Six months since Level 39 (L39) officially opened and the accelerator has received over 300 applications from startups for 76 places.
The FinTech accelerator on the 39th floor of One Canada Square in London’s financial district provides work space for technology startups focused on financial technology services, retail technology and future cities technology.
A third of applications are from overseas. “International companies are looking at L39 as a soft landing into FinTech services, while UK companies are using us as a spring board to their international expansion plans,” says Eric van der Kleij, head of FinTech accelerator L39, and previously of Tech City.
The accelerator, which was conceived, built and funded by the Canary Wharf Group, is aimed at companies at growth phase, which may have already spent some time in startup incubators elsewhere in London – it’s for when they want to be a grownup, rather than a startup, says van der Kleij.
While the accelerator is attracting interest from over the world, the real measure of L39 is how well the startup companies are maturing from the experience.
Van der Kleij says that the he doesn’t measure this success on whether startups are receiving investment, but rather are they gaining customers? And located in the centre of Canary Wharf, the banking community is right on the accelerator’s doorstep.
With his experience as a ‘serial entrepreneur’ – van der Kleij set up credit card fraud alert company Adeptra - he advises startups to “go as far as they dare to develop their solution before taking on investment.” Agile technologies with low software development costs make it possible to boot strap your business.
Van der Kleij says that you need to prove to some degree that you can sell it, before taking on large sums of investment.
The CIO connection
L39 helps to form relationships between startups and potential customers, “We have direct contact with the buyers and CIOs around here,” he adds, saying that CIOs are so happy to see new innovation that he can send them a text in the morning and they will pop in at lunch time to see the startups.
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The accelerator has organised three CIO breakfasts since its launch, where it invites CIOs, CTOs and CMOs in the community to discuss their business challenges.
Challenges surrounding regulatory, efficiency and transparency are key, and this has led the CIO to look at new kinds of innovation to solve these big issues.
L39 encourages CIOs to become mentors to the startups and become involved in panels to decide on the best technology. Van der Kleij says that this means the CIOs end up caring a lot for their startups and it brings a lot of value into how a product should be shaped for the industry.
And while the IT decision makers spend time with their startups in the L39 space, they may bump into other startups creating innovative technology relevant to them. “My proposition wouldn’t happen elsewhere,” says van der Kleij.
Economic bust leads to startup boom
Van der Kleij says that the time for innovation in the financial sector couldn’t be better. He says that the economic downturn in recent years has forced CIOs to look into other cheaper and more agile solutions to solve their technology problems.
“In the good times when financial services were soaring, it would have been difficult for that to happen,” he says. “The way the CIO community solved problems when things went well is that they’d order expensive solutions from big companies.”
“But because the financial services sector had to pause, take stock and realise some pretty serious challenges, the approach taken by the CIO and CTO community changed.”
He says that as the industry is contracting, CIOs have to find new products and services, and efficiencies within the existing business, while the regulator insists that the banks show that they are in control of the business.
“So the challenge now with the new business models mean that you have to find ways to be regulated, but that also means the institutions need to have a radar on to say ‘OK this may be a very different business model, one that we haven’t seen before, but let’s explore it’.”
“I think the test will come when you start to see new innovations in financial services starting to emerge.”