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“Most fintech companies and corporate networks are in Madrid”

Conversation with Andrea Sánchez, Country Head at F10 Spain.  May 2021

Andrea Sánchez is the head of F10 in Spain, the specialized fintech accelerator owned by the Swiss group SIX. SIX bought Bolsas y Mercados Españoles (BME) in June 2020, the largest foreign investment operation  in Spain that year, and just a few months later, in October, it launched F10. The accelerator has two different programs —the incubator and the accelerator itself— and has offices in Madrid and Barcelona

Ms Sánchez welcomes us at their headquarters in Madrid to give us a first-hand account of F10’s launch and her vision of the fintech ecosystem in the city.

 

M.I.A.: F10 is an accelerator owned by the SIX group, which arrived in Spain in June  last year with its takeover bid for Bolsas y Mercados Españoles. Was the opening planned before the acquisition?

A.S.: One of the pillars of SIX is its innovation strategy. They work with many financial institutions and want to bring innovation to these corporations. As a result of the takeover bid for BME, they saw the opportunity to enter the European market- not only because of the success of the operation, but because the fintech and insurtech sectors have been growing a lot in Spain in recent years. Switzerland is not precisely a gateway to Europe. Acquiring BME is a strategic move and helps the F10 community expand

We had always entertained the thought of expanding into Europe. It is a strategic market. Innovation and digital transformation are very strong there, like the startup ecosystem. It was necessary to determine which was an important market for SIX and I believe that everything fell into place when BME was acquired. Growth in Spain, a reference framework for Europe, and a country in which the Government prioritizes  digitization and the attraction of investment in startups was considered vital… We wanted to expand into Europe and we specifically decided to go to Spain. The characteristics of the ecosystem are improving. And we also have the opening to Latin America, which perhaps another country would not have.

M.I.A.: How do you operate? Does SIX have an office in Spain?

A.S.: The only operations that SIX had in Spain were those related to data intelligence. As BME has become part of the SIX Group, SIX considers that Spain is a key market for them. BME’s structure is part of SIX, although at the moment everything operates as before. There are no new offices.

M.I.A.: When did you launch F10?

A.S.: Officially, on October 14, when we organized the launch event, but we started working on the project  in February of last year. We brought different players to the fintech and insurtech sector that today is not so well developed. There are no hubs dedicated to these sectors, rather they have a more general outlook. That was our competitive advantage.

M.I.A.: You have opened in Madrid, Barcelona, Valencia and Bilbao, while in Switzerland and Singapore F10 is only present in one city. Why are you operating in four cities in Spain and in the rest of the countries only in one?

A.S.: Spain is a very diverse country. The regions all have different characteristics and we understood that these cities, in addition to Malaga, which is fast becoming a key player, are poles of innovation. Bilbao is a very technological city, where Industry 4.0 is very much in vogue. In Valencia there has always been a lot of entrepreneurship, most of the accelerators are there. And Barcelona likewise. And Madrid has investment. Most of fintech companies and corporate networks are in Madrid. The main offices are in Madrid and Barcelona; Bilbao and Valencia are, for the moment, satellite offices. The idea is to expand as we grow.

We have different initiatives. Our goal is to generate an ecosystem, provide services to our corporates, which are financial and insurance institutions, and to be able to connect them with startups. Not only nationally, but also internationally. The second initiative is to work in the early stage of startups. We help projects in the conceptualization phase to consolidate and gain scale. We channel our efforts through the accelerator program and the conceptualization program. The accelerator program takes place in Madrid while the incubator program is in Barcelona.

M.I.A.: The process of channeling startup solutions towards what corporations ask for is somewhat different from that of other accelerators. How do you do that?

A.S.: In the incubator program we channel future trends and technologies. In the accelerator program companies are in a moment of disruption. They need to remain relevant. And it has been observed that the rapid advance of technology generates complications: they are dinosaurs that find it difficult to innovate. Well, we try to help make that process more efficient. How? Through collaboration with startups. Our goal is to listen to these corporations, understand what problems they have. I have companies that today need to automate a process, that may need simple solutions that are important to move forward.

We have a team that is dedicated only to interacting with these partners. They are in constant contact. You give me a broadly defined need, and I delve deep, I inquire to really understand what you need. And we have a global scouting team that is in charge of looking for startups. We do that in Madrid, Zurich and Singapore. In Madrid we have sat down with all the corporations to analyze their needs. The idea is to launch a global and simultaneous acceleration program in the three regions. What is the beauty of that? That they probably have needs in Switzerland that they don’t in Spain, but that are interesting to see.

