Institutional (Capital Markets) fintech start-ups are often ignored as the big bucks head into direct-to-consumer lending and wealth management start-ups. However it deserves closer attention as those start-ups tend to prove their value very quickly whereas the jury could still be out on consumer fintech.
That’s because while other industries embrace the “fail fast” mentality, in financial markets and trading, fail fast thrives. The ROI of new innovations is often instantly quantifiable. When Anova Technologies built a laser and microwave infrastructure to carry data over airwaves between Chicago and Aurora, they knew the value of faster data – and so did all the trading firms that relied on being faster than everyone else. Once Anova demonstrated it could send data milliseconds faster, any firm whose competitive edge was speed had to subscribe. Other startups mine social networks to monitor for fast-breaking news from market influencers. Of the millions of people tweeting about stocks, Social Market Analytics identified a universe of 55,000 influencers, offering its tools to hedge funds and institutions to gauge market sentiment on which to base algorithmic trades.