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HOW TO RAISE CAPITAL DURING A CRISIS

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By Rick Brar, CEO of Brains Bioceutical

 

The ongoing Covid-19 pandemic has had a devastating impact on the global economy and financial markets will take a long time to recover. In fact, the International Monetary Fund (IMF) has reported that the ongoing crisis has triggered the worst economic slump since the Great Depression and have predicted resultant losses of up to $9 trillion in global GDP figures over the next two years.

Whilst raising capital for a new business venture has never been easy, securing investment will undoubtedly seem like a near impossible task amid such turbulent and unpredictable market conditions.

However, despite widespread fear that venture-capitalists would postpone any new investment deals until the current economic conditions improve, deal activity only dropped by 6 percent in the first half of 2020, compared with the previous year.

One explanation for sustained investor interest is that many market leaders have been born out of a recession. For example, Apple and Amazon launched during the dot-com bubble burst and Uber, Airbnb and Slack all launched during the 2008 recession.

However, whilst this narrative offers hope, investors have still become extremely wary of the pandemic’s economic implications. Therefore, entrepreneurs and business leaders alike will need to continue to quickly react and adapt to changing market conditions, and adjust how they approach raising capital, if they are to be successful.

 

Rick Brar

Make it personal

For most companies, getting investors to back your vision can be challenging. For businesses in emerging industries, it can be particularly hard. Without such an established track record on sector returns, for most investors, it is easier to move on to the next opportunity, rather than taking the time to assess risk and rewards. The key in being able to capture the interest of a potential investor comes from your ability to connect with the individual you are pitching to on a personal level.

However, amid the current shift to doing business in a Covid-19 world, making a personal connection with someone you’ve never met can be extremely difficult. It is without a doubt that Zoom and phone calls have opened up new opportunities, but without gaining the trust of the person on the other end, you’ll never really have their full attention. Therefore, before you jump onto a call with a potential investor, make sure you’ve done your research and know who you are really talking to. Pitch on a personal level, get to know them and learn what is important to them.

 

Consider your communication strategies

During periods of market downturn, it can be all too easy to get caught up in the hectic pace business demands and hold back on communicating with potential investors, especially out of fear of ‘rocking the boat’. However, during a crisis, it is especially important to communicate and be open with your contacts.

At the end of the day, we are all navigating the ongoing pandemic together. Remember that there are real people on the other side of the screen and that continued communication during the most uncertain times will help to strengthen your relationships and pave a way forward.

 

Embrace the rise of the digital network

With travel on pause, and social distancing set to stay for the foreseeable future, entrepreneurs and business leaders must develop their digital networks if they are serious about raising capital.

Whilst getting in front of investors may now require a more creative approach, the monumental shift online has opened up the opportunity to reach out to a much wider range of investors, irrespective of their locality. In order to have an edge over your competitors, establish an online relationship management system to ensure you are communicating effectively with potential investors and also use a data room to safeguard information. This extra step will not only help to protect you from any digital breaches, but it will also demonstrate to investors that you are proactive and well equipped to operate in this new digital era.

 

Prioritize the Covid-19 pivot

Before you approach any potential investors, it is crucial that you review the viability of your business model in the context of the current economic climate. Is your business still profitable amid the Covid-19 pandemic? Is it still scalable and what makes your business resilient?

Any serious investors will want to know how you are responding and adapting to the ongoing crisis. Be prepared to discuss what’s working – and what isn’t – but more importantly, demonstrate that you understand the current situation and show that you are making tactical adjustments and pivoting your business accordingly.

 

Assess & restructure your financial models

During uncertain times, it is important to be open to negotiations when it comes to valuations. Instead of setting your sights on an extremely high figure which may deter investors, consider setting a more achievable valuation. This will not only help to gain potential investors trust, but it may also help make your funding round more attractive.

Despite the ongoing market upheaval there are a number of industries that still going from strength to strength, for example; CBD and health & fitness brands to e-commerce disruptors and education platforms. Whilst there are opportunities to thrive, the key to success, is being honest with yourself. Is now the right time for your company to raise capital? If so, make sure to build in buffers to protect your business during these uncertain times. For example, investors may need more time between funding rounds and so adapt your financial models accordingly. Demonstrating to investors that you are on top of these considerations will go a long way.

