Jan 29, 2021

Investing for impact as a woman in fintech

Flourish-Ventures
Fintech
investment
female-leadership
Emmalyn Shaw, Managing Partner...
5 min
Emmalyn Shaw at Flourish Ventures provides us with a personal take on how women can make an impact in fintech investing
Emmalyn Shaw at Flourish Ventures provides us with a personal take on how women can make an impact in fintech investing...

When I co-founded Flourish Ventures, focusing solely on fintech was relatively new to me. I had more than 20 years of experience working with entrepreneurs in the technology industry, but it was the desire to have an impact, to invest in companies that were both mission-driven and commercial, that led me to fintech and to Flourish.  

Looking back, it seems inevitable that my career path led me here. My parents were both first-generation immigrants: my father’s family ran development banks, so the notion of providing banking for the under-served runs deep, and my mother always emphasized the importance of giving back to others. While attending Berkeley, my interest in technology compelled me to seek an internship at Apple, followed by a full-time job as a product manager for a software fintech company to pay my way through college. I found myself wanting to dive deeper into technology, but I was also interested in economics and markets, and that led me to investment banking. I took a job at Morgan Stanley, which at the time had the preeminent technology banking practice. 

At Morgan Stanley, I worked on the AOL—Netscape merger. When the CEO and CFO of Netscape decided to launch their own venture fund, they recruited me to join the $200m fund. My career in venture began on January 1, 2000. It was an early-stage fund, giving me the opportunity to work with incredible entrepreneurs and to gain experience investing across sectors. I wanted to use the skills I’d gained as an investment banker to deploy large amounts of capital and work with more mature businesses, so I expanded my skills into growth investing in 2002. In 2007, I joined Oak Investment Partners because the firm allowed me to blend my desire to invest in both early and late innovators. 

Balancing work with meeting the needs of my family

In my job discussions with Oak, I realized that I needed to be deliberate about how I approached balancing work and family. I was recruited for a Partner role, but at the time, my kids were at a really formative stage. If I took that role, I knew I wouldn’t be as present for them as I wanted to be. I asked for a position as a venture partner where I could sit on boards and lead investments while also having the flexibility to meet the needs of my family. It was a tradeoff, but one that allowed me to be successful as a parent and as a professional. 

At Oak, I worked with a lot of exciting companies, including new media like Huffington Post and Bleacher Report, which showed me the importance of building an audience and retention. I began to wonder if I could take all that skill and knowledge and apply it towards business models and entrepreneurs that were intentional about advancing impact. I was convinced there was a way to reconcile a commitment to social responsibility and positive outcomes with commercial success. I found that while many funds were interested in impact investing, there was a fear that the focus on impact would conflict with the imperative to drive returns. 

Unless it was a dedicated fund with a dual mandate, it was really hard to find a vehicle that could execute impact investing with integrity and at scale—until I found Omidyar Network through which we spun out Flourish Ventures. The idea of using technology to advance financial health and economic resilience resonated with my core. It brought together everything I was passionate about and leveraged my particular skill set. All of the volunteer work I’d done over the years, often with my kids, was focused on diversity, equity and inclusion, as well as creating a level playing field. While working with underrepresented communities, I realized that unless we fundamentally change the underlying systems that keep people in poverty (or prevent them from getting out), there won’t be meaningful change. Philanthropy and grant dollars are not sufficient on their own. One of the best levers for lifting people up is by enabling financial access and creating systemic shifts in the way financial services are offered. For low-to-middle income people around the world, certain technological interventions can unlock financial resilience in a way few other interventions can. 

Building companies that are meaningful, scalable and successful

A commitment to lifting people up while also being commercially viable, particularly in a heavily regulated industry like financial services, is not easy to maintain. It requires entrepreneurs who are hungry and engaged, and that’s what we always look for at Flourish Ventures. We believe that deploying capital, commitment, and innovation can help shift the system. We want to prove that there are companies that are meaningful, scalable, and successful. 

The commitment to diversity and inclusion shouldn’t just extend to the fintech companies we invest in and their users. As a woman of colour in VC, I believe it’s important to ensure that the people who are making the investments and sitting on boards, as well as starting and leading companies, reflect the world we live in. Fintech, in particular, is a space with amazing female leadership, with women like Jo Ann Barefoot of Barefoot Innovation Group, Ellevest co-founder and CEO Sallie Krawcheck, and Kathryn Petralia, Co-Founder and CEO of Kabbage. That representation is an essential part of tackling persistent financial health disparities. As an industry, we have to invest in ensuring equal access to opportunity for people who are traditionally under-represented and do what we can to support them. That support can look like everything from dedicated mentorship to a cultural acceptance of more flexible work arrangements.  

For people working in fintech, and for women in particular, there is so much room for impact and innovation. The more women we bring into the fold, to engage more meaningfully in financial services and industry leadership, the better-positioned fintech will be for its next phase—a phase I hope is one where impact and returns grow together.

