28th, just right around the corner. But certainly check it out online. We’ll show their website here on the screen, and J.P. James, I want to thank you so much for joining us on the Atlanta Small Business Show.
JP James: Thank you so much.
Jim Fitzpatrick: It’s been very enlightening, and I’m going to run out now open up a fintech company.
JP James: Please, go ahead.
Jim Fitzpatrick: Thanks so much.