 

Looking forward  

It is without a doubt that these are challenging times for all businesses and the processes to secure investment have changed significantly over the past 10 months. However, if you can identify mutually beneficial opportunities and demonstrate to investors that your business is well-positioned amid the current market conditions, you can still successfully raise capital.

If anything, periods of crisis create an opportunity to accelerate change at a much quicker pace. Now it will be interesting to see which entrepreneurs and business leaders adapt best to these changing market conditions and come out of this period with a renewed focus and strategy to succeed in the long term.

 

Rick Brar is the CEO of Brains Bioceutical. The company produces natural CBD as an Active Pharmaceutical Ingredient (API) for pharmaceutical applications, research & development and clinical trials. Brains Bioceutical are currently going through a £30 million funding round.

 

Finance

astrantiaPay Selects SaaScada to Enrich Swiss Landscape of Business Payments and Fill Market Gap

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Swiss financial firm, astrantiaPay, to use SaaScada’s cloud-native core banking engine to simplify cross-border payments for SMEs and facilitate international trade and services across the old and new economies

 Cloud-native core banking engine, SaaScada, today announced it was selected by astrantiaPay to launch a Swiss point of contact for international businesses looking to open and run corporate bank accounts in Switzerland. Once regulatory approval is in place, astrantiaPay will provide mission-critical payment services to sophisticated Swiss, European, and global companies.

“Promoting SMEs is high on the agenda of policymakers, but the reality is very different when dealing directly with banks. In fact, financial institutions often show little or no appetite for low-margin, labour-intensive company accounts with regular cross-border payments”, explains Lukas Wissner, CEO of astrantiaPay. “As a result, opening and maintaining corporate bank accounts can become a complex and costly procedure, posing a real challenge for Swiss and European start-ups and established businesses. This can hinder growth, and sometimes even threaten a company’s existence. Ultimately, corporate bank accounts with a foreign nexus are an underserved niche segment in the Swiss financial ecosystem which is historically dominated by asset managers and private banking.”

SaaScada is an industry-proven core banking system that unlocks trapped customer value, mitigates risk, and drives real-time data insights. It was founded from a desire to provide first-class financial services capabilities for everyone. SaaScada’s configurable product features and transactional ledgers can be connected to any payment scheme, gateway, channel, or FX provider. Its event-driven architecture will provide astrantiaPay with a real-time stream of events for each company account.

“SaaScada’s experience and deep understanding of how to execute a bank in the Swiss financial and regulatory landscape convinced us,” concludes Lukas Wissner. “Looking back, SaaScada was the right starting point on our integration journey, as its experienced team of programmers readily enable open API connections to virtually any data source and endpoint; be it software tools for onboarding, client relationship management (CRM) and transaction monitoring (TM), or accounting systems, payment aggregators and international correspondent banks. Leveraging SaaScada’s proficiency and infrastructure has helped us create an organic whole.”

“Lukas Wissner and the team at astrantiaPay have a distinct vision to make bank account opening simpler for international SMEs,” explains Nelson Wootton, Co-Founder and CEO at SaaScada. “SaaScada is delighted to support astrantiaPay in driving financial inclusivity for its customers, solving complex compliance challenges, and enabling SMEs to thrive.”

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Banking

How Biometric Payments Are Tackling Financial Exclusion

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By Catharina Eklof, CCO, IDEX Biometrics

We are moving closer to a cashless society: 89% of payments in the UK are contactless and, globally, contactless payment transaction values are set to surpass $10 trillion by 2027. Ease, convenience, security, and inclusion have accelerated the transition away from cash. However, many of today’s current payment solutions are leaving entire cross sections of society behind: including the most vulnerable, underserved, and unbanked populations.

Developments in the payment sector over the past decade still aren’t a perfect fit for all. Those suffering from dementia, literacy challenges, or impaired vision can find current payment methods – with a PIN to remember – extremely challenging. Financial inclusion requires us to make payments accessible to all demographics. Though the financially excluded represent minorities, they account for an estimated 1.7 billion people – almost a third of adults globally.

