New York FinTech Innovation Lab 2016
I’ve written about New York Fintech Innovation Lab here at AVC a bunch of times. It’s a great three month long program where entrepreneurs get mentoring on their businesses from executives at 25 large financial services companies including teams from the insurance, hedge fund, money management, and payments sectors, as well as teams from the 10 original money center banks who helped to found this program.
If you are starting or building a company that is focused on the fintech sector and would like some help on strategy, product market fit, and business development, this is a great program to consider.
The 2016 program application deadline is December 3rd, three weeks from today. You can apply here.
And there is an information session this evening at 5:30pm downtown at 1 Battery Place. Details and sign up are here.
Comments (Archived):
anyone been through the Lab? how is it?
You can view our portfolio here http://www.fintechinnovatio…I am happy to connect you with an alum if you want to learn more
I bet this year, the blockchain will be in full force in this program. I’m seeing lots of interest and activities from banks in this area. It’s for real.
HmmmCounterintuitive to me.This is like saying that the Hollywood studios will fund and be the mentors in creating an independent system that will erode their power and control.So in essence you are saying that the Bicoin will not change the status quo from the outside but will be simply a tool for those in control to stay in control.If so, how is this disruptive at all?I thought this was a revolution.
they want to take some form of control of the technology, backed up by government regulation. probably modify it in some way and patent it.the currency system could become a closed chain system where only official nation state currencies are recognised. i’m sure the powers that be already have a wireframe in the works.
No, the banks see the blockchain as a cost reduction opportunity for their middle and back office clearing operations. That’s one side of it.
You need to stick your neck out more than that William.Is Blockchain a damn revolution democratizing commerce and transactions or is it simply analog to digital movies controlled by the same people?Or is it really smart plumping?Is there a vision buried in all this activity?
Both. Collapsing clearing and settlements is a huge deal for capital markets. Billions at stake.I have been speaking this whole week at events. Videos will come come & podcast. Also see my post from Monday. And book announcement coming-up. Stay tuned 😉
Couldn’t be happier for you my friendYou and I a hundred times have coached entrepreneurs to create the articulation of what they are about and the vision of a changed world that we will live in when their vision becomes real.What is it for bitcoin?
Does the fact that billions are at stake mean that blockchain has little chance of ever providing a viable solution in that space? Essentially, can blockchain ever be used to validate ownership of an asset whose intrinsic value is more than the cost of a 51% attack? If this asset is a bitcoin wallet worth $200K, then sure, blockchain is reasonably secure, but what about a $10B bond issue? Compromising one such transaction is more valuable than maliciously forking the entire blockchain right down to the genesis block.Correct me if I am wrong, but a simple analogy is bitcoin->gold, both are rare, durable, divisibible,fungible and easy to identify. But a typical gold backed currency could not survive on multiple orders of magnitude less gold reserves than the cumulative value of notes in circulation, let alone exist in a universe in which the ownership of a particular gold ingot is decided by an online anonymous majority vote irrespective of where the ingot is at any point in time.What am I missing?
No one ever talks to the risks of the blockchain! Billions, that’s piker $, And what happens when we get to trillions (as in derivative trading)? I just don’t see regulators ever allowing western civilization rest on a system until all risks are understood.
I deliberately avoided even bringing up the trillion dollar securities market to avoid the counter argument that block chain will find it’s niche in smaller markets, but I agree with you on this.The entire mining ecosystem relies on mining 3600 bitcoins per day, and even if each bitcoin were worth $10,000, that comes to $36M a day. So if I was willing to invest $200M I could ‘erase’ an entire week’s worth of blockchain activity. Using part of the $300M I borrowed two days ago from Nouveau bank, who happily secure their records on the block chain.And people seriously expect to allow hundreds of millions of dollars of real world securities transactions to be dependent on this system?
To this day, I can’t come to a grips of the role and the need of the miner? Couldn’t Amazon just build a huge sever farm, set up its own blockchain and charge for it?
