1047. Insights: Can you launch a start-up in 2026? Live from J.P. Morgan Payments

0:14Hello and welcome to Fintech Insider Insights live from the J.P. Morgan's E-Commerce and Fintech Forum here in London. Make some noise everybody.

0:26i'm javier bruce ceo at 11fs and today's episode we're going to be tackling a question that feels simple on the surface of it but actually really anything but that can you still launch a startup in 2026 uh i mean it's going to be bad news for anybody in the room if we conclude no and you're about to do it i'm sorry but like it's this is not product advice everybody on the basis that ai can now do pretty much the work that it required entire teams to do. And capital is a lot more disciplined now than it ever was before. We heard from the general area on geopolitics and everything that's happened with sovereignty are shaping markets in a scarily real time.

1:03And growth at all costs has at least in theory given way to something a little bit more sustainable. So we're going to be answering the question of if you were to start from zero, what would you actually do? What would you prioritize? What no longer matters? And what does winning actually mean today? To unpack this, we've got a spectacular guest list here. First up, we have Philip Hovel, who is the co-founder and co-CEO at Mondoo. How's it going? Good. Thanks for having me. I nearly missed the co-bit and promoted you then to sole CEO. It can still happen, you know? Yeah. Well, let's see how the panel goes.

1:41I'm not saying that this is an interview, you, but we'll give it a go. For anybody who doesn't know you, what do you guys do? And tell us a little bit more. Yeah, Mondo is a B2B payments company. We operate across Europe and the UK, currently active in about 30 markets and service hundreds of thousands of customers, business customers. And our mission is to make B2B payments as easy and seamless and flexible as consumer payments. Very good, very good. Have you been around for most of the show today? You've seen a few bits some bulbs over here? Just a bit, yes. I feel like I'm doing a big thing here of like, if people listening to this, if you know anybody at JPMorgan, blag a ticket next year, because like it was good fun.

2:22Right, next up, and also joining us today, Martin Gilbert, who is the Executive Chairman at River Global PLC. Don't worry, Mina, I haven't missed you out. I will come back to you in a second. I'm just working up to your surname because I know I'm going to mess it up. Martin, how's it going? Yeah, so far so good, yeah. Yeah. If we could get a banking license, I'd feel even better. But I will get there. Well, I'm potentially promoting somebody to a single CEO and maybe getting you a banking license on this panel at the same time. Thank you. And we have in between you two guys, we have Mina and Muceva.

2:59Just go for it. Yeah? Say it right so I'll get it again. Muceva. I'm not going to get it. Like you said backstage, you just go by Mina. like Madonna or Prince, like that. For me. Yeah. For anybody who doesn't know what HV Capital and your role there as a partner, what does that mean? What do you do? Yes, we invest in startups across Europe, one of the largest multi-stage funds that is headquartered and always been fully European. I run a UK office. I invest in startups from Series B onwards. We have a team that deals with everything before that. and I spent the last 11 years mostly investing in B2B software and fintech.

3:43Very cool, very cool. Lots to talk about then. And last up, we have James Frazier, who is the head of Amir Payments and global head of trade working capital at JPMorgan. I think it needed like a breath and a half to get through that job title. That was impressive. But I think everybody will have heard of JPMorgan in the room. I think so. For the avoidance of doubt, not a startup. Yeah. We're the ones the startups come after. A couple of hundred years old startup type thing. But what does the role entail? Because that's a big job title, but that's a big region. Honestly, I'm trying to sort it out.

4:14So if you have an answer, let me know. I feel like I've got a lot to do here. Yeah. I mean, just simplistically, I'm kind of responsible for all of our payments infrastructure. So domestic cross-border payments across EMEA. And obviously work closely with our global product partners at bringing in new products, new capabilities, expanding to new markets. and then on the trade finance side, maybe tying it back, we're also doing, you know, kind of financing cross-border trade, both domestic and cross-border and then also providing new products and deploying solutions to optimize working capital for our clients.

4:51Very cool, very cool. You must be Scottish with a name like that. It is quite Scottish, yeah. You sound Scottish, actually. Yeah, Scottish New Jersey, yeah. Very good. Well, I feel like we've got the right people involved, which is good. So maybe if we start with the thought experiment that we were looking at. So in 2026, clean slate, no incumbency, no brand, no existing capital, no co-CEOs trying to take over. Like you're starting from absolute zero, right? Philip, maybe starting with you. Like I want to take you back to when you were thinking about doing this at the beginning, but what would be the approach?

5:27What would you think about building in this market? I think that the founder playbook hasn't really, or has aged quite well, I would say, over the last couple of decades. And it's been the same for quite some time. You have to have a great team. You have to solve a painful problem in a big market. Ideally, have great distribution and generate unique economics that allow you to cover the upfront investment. and ideally you create also over the course of time a defensive mode and traditionally that has been mostly in technology. There are of course other things you can do, economies of scale, network effects, etc.