Enabled by huge advances in technology, our evolving social dialogue has become accelerated and unfettered, on a global scale. It is critical to harness technology as a force for dynamic economic improvement: democratizing access to banking and payments. As such, we need to look beyond mobile wallets or digital payments and support those in need of easier access to payment and fintech solutions. A more inclusive form of payment technology is essential.

Catharina Eklof

 

Personal Identity as the New Pin Code

Many communities remain vulnerable or underserved by the functionality of traditional payment solutions such as bank cards. These products are, at their core, only linked to the owner by way of name and signature, offering limited security and protection. With contactless payments, no link whatsoever is required to a card for payment.

In an increasingly contactless society, fraud and digital security are growing concerns. Credit and debit cards can be used by anyone, and card readers don’t understand if cards have been apprehended illegally. Vulnerable groups may also struggle to input their credentials into what can be, for some, a complex system. Empowering those vulnerable groups therefore means providing them with the independence to access payments with greater ease.

Biometric payment cards play a significant role in bridging the gap between the financially underserved and the financially included. Simple and secure financial authentication, like facial or fingerprint recognition, allow payments to become about who a person is rather than what they know or remember. If individuals can be personally linked to a payment card via biometrics, it can address the significant 1.1 billion people worldwide who are currently without official government identification or access to it. In Nigeria alone, 149 million individuals lack the legal means to evidence their identity, while in South Africa, 12 million individuals are excluded from the country’s formal identity system.

Fingerprint authentication has the added benefit of optimizing security, in that it requires the individual to opt into a purchase, avoiding any issues of unauthorized or unintentional payments from having a reader placed near the card owner’s face. This provides increased independence for the blind and visually impaired, who account for an estimated 2.2 billion people globally, as it allows for seamless payment authentication without sensory barriers. Similarly, biometric smart cards can be transformative for more than 55 million people living with dementia and Alzheimer’s, as it enables access to payment without the difficulty of remembering passcodes.

Literacy is also a little talked about hurdle to inclusion. Globally, there are 750 million “functionally illiterate” individuals struggling to use and understand financial products. Across all levels of education, biometric authentication is a universally inclusive concept. It is easy to communicate and understand that one’s fingerprint is inherent to their identity, and can act as a form of verification. Biometric smart cards facilitate and secure payments with ease by simply requiring their fingerprint to instantly authenticate their own card.

 

Pushing on With Progress

Even the most reluctant individuals are likely to have succumbed to contactless payments and some form of digitized banking in recent times. This will have the positive impact of making the needed transition to biometrics more seamless. Using fingerprints or facial recognition to unlock phones or access apps is not unusual. If anything, they have been convenient and comforting additions to the surge of tech innovations over the last couple of decades. There is a relief in knowing that these portals are being secured by methods that are almost impossible to replicate.

It is a breakthrough that financial players and governments in the world’s most developed countries still need to catch up with, as emerging economies have already capitalized on biometrics’ capabilities for almost a decade now. In India, for example, internal fraud and leakage from pension payments dropped by 47 percent after transitioning from cash to biometric smart cards. Because the solution bypasses the need for prior credit ratings or credentials, the country has also been able to catalyze safe online banking among previously unbanked adults since biometrics’ introduction in 2014.

Meanwhile, in Pakistan, the total number of mobile wallet accounts tripled from 5 to 15 million in 2015, with an estimated 50 percent of new registered mobile wallet accounts opened using biometric authentication. This was a result of Pakistan’s National Database and Registration Authority’s (NADRA’s) effort of collecting biometric information to allow for more convenient and democratic account opening processes.

Many around the world have been marginalized by both the pace of change in banking and the solutions that have, to this point, been created to accommodate such change. With the mass adoption of biometric smart cards, the same benefits seen in India could be realized on a global scale. If we take on the opportunity in front of us – promoting solutions like biometric smart cards to increase accessibility to the global economy – we will foster a digitally-focused, equitable and inclusive society. This doesn’t just mean ease and convenience, but also security for all and financial inclusion of those who have been left out of digital evolution, until now.

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