UnionBank President and CEO Edwin Bautista discusses the top 7 things investors look for when investing in a FinTech start up, taking from their recent investment on digital logistics pioneer  Shiptek Solutions Corp.

Financial technology or FinTech companies continue to proliferate as more entrepreneurs find themselves riding the wave of digital transformation. In the Asia-Pacific region, global market and consumer data provider Statista recorded a staggering 2000 fintech startups established as of February 2019.

In the Philippines alone, over 100 Fintech companies were created in the last five years with over USD 150 million invested according to worldwide startup data platform Tracxn. This is an indication that investors are recognizing the radical need for digital transformation in the financial sector given the support of the government, increasing adoption of mobile devices, and urban youth demographics.

Among these aggressive FinTech players in the field is digital banking giant Union Bank of the Philippines (UnionBank), who is seen to go beyond the boundaries of banking with their commitment to “tech-up” the Philippines. President and CEO Edwin Bautista then sheds light on the 7 key factors that investors must consider when venturing into FinTech companies, citing the case of their most recent investment on Shiptek Solutions Corp through their subsidiary UBX:

Is the technology sound?
XLOG, Shiptek’s pioneering digital logistics platform seamlessly connects a system of modules for shippers, truckers, warehouses and customs brokerage. Harnessing on blockchain technology, XLOG offers a first-of-its kind end-to-end system.

Is there a problem that needs to be solved and has a potential to disrupt the industry?
It is apparent that various industries still see a heavy reliance on paper-based systems and XLOG as a digital solution solves problematic, outdated, and error-prone manual logistical processes.  It allows for fast and cost effective online booking, round-the-clock shipment monitoring, and easier transaction management; embedding financial services into the platform will all the more result in greater convenience and transparency. XLOG is simplifying the complex world of logistics.

Is it scalable? How big can the company grow?
Imperative to investors in deciding to pursue a venture  is the ability to gauge whether a startup has the potential to grow at an exponential rate. Since launching in 2018, Shiptek has already generated over a thousand twenty-foot equivalent units (TEUs) and is seen to reach its goal of moving 500,000 TEUs by the end of the year.

How committed is the proponent?
Shiptek’s CEO and President Jun Ynion has long recognized that digitalization in logistics is urgent. The serial entrepreneur led the development of XLOG in the absence of a venture capitalist, shelling out some 200M as an initial investment. He relates, “Traditional logistics calls for disruption. Technology is the key to moving forward hence, the partnership with UBX.  We are excited to share with them what we know, learn and collaborate on innovations that will advance our industry.”

Do they have the support of an institution that has a ready customer base that can open the doors?
Shiptek, UnionBank and UBX share the same goal of “teching-up” the Philippines and bring paperless transactions to analog-driven industries. UnionBank and UBX bring together a vast network of SMEs and large-scale corporations that have the potential to benefit from Shiptek through XLOG’s game-changing technology. Likewise, Shiptek, through their President and CEO Jun Ynion offers over 20 years of expertise in the logistics industry. Together, these tech giants co-innovating to disrupt the logistics industry will put the Philippines on the map for technological innovation.

Do they have domain expertise?
Bautista emphasized that, “The most successful people who are disrupting industries are people who are within the industry because who else will know best the needs and nuances of the field?” XLOG is a passion project put up solely by self-made entrepreneur Jun Ynion. As a logistics player for more than two decades, Ynion knows by heart the ins and outs of the business.

Are they businessmen?
Most start-ups are strongest on the tech side but lack the vital entrepreneurial skills and experience that would allow for a successful business venture. Bautista vouched that he knew Ynion as a committed businessman who has successfully steered the progress of his corporation Yngen Holdings, which has stakes in shipping, food, marketing, and more in the last 20 years.

7 Critical Questions When Investing in FinTech Companies

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7 Critical Questions When Investing in FinTech Companies

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