S1 Episode 1: Fintech for the Future

In an era of historically low interest rates, Millennials and Gen-Z have radically shaped their approach to finances and their investing mindset. 

We speak with Rathin Shah, co-founder and CEO of Spenny, and Neel Popat, Founder and CEO of Donut. They join host Entrepreneur First’s co-founder and CEO Matt Clifford to discuss how fintech founders are now designing products to empower the new generation to save and invest in new ways. 

We talk about their journeys into entrepreneurship, why they chose India and US markets respectively, the balance between regulation and innovation in fintech, and why it’s so hard for incumbents to keep up.

Show notes

Career aspirations are changing. Both Rathin and Neel began on traditional career paths before jumping into entrepreneurship. Neel has worked at institutions like Rothschild, American Capital and Graphite Capital while Rathin got his start at JP Morgan Chase, but both displayed a very strong entrepreneurial streak since young.

Social permissioning may hold back entrepreneurs from starting, but environments (family, school, careers) that normalised it gave people the confidence to make the leap. 

Berlin has a great ecosystem for founding: access to European tech talent and a low cost ecosystem, and a culture that encourages non-traditional thinking [5:20]. For Donut’s DeFi protocols, they can be described as oil rigs that have found rich oil sources, and they are the petrol stations that pump up the oil. 

Stablecoins are cryptocurrencies that peg their market value to some external reference such as a currency like the U.S. dollar to offer price stability [10:20]. Donut’s thesis for targeting the US market was due to a bulk of the innovation happening in this market, which drove a lot of demand globally especially with the potential of double digit yields. The decentralised nature of DeFi also meant that its architecture was scalable globally [11:58].  

Spenny started with a general Asia focus but he realised that Fintech needs to be solved along with regulations and investor mindsets that are country-specific [12:20]. In India, only 2.9% of India’s population had only invested, where it was not for the lack of money, but the lack of access and knowledge about these investing instruments. The pre-existing solutions are boring, analog and with 1 in 2 people in India below 25, and there is a growing market for investment and wealth technology which are Millennial and Gen Z-friendly [12:30]. 

Startups need to have a sound regulatory strategy to succeed: The risks of the sector are often around a lack of education for individual investors, how governments are starting to work with startups and the need for startups to constructively work with regulators [15:00]. Neel believes that products need to be uber-transparent about their business model and how their product works [16:00] to inspire trust in users.  

Incumbents are struggling to keep up with innovation, and startups are leading the way: Startups are democratising access to investment products – digital finance products which are not being run or even owned by anyone are replacing relationship managers [21:30]. Startups are winning customers by being relatable and making customers feel seen and heard, and this personalisation inspires trust [22:10]. 

Digital products are normalising investing and making it easier by making it less daunting through increased relatability in the way they engage with consumers.

Both Spenny and Donut have made artificially lowering barriers to investing part of their vision: Rathin made it relatable and funny by using monkeys as part of his pitch. Neel firmly believes in making investing inclusive and getting billions of people into DeFi [27:10]