The risks to Blockchain and Bitcoin may not be on the radars of Fred, @wmoug:disqus and @disqus_8SMbbixuT6:disqus and his banking colleagues because they’re unaware of developments in Quantum Computing. It’s one of the fractal edges I was referring to in previous comments and my position on why Financial Capital shouldn’t assume “The Information Revolution is done” and just leave everything to Production Capital from Google, IBM, Facebook, Alibaba etc.Vitalik Buterin of Ethereum wrote this, July 2013: “Everything about quantum computers in the above two paragraphs is, given public knowledge, is essentially correct, and if a Bitcoin address is truly unused, then indeed, even given quantum computers, any bitcoins lying inside are fine. However, the challenge is, how do you actually spend the funds? In order to release the bitcoins sent to that address, it is necessary to create a Bitcoin transaction, and that transaction must include a signature and a public key to verify that it was the owner of the private key that signed it. However, here lies the problem. By making that transaction, you have just released all of the information that anyone with a quantum computer needs to fully impersonate you, right on the spot. Without quantum computing, this is impossible, as Bitcoin’s elliptic curve signatures only have enough information to recover the public key, not the private key. With quantum computing, elliptic curve signatures are as flimsy as a digital sheet of paper.”He then continues with some suggestions on how to apply Lamppost Signatures with “a few established organizations will agree to serve as trusted nodes, using the Merkle signature scheme to add an additional signature to transactions sending from old-style addresses to new-style addresses.To prevent network fraud and Finney attacks, the new Bitcoin rules would require all transactions from old to new after a certain point to be signed by these authorities. The authority system will introduce centralization…”Now at Ethereum conference, Vitalik showed a video where Greg Slepag’s last slide showed that the only thing setting Ethereum apart from AWS is … decentralization.A key tenet of Blockchain that is supposed to set it apart, philosophically and lend it legitimacy (“By the people, for the people”) from legacy systems is its decentralization credentials. However, if to counter-act Quantum Computing, it HAS to have a centralized authority (even on an interim basis)… that affects its core premise and values.Vitalik and other Blockchain developers thought the Quantum Computing issue would be a few years away so not a priority for Blockchain community to deal with.However, this is happening from Google and MS:* http://9to5google.com/2015/…* http://fortune.com/2015/11/…At Ethereum conference, I managed to speak with the person I was most interested in meeting: Nick Szabo, who Nathaniel Popper of NYT wrote could be Satoshi Nakamoto.Our paths would have crossed sooner because, by chance, I met the CEO of Mirror (then Vaurum) in NY. He was recruiting and it transpires that a few months later Nick Szabo joined Mirror:* http://www.nytimes.com/2015…In any case, I spoke with Nick Szabo for a minute or so about Quantum Computing and his distinction between “Wet (subjective human intelligence) and Dry Code (logical, bit-based machine intelligence)” and he GOT what I was saying like lightning.[There aren’t many people who can follow my abstractions so quickly, haha.]So … my instinct holds: it’s a question of HOW to integrate centralized and decentralized systems coherently.By the way, Google has already admitted that Quantum Computing isn’t perfect for Deep Learning (e.g., solving problems like Natural Language understanding):* http://venturebeat.com/2015…Well … this was obvious to me before Google spent a few $ billions on their Quantum computer and publicly shared that data point!The Blockchain brigade may not have future-proofed for Quantum Computing but I went BEYOND Turing machines and Einstein-Schrödinger’s theories from the second I decided to invent System #1 because I followed my gut instincts about the limitations of probability and bits, and knew that none of the Quantum Physicists had been able to create a Unified Model for Information — much less architected and coded a system to solve it.A model for information that then permeates and affects how we do Neural Networks, combine Art+Science in our models for human experiences (including language), economic modeling, social platforms and more (including Fred analogizing investment hype cycles as sound waves).I may continue to explore how to apply the Ethereum framework in my System #2 invention, which is an IoT play, and hybridize it with incumbent technologies. OR I may simply opt for traditional technologies end-to-end — whatever gets the system to monetization most efficiently and effectively.Ok, returning to lurking because lots of hardware & software integrations to-do!!!——@JLM:disqus @disqus_Awy3Cl8ObF:disqus@pointsnfigures:disqus @domainregistry:disqus – It’s not a “head fake” but it’s not a slam dunk either.
What is missing from your example is what private blockchains can accomplish. Nodes are trusted, therefore no security risks exist.
Surely the whole point of the blockchain is securing information without requiring trust in the network nodes? You rely on miners because it would cost them their mined past and near term revenues to unilaterally fork the blockchain. If you have trusted nodes, why bother with proof of work, you’re essentially back to the current status quo (minus the checks and balances).To quote Satoshi Nakamoto him(or her)self, “We have proposed a system for electronic transactions without relying on trust.”
True partially, but even private chains let you clear transactions quickly, once assets are on it organically. It’s about the ledger part more than the mining/proof of work.
The funny thing is I just listened to Slockit and, for me, THIS could be one of the killer applications for Blockchain:* https://bitcoinmagazine.com…Albeit, Home Automation isn’t where it’s best used…The FinTech piece is not that interesting for democratizing commerce, imo.
