Business

Financial tech is a big business. What Charlotte’s doing to become a larger player.

Dan Roselli, Queen City Fintech’s co-founder and managing director, kicks off the inaugural Southeast Fintech Venture Conference in Charlotte.
Dan Roselli, Queen City Fintech’s co-founder and managing director, kicks off the inaugural Southeast Fintech Venture Conference in Charlotte. rrothacker@charlotteobserver.com

As a major banking center, Charlotte is known worldwide as a city built on money.

But for young financial technology – or fintech – companies trying to become the next PayPal or Square, the city still lacks in the investment dollars they need to develop and flourish.

That’s why Queen City Fintech, a local organization that helps nurture fintech startups, hosted a conference this week designed to put young companies in the same room with the investors they need to fuel their growth.

More than 125 people attended the inaugural Southeast Fintech Venture Conference on Monday to hear presentations from investors, fintech success stories such as small-business lender Kabbage and new firms just getting off the ground, including some from Charlotte. Sponsors included investment firm Frontier Capital and asset manager Barings, which hosted the event at its new Tryon Street headquarters.

Dan Roselli, Queen City Fintech’s co-founder and managing director, says Charlotte’s fintech scene, in baseball terms, is in the top-level of the minor leagues. He notes the city has a number of firms that make investments in more mature companies but not as many that make riskier, early-stage venture capital investments.

“I would say we’re not quite yet in the major leagues yet, but I think we have definitely taken a step forward,” said Roselli. “There are a lot of good things happening here.”

According to the National Venture Capital Association, Charlotte-area companies brought in about $393 million in venture capital investments in 2017, led by a $300 million round for payments company AvidXchange. That topped $128 million in 2016, but is still much smaller that major tech hotbeds.

For example, Boston-area companies brought in about $6 billion this year, while Austin, Texas, attracted nearly $1 billion. Silicon Valley companies tapped more than $17 billion in investments.

Still, there are some positive signs for the city’s fintech future.

Queen City Fintech has graduated its seventh “class” of startups that it has helped incubate and is working to create a fintech investment fund, Roselli said. A second organization, Carolina Fintech Hub, is also promoting the region as an attractive place to build financial companies.

One fintech startup making its home in Charlotte is Finsophy, led by CEO Jason Aspiotis. He came to Charlotte from California this spring to participate in the Queen City Fintech accelerator. After tapping a network of mentors and partners, he decided to keep his company in Charlotte.

“It just made a lot of sense to stay here,” said Aspiotis, whose company is creating technology that allows consumers to target the use of their bank deposits for socially responsible lending and investments.

Charlotte is promising for fintech companies because it’s a major banking hub with abundant capital. But sometimes investors here can be conservative, preferring a safe commercial real estate investment over a riskier but potentially more lucrative venture capital deal, he said.

“It’s a challenge,” Aspiotis said during a break in the conference.

‘You need to get out there’

Monday’s agenda included sessions in which entrepreneurs got a chance to make a quick pitch about their firms to an audience of investors, sort of the fintech version of speed dating.

The morning session included two presenting companies from Charlotte: Payzer, which helps contractors process payments, and uBack, which uses technology to make philanthropy easier. At the conference, uBack CEO Melissa Bodford announced a deal in which Charlotte-based Bank of America will use uBack’s technology to allow customers to make donations to more than 800,000 nonprofits through the bank’s mobile banking app.

Another company making a pitch was TrustStamp, which is developing advanced facial recognition technology. That company went through the Queen City Fintech accelerator in 2016 but is now based in Atlanta.

“There is starting to be less of a concentration of fintechs in New York and the Valley,” said CEO Andrew Gowasack. “Charlotte and Atlanta's fintech ecosystems are maturing.”

The event’s keynote speaker was Kabbage CEO Rob Frohwein, whose Atlanta-based company provides small business loans through its technology platform. His company started around the time of the financial crisis with just a handful of people but now has more than 400 employees.

In an interview, Frohwein said getting capital is a challenge in places such as Atlanta and Charlotte. But just as entrepreneurs pursue customers and partners beyond their local area, they need to be willing to tell their story to investors wherever possible.

“If you believe in your business, you need to get out there,” he said. “I always say my job is to tell the story of Kabbage every day to as many as people who are willing to listen and hope it sinks in once or twice.”

Rick Rothacker: 704-358-5170, @rickrothacker

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