Over the past 50 years, each decade has brought with it a new wave of innovation which has created new markets, products and services while disrupting and displacing existing ones. With the invention of integrated circuits, mobile communications, GPS, the internet, cloud computing and now blockchain, thousands of new companies have emerged with business models that capitalized on each new, groundbreaking technology.
If you are one of the pioneers in this “New Digital Economy”, you have an exciting opportunity to leverage all of the innovations that have been created over the past half century. Unfortunately, by treading new ground, you have likely encountered the reluctance of traditional banks to provide your company with basic corporate banking services. Examples abound about how traditional banks have run in fear from new, innovative companies:
- “Over 50% of U.K.-based blockchain companies have difficulties opening bank accounts” (link)
- “Crypto exchange crippled, claims Australian bank closed its account” (link)
- “Blockchain and bank accounts: a Swiss tightrope act” (link)
- “Crypto companies complain they’re being shunned by most banks” (link)
When seeking corporate banking services, your company probably falls into one of three categories:
- Early stage startup operating on seed capital
- Post-ICO/IPO company ready to invest in rapid growth
- Established post-startup company looking to expand into new markets with second-round financing or private equity investment
Although seeking to disrupt conventional businesses with non-traditional business models, to develop new products and achieve market adoption, access to traditional corporate banking services are mission critical for your business. Depending on which stage your company is in, you may also need banking services that didn’t exist until recently such as cryptocurrency custodial or trading services.
One common denominator in all phases of your company is clear: you need fast, unambiguous answers, quick approval, and consistent service offerings throughout all stages of your company’s growth. The last thing you need is a bank that says no, or changes its mind at critical stages of your company’s growth. You need a bank which knows how to assess the risks of new, innovative businesses models like yours without prejudice.
The Early Stage Startup
Startups are often spin-offs from local universities where young, enthusiastic founders work hard to grow their innovative idea into a real business. The founding team are usually engineers with deep knowledge in a new disruptive technology, but little knowledge or interest in the mundane details of managing corporate finances. With a small team of core founders, startups need an experienced banking partner that can offload the tedious details of managing cash flow, payroll and payments to suppliers. Most importantly, they need a banking partner that is willing to work with them, make quick decisions, and accompany them along the first turbulent years of growth.
Basic services needed by startups:
- Acceptance of corporate funds into a bank account
- Overview and management of accounts via online banking platforms
- Liquidity services i.e. settling of operating expenditures and reception of operating income
Post ICO/IPO companies
With a war chest of cash, post ICO/IPO companies are ready for the next phase of growth. Recruiting new talent, expanding into new offices, and improving their hardware, software and online services. At this point in time, the finances of a startup has grown into a complex system of managing incoming payments from investors, resellers and customers, as well as outgoing payments to a much larger number of geographically dispersed partners and employees requiring multiple currencies, as well as payments to vendors, logistics providers, insurers, and market compliance regulators.
Enhanced services needed by Post-ICO/IPO companies include:
- Direct connections into the local clearing system in different countries
- Service offerings such as IBANs and HOCAs
- Assisting clients in the crypto space to convert crypto into fiat and effect a faster fiat pay-out to their customers.
Typically past the 5-year mark, these companies have achieved the goal of a startup; to no longer be a startup. Having reached break-even, or close to it, post startup companies look to scale their business to new markets in new jurisdictions. In addition to all previous services, they want to integrate their payment systems with their customer’s systems and issue key employees and their clients corporate credit cards.
- Provide cross-national banking services to serve customers abroad
- Offer direct API integration into customer and reseller platforms
- Providing corporate cards for clients’ key staff and their customers
INITIUM: going the distance with clients on the cusp of innovation
Traditional banks are notorious for saying no, or changing their minds without giving a reason. Clients may often be re-evaluated on an annual basis, and a negative headline about a market sector can scare bank shareholders into dropping clients operating in what is deemed a risky sector.
Conceived as a multi-jurisdictional bank dedicated to serving clients operating in the New Digital Economy, INITIUM knows how to assess the risks and rewards of doing business with players such as you in this new sector. With a seasoned CEO at the helm, Daniel Spier brings with him over 20 years of corporate banking experience;
“INITIUM will incorporate best practices from traditional banks,” he says. “We just need a new perspective on old methodologies, and starting afresh makes that far easier than trying to change embedded practices. I’m not doing this altruistically, just pragmatically. I’m a banker, and INITIUM will serve businesses from this sector which meet our risk profiles. It’s just good business for all involved.”