As the Venture Center of Little Rock wrapped up its 2017 VC FinTech Accelerator on Thursday with a four-hour demo day, global technology provider FIS announced that it has partnered with two startups that graduated from last year's inaugural accelerator.
The startups are FundSeeder of Westport, Connecticut, and Hexanika of New York City.
The 12-week accelerator, extended until 2018, is being funded with $500,000 each from FIS of Jacksonville, Florida, and Arkansas discretionary funds. Applications for the summer 2018 program will open on Sept. 20.
Rob Lee, chief product officer for FIS, announced the new partnerships to more than 350 Arkansas and out-of-state professionals who attended Thursday's event, after the two international startups and eight U.S. startups selected for the program pitched their ideas to investors.
Lee told Arkansas Business that FIS made a small investment in and has a distribution partnership with FundSeeder, which offers a data and performance analytics platform for traders designed to democratize the capital allocation process.
Lee declined to disclose the amount FIS is investing in the startup.
Lee said FIS, through its large financial institution division, has a distribution partnership with Hexanika, which offers a regulatory compliance and reporting system that provides data abstraction, normalization and transformation from disparate systems within a bank.
Both companies were selected for FIS' HiPo Network, a collection of high potential, early stage fintech companies that also included 2016 VC Fintech Accelerator graduates Akouba, Bleu, Flutterwave and LumoXchange.
Bear State Financial Inc. of Little Rock has partnered with LumoXchange, which has moved from Atlanta to Little Rock, and Monotto of Atlanta.
Lee said FIS will announce in a few weeks which of this year's graduates would be selected for the HiPo Network. Lee described the network as a continuation of the accelerator that includes mentoring from FIS executives.
"Ideally, that will end up in a distribution agreement or partnership," he said.
FundSeeder CEO Emanuel Balarie said, "Having FIS in our corner gives FundSeeder a real competitive advantage in the space."
FundSeeder COO James Bibbings said, "FIS has provided FundSeeder with great product insights. The financial industry expertise FIS has brought to the table has been invaluable. It’s apparent that they desire to make FundSeeder as successful as possible."
He also said, "Alternatively, FundSeeder’s innovations and overall vision for industry disruption is pushing FIS. As a new company, we have the opportunity and autonomy to think outside the box a bit more than a Fortune 500 might. By challenging the asset management and trading industry paradigm, I believe we are already helping FIS to innovate and bring new value propositions to their clients as well."
Hexanika CEO Yogesh Pandit said his startup has been working on the partnership for a year and was very happy with it. He said the company had already formed a relationship with a large regional bank through its work with FIS.
"At the end of the day, this relationship [with FIS] is going to help the banks to reduce their costs and be more efficient … and that's what we're aiming for, taking this system to more customers across the U.S., and probably, … Europe," he said.
Pandit said FIS would not only connect his startup with more clients but help it navigate formal agreements with banks and provide ongoing support to banks that buy Hexanika's software.
Hexanika has two employees in Little Rock, and Pandit hinted that moving to Arkansas "may happen." Pandit said he is having discussions with the Arkansas Economic Development Commission about any state incentives Hexanika might qualify for.
Before the partnership announcements and demo day festivities, Jack Novielli, executive vice president of strategic product integration for FIS, sat down with Arkansas Business to talk about the accelerator.
He said this year's program introduced participants to more of the global company's clients. About 20 FIS clients and prospective clients, including Bank of the Ozarks Inc. of Little Rock, Bear State Bank of Little Rock, Centennial Bank of Conway, Arvest Bank of Fayetteville and Onebanc of Little Rock, met with them.
Novielli said FIS also benefitted from listening to their clients, as opposed to listening while working on a solution at the same time. He said a company can learn much more about its clients' needs by listening without doing. For FIS, Novielli said, that means doing a better job of providing for its clients' current and evolving needs.
"I think the true value proposition of that is these clients are putting on the table real-life problems that these companies are listening to, maybe with a different ear, as [opposed] to what they anticipated the problem was ...," he said. "Part of this process is better definition of a problem statement for our clients so that the solutions that these individuals are trying to [have them] adopt actually solve something, and are meaningful for our client base."
FIS executives also provided technical assistance to the startups. The goal was to teach them how they could integrate their innovations into FIS' existing technology infrastructure, Novielli said.
He also said one difference in this year's class versus the inaugural class has been that "their maturity has been very demonstrable."
Novielli said both accelerators were successful but more formality and structure was added to this year's program.
He added, "I think what these companies offer FIS is the nimbleness to attack problems that a company the size of FIS may not be able to get to."