6:08But this is how it's been. And I think that most of those things are still true. You still need to solve a problem. You still need a big market distribution and depending on the cost of capital, unit economics have always been important. That changes a little bit over time, but they're always relevant, at least at a later stage of a company. But I think what has changed are two things. First, the tools that we have to solve for those problems. And we all know that large language models allow us to build really great products very, very fast. Even small companies can do that. And the second thing is that there's a shift in how you build a defensive mode.

6:49And that's definitely not just technology anymore. you need to do much, much more than that. So as a founder, if I were to start a company today, I would definitely think very hard about my structural advantages. And since this is an e-commerce and fintech forum, and I ran a large e-commerce company in my previous life, there are a few things you need to do. And it's not just build the shop software, which we used to obsess about in 2009 and 2010. It definitely is, you know, build the right logistics infrastructure, exclusive distribution, also network effects, economies of scale. And in fintech, it's building trust, regulatory compliance, deep data integration, et cetera, et cetera.

7:32So while today it is easier to build a company, it is much harder to build a defensive business. People can build good things really quickly, but equally there's a load of people building bad things really quickly as well. So I guess the market has moved, but has still very similar problems. I guess from a consumer perspective, I mean, is there still problems to solve? He says knowingly. I'm sure there's. There's always a problem to solve because we have new technologies, new ways of doing things and consumer behavior is shifting. And so there's always new things to do, for sure. Meena, I guess the briefs of new and exciting things to invest in have not slowed down, sort of coming across your desk.

8:14So, you know, are you still seeing people attempting to fix problems that haven't been solved before? Because I guess in the fintech space, we've seen an explosion in payments early and retail banking, commercial banking, but there's a long road still to go, right? A hundred percent. I mean, if anything, as we just said, it's a lot easier now to build things. What's really changed is I would say, you know, back in the day, people used to like audit your code and, you know, check how difficult it was to build what you built. and that's completely gone in most cases, not all cases. There are places where that still matters, but it's more linked to the physical world rather than this sort of world of ones and zeros.

8:54So that's really gone. And in many ways, that's also, in a way, I would encourage founders to more adopt a mindset of abundance rather than like, oh, it's hard to now have that as a defensibility, but equally a lot more is possible. but what we have seen and luckily we're a little bit early in that is that things that were almost uninvestable before because of how hard it was to do it are actually possible now and then things that are more really startups that are focusing on like moving things in the physical world or making sense of supremely messy data in the physical world which was just almost impossible to handle with with technology that basically existed up until about two three years ago are now possible to solve.

9:42And a lot of attention is being put into moats. That's a really interesting one for me. I mean, I've been doing this for sort of a really long time. And I think my main learning in the last maybe 10, 11 years is that really the only moat that you ultimately have is like how excellent your team is and how much trust your customers actually have in you over time. and everything else essentially like someone will catch up. So velocity, trust and quality of team is probably the three things that I would say people can still do. And then there's network effects and so on. But yeah, interesting time, but certainly many problems to solve that are now actually possible to solve that were not possible to solve until about two, three years ago.

10:30It's a weird balance, isn't it? Now it's easier to do things without people, but the core of capability still remains excellent teams, making these things happen, doesn't it? I have to say the engineer in me of all these things writing code for you freaks me out ever so slightly. Because maybe Martin revolutes advantage, we said backstage, but I think you guys are probably the best example of people who build software at scale anywhere in the world. It used to be tech firms, but actually fintech firms do that better than anybody. So I guess that core advantage starts to shift. I still think it is a huge advantage for us.

11:07Part of Nick's philosophy is to do everything he can in-house. And obviously, all the software is still written in-house. And as you know, it's quite a siloed sort of business revolute in that we have product leads for each of our products. And they all report up into Nick. So one of the pieces of advice I always give people just, I mean, I was there. I started Aberdeen Asset Management and built it into a big global asset manager. And then I thought joining Revolut was a nice, easy retirement job, by the way. There was only 3 million customers at the time, and now there's 75 million. But one of the things I've seen with Nick is just this obsession with the product.

11:54And each week, each of his product leads has to have a one-on-one with him remotely. and he goes through what they're working on on that particular aspect of the product. And I think you look back at the history of Revolut and we were speaking about it earlier, what he identified was an area of inefficiency within the big banks and he focused on that one product and built a business on the back of one product with obsessional attention to detail. And then he widened it out and went global. So there are plenty of companies that have grown the business through one product or widened, but none of them have done it to the scale he has of widening it and going global.

