The Venture Center is Bringing FinTech to Arkansas

“This isn’t just about turning start-ups into strong investment opportunities, it’s about reinventing the financial industry by identifying and fast-tracking the best ideas,” said Gary Norcross, President and CEO of FIS Global. “The Accelerator and the fostering of innovation fits squarely with our strategy to deliver results that empower the financial world. It is at the heart of everything we do.” Turning ideas into real ventures... this is the story of how one group of entrepreneurs took a disturbing statistic and turned it into a fast-track program for FinTech start-ups across the country and around the globe.

Let’s rewind to 2013: Arkansas had been ranked in the bottom third of the country in terms of both innovation and entrepreneurship by progressive media group Fast Company, and a group of local The Venture Center is Bringing FinTech to Arkansas business leaders took it upon themselves to create a program to kick start the growth of technology-based start-up companies and bring the technical talent in central Arkansas to a new level.

Their idea, The Venture Center, was launched in May of 2014. As part of this program, the Venture Center keyed in on FinTech. In collaboration with FIS Global, the organization developed the VC FinTech Accelerator Powered by FIS. Modeled after similar programs in Silicon Valley, New York, and London, the Accelerator puts FinTech start-ups through a 12-week boot camp of sorts, with intense curriculum, mentorship, and capital investment. Companies were chosen for the program through a vetting process that included a measuring revenue, the amount of money already raised, maturity of the business, product/market fit, and various other factors.

A committee of FinTech experts, Venture Center personnel and FIS executives further evaluated the finalists before issuing invitations to join the program. For its initial cohort, the program accepted ten emerging FinTech companies in 2016: Akouba, Bleu, Dream Forward, Flutterwave, Fundseeder, LumoXchange, Hexanika, Monotto, Mortgage Peer Network, and PFTIR. Each company received a $50,000 capital investment.

As these start-ups develop, the Accelerator’s goal is to enable them to gain a sound foothold in the financial services ecosystem so they can deliver new solutions to financial institutions, payment firms, and other segments of the industry. With founders that hailed from around the globe (there was one native Arkansan in the mix), the companies took up residence in Little Rock in May. For some, it was a change of pace...for others, a culture shock.

One commonality ran through the group — these teams were here to learn, work, and grow their companies. The program’s curriculum is intense, and focuses on strategic relationships and rapid customer acquisition. Throughout the course, the companies also spent time with local mentors — including FIS executives and other financial services industry leaders “A key success factor of the VC FinTech Accelerator is the support of our mentorship network and our strategic collaborations.

Central Arkansas is uniquely positioned in this regard because of the history of FinTech innovation dating back to the 1960s and the development of companies like Systematics,” said Gary Dowdy, Managing Director of the Venture Center. “Little Rock is not only a less expensive market but is also a more agile community in many ways. A startup founder launching a FinTech endeavor in Chicago or New York could easily be lost in the shuffle. The same founder has unprecedented access, mentorship and support to top industry leaders and influencers right here in Central Arkansas.

The reality is that you don’t have to be in Chicago, New York or San Francisco to successfully innovate in FinTech.” The group spent a great deal of time connecting with local business people, community leaders, and bankers. The entrepreneurs worked directly with the ABA on two occasions to define their products for Arkansas bankers: at a mixer on June 22, and again at the FDIC Banker Outreach Seminar the following week. Several of the start-ups went on to forge connections with Arkansas banks. Bear State Bank in particular began working with LumoXchange and Monotto.

“When FIS and The Venture Center announced the Accelerator, we were very interested to see the companies chosen and see how they each represented a solution to different pain points within the banking space,” said Shelly Loftin, Chief Marketing Officer of Bear State Bank. “All ten companies have phenomenal products, services and resources and really focused on specific areas to improve in the banking space. We were incredibly impressed and wanted to take a few that fit with some of our immediate priorities and look at enhancing our services with their help. By the end of the 12-week program, we had finalized partnerships with two of them and continue to work on refining those services to further enhance the Bear State Bank brand and service suite.”

Loftin noted that bringing FinTech into the mix is a must for financial institutions to keep up with the rate of change in both technology and customer expectations regarding their service experience.

“For Arkansas and the Venture Center to step up, create, and host this program in partnership with FIS is a huge step forward in finding the balance between FinTech and traditional financial institutions. There are advantages to both business models, and striking that balance where you can innovate and be adaptable while remaining compliant and taking advantage of economies of scale is where the real transformation will start. We loved the opportunity to participate in this program and it will be great for our industry and local economy that it is going to continue for a few more years,” she said.

