Simon Wilson-Taylor, head of EBS Institutional, reflected at Forex Network Chicago on the challenges that he faced as the founder and head of a fintech firm, Molten Markets, prior to being acquired by EBS.
“The first thing that I would say to any budding entrepreneurs out there is that building something, building a product, is the fun part and the easy part. Even finding clients is relatively easy,” said Wilson-Taylor, before adding: “The really difficult part that’s kind of out of your control is: how are my clients going to react? How is the market going to react? What are my legal, regulatory and insurance obstacles?”
Going through the different business lines that Molten Markets operated, he explained that consultancy is a good way for fintech firms to generate some revenue and pay some bills as the barriers to entry are not particularly great. The firm also operated an ECN, which Wilson-Taylor said was not easy to build and posed capital challenges for a small fintech, but that his firm was able to overcome these.
“Those businesses were interesting and useful to our clients, but neither was something they would totally rely upon, that has to be there to keep their lights on,” he explained. “The third business, which has become EBS Institutional, was building an FX platform for asset managers. That’s a key part of their operating infrastructure and that’s where the decision points become different.”
To run this platform, Wilson-Taylor said that an indemnity and insurance policy was required that was simply impossible for any startup to get, while there was also a swathe of legal and compliance documents needed that were expensive to have audit firms produce.
But the final hurdle that he encountered as a fintech startup was that, individuals at large asset managers were reluctant to take on the career risk of utilising a product from a small firm over larger, better capitalised and more established players.
“That was, for us, the final tipping point which said we have to be part of a large company and be acquired,” concluded Wilson-Taylor.