12:48And that going global is the big difference between a lot of the startups. And we have a lot of competition, a huge number of very able competitors, but most of them tend to be local. So at each market we're in, we have very, very strong competition. But globally, there's not that many. That's a long answer to writing software, by the way. I managed to get a good advert in there, I hope. Revolut. Well, we'll take it. We'll take it. Yeah, I know I've heard Nick say before, sort of do something exceptional and then earn the ability to do more exceptional things. And if you can work with customers, The beachhead was travel money.

13:28That worked then because there wasn't a great alternative, right? And now look at all the things that you've got. Also transfers. I mean, he built a business in Ireland with an 88 % market share just because the incumbent banks, you couldn't transfer between them. So he took that one idea and built a business. They revolute in Ireland, as you know. Let's revolute the bill and so on. So it's really fascinating. what penetration you can get if you have the right product. Yeah. I guess, Mina, on the scopes that come across your desk, it must be quite hard now. I mean, you guys are having to work harder than ever before because, you know, things are presented amazingly well or look great in a presentation or the interface is suddenly a lot further advanced.

14:14You know, you've probably got to do a harder sifting job these days, right? Yes. I think also, very importantly, the quality of what we see come across our desk is really high, which is really nice for the European ecosystem. Like 10 years ago, like now I'm saying no to startups that I would have loved to invest in 10 years ago. Sorry, that's not very encouraging, but the quality is really, really high. So for the ecosystem as a whole, I think that's a great thing. To this point of like, is it a real thing? We're living through such a kind of turbulent time in many, many ways, as was discussed earlier in this day.

14:49And then also we have this amplifier of social media, which makes everything sound like vinyl and nothing is nuanced anymore, at least in the public domain, if you're not careful. So I think, you know, the best way to know that something's worth solving is if people are already paying a lot of money to someone else to solve it and they're not happy with how it's being done. Like, that's great. And I think that's what Nick saw and was like, yeah, very easy. Are there still things like that? Probably. I mean, that's where super deep domain expertise and years and years of doing something probably gives people tremendous insight now that can be solved.

15:27On the other hand, I would say, you know, some of the coolest, most interesting companies that have defined the world today came from, like, again, this mindset of abundance. Like, hey, today I can, like, have an app in my phone that calls a driver that comes and picks me up in this random street corner. Who would have thought that that would be a multibillion-dollar business? So I would say also having this idea of today so much is possible, I've always wanted to do X, is also really, really powerful. And a lot of the value that's been created through startups is in things that just weren't there before.

16:03And now we have them. I would argue, you know, I mean, obviously Uber is a perfect example of this. But even social media, I mean, for all the good and bad things that it's done, it just wasn't possible and wasn't there before. and now, you know, these companies are defining the way we live our lives. So there's plenty of opportunity out there. And if you kind of go at it with this mindset of like, I could do anything. And it's also quite easy, I would say, to figure out today whether you have product market fit. Like it used to be really hard. Nowadays, because of the way some of these AI-enabled startups have started to hit traction super quickly, you can kind of get signals easier.

16:41the problem of course for me is to figure out is this a true signal or is this a blip and this is where my job gets really freaking difficult um because you don't want to miss the next big thing but there's always like competition from everywhere and that's again where trust team execution really come into play because there's very little else to really go on uh when you have to think like 10 15 years out is this company still going to be around yeah i think anybody who's sort of had to deal with like a London cabbie could have predicted that Uber might, you know, anything not to deal with London cabs basically would have been a thing.

17:14Like, we'll pay twice as much, like whatever, it doesn't matter. But James, maybe come to you, because I guess, you know, there's clearly customer opportunities still out there. There's clearly slices of financial services and various other industries that are there. I guess the question would be, would be, I mean, B2C is quite hard, isn't it? You know, it took Revolut a long time to get market traction and, you know, people in geographies using it as a verb now? Never good at English. But, you know, being in a situation where you went B2C or would you go to the B2B route? Because it feels like there's lots of industries where even the B2B2B might be the play now in order to become the infrastructure, the fabric of the industry rather than just another player?

18:00Yeah, I think, listen, I think the B2C opportunities, they're easier to identify, right? Because they're closer to the consumer. So I think even market by market, you see a lot of competition, but already kind of a lot of adoption. The B2B space has been much harder to penetrate. And I think, you know, when we think through, you know, we're obviously, we sort of have the privilege of sitting within the moat. We have a lot of sort of protection from startups, even extremely strong ones. But, you know, we obviously, you can't take that for granted, right? You build up, we're operating in scale. We've been operating in scale, you know, for decades.

18:38But ultimately, the foundation of that is trust. And, you know, that's something that can take a very long time to establish, but you can lose very, very quickly. You see that time and time again among the FI space. But, you know, I think, so there is an element around success linked to trust for any startup because you have to establish that track record and continue to build it. They really have no margin for error. And I think when we look at our landscape, a lot of the opportunities we see on the product side, I think we sort of, I would say there's an organizational anxiety around the pace of change.