Arvest Bank also took a strong interest in the program, meeting multiple times with Venture Center staff and the start-up teams. They were able to act as a sounding board, listening first to what each start-up had to offer, and later giving insight into banking industry issues.

“At Arvest, our mission statement is ‘people helping people find financial solutions for life.’ Arvest is helping the FinTech Accelerator locally with our expertise in banking and technology and, in turn, they are helping provide potential solutions to make the customer experience with Arvest even better than it is today,” said Kyle Proctor, VP, Marketing Manager for Arvest Central Arkansas. “Arvest has a long history of supporting initiatives that will benefit the communities we serve and we feel this is simply another way of doing that here in central Arkansas.”

Proctor noted that Arvest was able to speak to the start-ups from multiple angles, as Arvest ranks among the largest 100 banks in the U.S., and is the second largest bank in the state. 

“Connecting the portfolio companies to the banking community of Arkansas is paramount to the success of the program,” Dowdy said. “Integrating these companies into the business culture of Arkansas provides them access to key knowledge as well as valuable resources. It also positions the banks of Arkansas with a front row seat and early access to cutting edge FinTech innovation.”

At the culmination of the program, the Venture Center hosted a “Demo Day” on August 3 to showcase the start-ups and their innovations. Nearly 300 venture capitalists, bankers, technology professionals and local community leaders were present at this event, held at the Clinton Presidential Library.

Live streaming of the event was sponsored by Arvest “to make sure all the participating teams’ ideas could be seen from Little Rock to Silicon Valley,” Proctor noted.

Demo Day came with big news for the program: Governor Asa Hutchinson took the stage to announce the first phase of a High Tech Accelerator Initiative for the State of Arkansas. FIS, a global leader in financial services technology and a Fortune 500 company, will partner with the state to extend the VC FinTech Accelerator program through 2018.

“I am thrilled that we were able to partner with FIS to keep Arkansas’s FinTech Accelerator going until 2018. This program has brought some of the world’s most exciting financial services startups and promising tech talent to Arkansas and we are excited to see that relationship continue. It is great to see companies like FIS investing in innovation in Arkansas and we are excited to partner with them to increase the tech footprint in our state,” Governor Hutchinson said.

“Arkansas is developing a national reputation for technology both as a result of the major technology companies in Arkansas and because of Arkansas leading the nation in computer science education,” he continued. “Our new High Tech Accelerator initiative is an innovative way for the state to attract new technology companies and to support our existing industry. I was elated to hear that several of the startups that participated in the program are interested in exploring Arkansas as a home for their operations. We are optimistic that some of the startups will take advantage of the tremendous benefits of locating their companies in this state.”

This initial phase of the High Tech Accelerator Initiative will be followed by a more comprehensive accelerator plan. The future plan will include program requirements to measure job creation and technology benefits to the state. There will undoubtedly be a variety of benefits to the state of Arkansas.

Over the past two years, the Venture Center has supported the creation of 153 new jobs in Arkansas, and member companies have raised nearly $7 million in the past two years. A handful of the companies that participated in the 2016 Accelerator are considering moving to Little Rock, or plan to have a presence in the state. One company, LumoXchange, has confirmed that it will be permanently relocated to Little Rock from Atlanta.

“The Venture Center’s vision is to create an engine for economic growth in Central Arkansas. The impact of the VC FinTech Accelerator can’t be overstated in this regard,” said Lee Watson, President & CEO of the Venture Center. “An industry-specific business accelerator program like the VC FinTech Accelerator essentially creates a systematic funnel of talent, ideas, and innovative companies pouring into the State. We are thrilled with the Governor’s announcement to help fund this program. This commitment showcases Arkansas as a center of tech innovation.”

The technology benefits hit close to home for the ABA, as banks push forward to serve a new generation of customers. “The ABA is proud that Arkansas is serving as a host for this group of FinTech start-ups. We are fortunate to have the services provided by the Accelerator participants available to our state’s banks and bankers. We look forward to the impact these technologies will make, both for our industry and our communities,” said Bill Holmes, ABA President & CEO.

The next round of the VC FinTech Accelerator will launch in early 2017. Applications for this stage of the program will be accepted in the late summer/early fall of 2016. Applicants can learn more or apply at VCFinTech.co.

This article originally appeared in The Arkansas Banker. To read in its entirety, click here.