This article was contributed by Emmalyn Shaw, Managing Partner, Flourish Ventures 

Photo: Emmalyn Shaw 

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Jun 10, 2021

FIVE things fintechs must do to keep investors onboard

Fintech
Investment
venturecapital
AI
Brandon Rembe, CPO, Envestnet...
5 min
Fintech innovations drew in first-time investors who reshaped the markets. What new advancements will help them continue their rise?

New investors flocked to the stock market during the COVID-19 pandemic. Thirty-eight percent of investors said they had never had a brokerage or similar account before opening one in 2020.

Low or no-fee trading options have helped accelerate the trend – nearly half of new investors said they accessed their account primarily through a mobile app. As FinTechs, how do we create the trust needed to keep new investors in the market and create a fruitful customer experience for them?

The financial industry does a disservice to individual investors if we merely offer tools that focus on making money quickly, an approach that usually backfires. Instead, the surge of interest presents an enormous opportunity for those who want to help more consumers use financial technology to educate them on responsible spending, saving, and investing in order to achieve financial wellness current fintech tools have welcomed individual investors in the door.

Now, it’s time to focus on education and improving their experience going forward. There are several ways those of us in fintech can step up to shape the future of retail investing so that it works better for everyone, starting with the following areas.

Equal access to financial wellness education

Financial health should be available to everyone — but today, not everyone has the educational resources to achieve it. One study shows that only 3.9% of students from low-income schools were required to take a personal finance class. What they aren’t learning in school or from family members, fintech companies can provide on their platforms.

The companies should move from solely offering financial services to a more responsible model of education, advice, and prescriptive choices to help consumers develop better habits and make wiser financial decisions. Not only can they empower consumers and bridge historical wealth divides, but they can also stimulate growth by opening up new consumer segments.

More personalisation

Just as we’ve come to expect that our fitness routines are tailored to our individual bodies, we’re also ready for finance tools that go beyond one-size-fits-all solutions. But only six percent of financial institutions say they’re using the kind of technology that allows them to deliver a deeply personalized experience. Fintech tools need to reflect that financial success looks different for each of us.

For one consumer, it may mean providing guidance on how to pay off student loans early; for another, it may mean prescriptive actions that enable them to stick to a budget for the first time; for a third, it could look like prioritizing environmental, social and governance (ESG) investments, so that her portfolio aligns with her political beliefs.

Now, we are seeing financial technology beginning to meet the demands of personalized finance in a substantial and meaningful way.

The rise of AI-Powered Advice

Big-picture advice and predictive guidance used to be a feature of high-end financial advisory firms — a perk only available to those who could afford it. But thanks to rapid advancements in data analytics and artificial intelligence (AI), that kind of holistic advice is now more accessible than ever. AI-driven robo-advisors can parse many different streams of financial information, delivering customized answers to key questions: Is it time to buy a home, or is it smarter to keep renting? Can I afford to take out another student loan?

Intelligent connectivity powered by AI can anticipate consumers’ needs and next steps, making proactive suggestions that guide them along the path to financial wellbeing. Fintech companies can also help consumers identify when their financial picture becomes too complex for a robo-advisor, and help them find a human financial advisor to meet their needs. 

Focus on financial mental health

New investors are quickly finding that the market can be overwhelming. That’s not surprising, financial anxiety is common and studies show that financial stress can have an impact on mental health for some.

It’s not enough for fintech companies to give retail investors access; they also must provide the guidance and support that help consumers manage their financial well-being. Educational tools can ensure that consumers are well informed about their options.

Predictive analytics can anticipate consumers’ questions, serving them key information and insights before they ask. Features that emphasize a comprehensive notion of financial well-being, rather than short-term wins and losses, can also help ensure that consumers are keeping their eyes on the bigger picture.

Gamification for good

The surge of gamification apps has done an impressive job making investing as engaging as playing a video game or joining a social media platform.

Much of the current use of gamification emphasizes short-term thinking, but there’s also an opportunity to help consumers think more broadly about their overall financial picture. One example is peer benchmarking, a feature that enables help consumers to see how their financial habits compare to those of friends and fellow consumers.

Gamification can also be used to incentivize making smaller, smarter choices — for example, rewarding saving over making an impulse buy.

The future of fintech is about more than just broadening access to the markets. It’s about making sure more individuals have access to the tools that can help improve their financial well-being—in the ways that suit their own circumstances and needs. The potential to act within their own set of individual priorities, with their long-term financial wellness in mind is much more empowering to a consumer than simply relying on short-term, high-risk investments.

About the author: Brandon Rembe is CPO at Envestnet Yodlee. He has over 18 years of experience building high-growth technology, software, and information service companies, Brandon has worked across a broad spectrum of enterprises from early-stage ventures to global businesses.

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