M.I.A.: How do you attract startups?

A.S.: For the accelerator we are looking for consolidated startups with clients who can implement their technology within a bank in the immediate future. This is very important. Because in the end the objective of these programs is not only that projects, pilot tests or new technologies are developed, but that partners see results. We have startups because we know the ecosystem and we will make an appeal to give the opportunity to others.

M.I.A.: What do startups think of the accelerator program? They often want to launch their own product.

A.S.: There are two types of startups: B2B, which generate services for large companies because they analyze a need in the market and create a solution, and B2C: neobanks or fintech companies that seek to compete with current banks. Our focus on acceleration is B2B. They have two ways of getting resources, investment or customers. What do we offer them? The possibility of connecting with the correct person in the institution. Throughout the process we analyze which startups are in the eye of corporates. If five of them are interested in a startup, maybe this is a startup we can invest in

M.I.A.: Are there enough startups like the ones you are looking for in Madrid? How do you see the ecosystem?

A.S.: There are many. But, obviously, one of the factors that Madrid can focus on is attracting international startups. We see that this is an area where a lot of emphasis is being placed. Are there startups? There are indeed, but they may not solve all the problems of our corporates. Our appeal is not only to Madrid, we try to attract startups from all over Europe.

I have already seen several very interesting fintech companies, always more in the B2C branch, B2B has been more limited. Now we see that there are more startups in that area, but there is a problem: investment. There is not much. Therefore, the maturity of startups is limited and they are not always prepared to work with corporate finance. Fostering the ecosystem and moving to the next level, of well-established startups that bring a validated product or service that works, remains a challenge

M.I.A.: How can the City Council promote the hub? What is Madrid missing to attract more fintech startups?

A.S.: Maybe with more promotion. I have talked with people from the public sector in Madrid and what I see is missing is better promotion of Madrid: we are an ecosystem and we want to promote it. The second point is to be able to offer capital to startups. A region can give startups incentives, be it tax credits to set up their company or financing models, which are not so developed today. I think that’s what it would take to attract them. You have to work hard for entrepreneurship. Indeed, millennials and people who have been in corporations for years are looking for a little more risk. That culture is changing, so we have to rethink our model

M.I.A.: How can Madrid compete with other important hubs, such as London?

A.S.:  In investment, for example. For an ecosystem to work you need players, startups and the international component. It is not just about identifying the correct area, but about seeking external knowledge, which brings many benefits. Many startups have consolidated in the United Kingdom because there is investment. Why not position Madrid like this?

M.I.A.: Have the administrations helped you to get settled in? How could they help?

A.S.: We have very strong support from the private sector, so the need has not been so great. And our aim is that, to be the focal point for the fintech sector. Why not look for synergies and opportunities to collaborate and promote initiatives like the fintech cluster? The private sector tends to support this type of initiative much more while the public sector adopts a more observant role, but it is not so much the case that it generates investments or mobilizes projects. They could help us by connecting us with the ecosystem, introducing us to different key actors. The public sector is very important to us, especially in Spain.

M.I.A.: How will the programs be developed? Will startups be present in this coworking space?

A.S.: Good question. The idea is to expand. For obvious reasons, with the pandemic this year the conceptualization of the program has moved online a lot, but the incubator program that we have just launched is based on a hybrid format. We have seen that startups prefer a physical presence rather than an online model. So in Madrid the idea would be to have a physical presence, but with the flexibility of being able to go online. We will take this entire floor to give them space.

M.I.A.: What has the incubator program been like and which startups are most interesting?

A.S.: We have twelve statups, all of them of a high quality. There is a neobank focused on the Z Generation, several for investment, another for expatriates, for whom it is very difficult to transfer money between accounts in several countries… There is another called Flow, of Tunisian origin, aimed at students from North Africa who go to France. These are kids who need the money their parents send them, which can take several days to arrive. The founder, Omar, has created an instant transfer solution. We also have a robo-advisor called Invert for middle class people that want to invest. Most come already with a validated idea. We consolidate or finalize that idea, in addition to connecting them with possible sources of finance. One such startup will announce a financing round shortly. We also have SIX Fintech Ventures, our investment arm. We usually invest: in Zurich, out of fifteen startups we have invested in six ventures.