19:18And that's a healthy thing. And it means that we need to think harder, move faster at what can be deployed in terms of new products to meet what are long-standing existing problems. So that could be cross-border B2B payments, particularly when you're moving across multiple markets. There's a big opportunity there to do real-time to reduce cost. We've seen some success on the consumer side, the B2B side, particularly at scale, is moving a lot slower. I think through, similar to what Mondu is focused in on, on the trade finance side, you can see B2B problems around financing where maybe we're not quite there yet, but you can see the use of AI and technology leveraging very specific data sets to deploy capital and lending and financing to pockets that have for a long time, and this is in like the trillions of sort of demand, have had limited access to getting capital or getting it efficiently.

20:18So there are still very, very big problems across both payments and trade is solved. And I think, you know, despite being in sort of this incumbency that's kind of like operating that core wholesale infrastructure, we still need to continue to innovate and move and also sort of be aware of who we can partner with or what else is going on in the broader ecosystem so that we can stay ahead of it. Yeah. I mean, it's an interesting point Martin made about the sort of start with doing something small. And I mean, I don't know the origin story of JP Morgan, but I imagine it wasn't all of the things you do now in all of the geographies that you do it.

20:52So, you know, do one thing, get the opportunity to do more stuff. A couple of hundred years later, this is where you guys are, right? So, you know, it's an interesting keeping all of those things focused and keeping that purpose alive in all of them is, I guess, a different challenge than a startup would be. But I guess, where would your advice be for startups doing that? Because your scale, multi-jurisdiction, multi-regulator, all of the... I'm going to start Martin off on the banking license bit again, aren't I? But how would you approach that? Do you think expand geographically quickly is the strategy?

21:27Or do you think focus in one geo first? No, I think it's one geo. So you have to identify what your TAM is. You have to know what exactly, what problem you're solving, how your product fits into that, how that product is differentiated. And then you start your distribution, right? And you start the track record. And I think getting to the point where at least getting through that first renewal and you're getting good feedback and you're adding new customers and kind of compounding, you have a sort of a compounding effect. You sort of worry about scale and where you're going next after that. You have to be obsessed about it.

22:03Yeah, it's the old, you know, do something 30 people absolutely love, right? And then scale that to the 30 ,000 or the 75 million after that. It's very interesting. Half our sales come from referrals and half our growth. but we spend a billion now a year on marketing. Wow. I mean, it's just to show the scale now of what you need if you want to build a big retail brand across globally. Yeah, you just sponsored Man City football team. My son, Josh, was mega impressed with that, I'm just going to say. But I mean, that's the cycle. I think the Formula One's more cool, actually. We'll see you in Monaco then.

22:43But that is an amazing change, though, because to your point, from startup scrappy, costas around Shoreditch giving cards to spending a billion on marketing. That growth is pretty impressive. And that's in 10 years. So it does show what you can if you get that growth. And it's the referrals. I think the referral payback is about eight months. So in any business, if you can get your existing customers to recommend you, it is the best way to grow a business. Yeah. So have we convinced ourselves? So we think there's probably market opportunities, there's probably customer opportunities. It's easier to build stuff, right?

23:25Yeah, it's hard work, so. Yeah. They need a great team. Everybody agrees there needs to be a good team. Yeah, team culture, right? And I think, you know, you can clearly see the potential for sort of the barriers of raising capital. They're going to become more challenging, right? So I think the window of opportunity feels like it's got some downward pressure. And once you start to sort of demonstrate that you can prove that the product has relevance and you can get some actual traction with the end customer, I mean, that's certainly across our portfolio of some of the companies we work with. You can, again, sort of feel that anxiety building because the barriers continue to drop around the pace of innovation and obviously the speed of coding and deployment.

24:12but I think it's always the best teams, the best leaders, the best leadership style, keeping sort of organizations simple and focused. It tends to be a recipe for success. Nick gave me one really amazing statistic. 49 out of 50 people turned him down when he raised his first 5 million, a million and a half at 5 million valuation. 49 people turned him down. one, one, Boulder turned back to them. Yeah. It does show, it's a life-changing, life-changing sums of money, by the way. But it does show how relentless you've got to be to raise capital. It's not that easy. Yeah. Yeah, you've got to go through a lot of no's to get to a yes on that stuff.

24:59And even when, you know, hindsight's a brilliant thing, isn't it? If you could have gone in with 75 million customers, that 5 million would have been a lot easier to get, wouldn't it? It's easy. It's easy now. I mean, we did a$4 billion secondary. I mean, it was oversubscribed. So it does show the money is there, but it's easy with hindsight. Definitely. Hindsight's a wonderful thing. Right, this is going to feel really weird for everybody in the room, but we're going to have to take a quick break. We'll be back with you really shortly. Hey, folks. David Breer here, CEO of 11FS. Here's something you might not know about me.

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