Addendum: I mean the clearing & settlements piece of FinTech, not the consumer side.
Is the blockchain a nice to have or a need to have for these contracts?
Need to have.Not that I think the contracts are smart enough yet … Works if the property is a digital asset (e.g. Soundcloud music track). More code needed if the property is a physical asset (e.g. pair of shoes) that also has a digital identity because the physical part of delivery would need to be tracked before the buyer can confirm completion of the escrow (and the physical delivery terms of contract are currently off-Blockchain).There’d also need to be a time variable as a duration countdown in the physical delivery contract (and this currently hasn’t been modeled in Blockchain). For example, if customer doesn’t receive the physical good within N days, even if the contract is digitally agreed it is “pending but not completed”. None of the demos I saw has that solved.The crypto-part of the contract is a need to have, though.The biggest problem they haven’t solved (and the core devs of Ethereum and ConsenSys) have raised this is…How to do the reputation rating system.No one I’ve spoken with thinks it should be 5-stars, # likes, social media shares.
Why do we need the blockchain for this? Why couldn’t Amazon centrally clear all of this, using similar blockchain technology and simply charge for it?
Elephant in the room, Rich. AWS could do this.The more I think it through, the more it becomes clearer the Reputation Rating system is a key piece of proprietary IP that would make Blockchain defensible philosophically for decentralizing decision-making and trust into the hands of billions of ordinary people rather than narrowly concentrated, and provide a valid technical and business case compared with the legacy systems.The IoT piece can also be done on a Blockchain by AWS/ other cloud provider.Ditto AI agency can be done by Google, Facebook, IBM Watson, Baidu etc. on a Blockchain.
This morning Vitalik Buterin of Ethereum showed a 5-min video from Greg Slepak which answers that question. The video took place around 10:23am GMT so if you watch the streaming, that’s where it’ll be.Slepag’s last slide shows that the only thing setting Ethereum apart from AWS is…decentralization.* https://devcon.ethereum.org
“How to do the reputation rating system.No one I’ve spoken with thinks it should be 5-stars, # likes, social media shares.”I agree. None of those directly address what a customer wants to know from a potential seller. 1. Will the item come in a timely manner? 2. Will the item come in the state warranted in the sales description?This could be described by # of settlements without dispute.
A-ha… well … I’ve just contributed to coding a smarter Escrow contract that factors in (1.) and (2.) because the ConsenSys/DApps/Ethereum team hadn’t shown code I was happy with on Tuesday morning ( @wmoug:disqus – I noted it in our email on 10 Nov @15.25).11 Nov: during a coffee break I overheard Jonathan Levi of Stanford University chatting with Joris Bontje who’d given a talk on DApp Design Patterns (DApp = decentralized application). Jonathan was saying he was prepping a class for Stanford students on DApp Design Principles.So I cut into the conversation and asked him if he’d seen the ConsenSys/DApps/Ethereum team’s Escrow example. He said he hadn’t.So then I ran through the code with him and Joris and the missing variables re. the “timely manner” issue. There has to be a clock countdown for courier and some Oraclizing of the physical product as it’s in transit whilst digital mirror of physical product is “complete” because Purchase has been ledgered.The ConsenSys/DApps/Ethereum team hadn’t factored that part of the risk management and resolution into the contract for the Buyer to be able to close the contract. They assumed the contract went straight from confirmPurchase to confirmReceived.This is fine for digital assets like Soundcloud music files. Not so for the physical example they were demoing which was to do with buying an Occulus Rift.Their code was:function confirmReceived ( ) {enum State { Created, Confirmed, Disabled }State state;modified conditions(bool c) {if(!c) throw; _ }The thing they were missing is this: one of the enumeration States needs to be “Couriered” and (!c) exceptions should be thrown (i.e., contract doesn’t close) if the Couriered State doesn’t complete within a defined timescale.It’s only then that the confirmReceived button comes into play for the Buyer. This also solves the page refresh problem on Single Page applications.If problems happen during the Courier State then a portion of the Ether put into the Escrow can be refunded to the Buyer.Jonathan and Joris listened intently.12 Nov: As I was leaving the Maker DAO meetup, I see Jonathan typing away on his laptop. I ask him if he’s still going to present DApps Design Principles at his Stanford class.He says, “No. I’ve changed it to this” and shows me what he’s writing …It’s that smart Escrow contract I’d discussed with him and Joris. It now includes … the COURIER functional code.Twain: Hey! That’s exactly what I shared with you guys yesterday!Jonathan: Yes, and I was listening.Later as I leave the pub, I bump into Joris and he walks a few hundred yards with me.Twain: Hey, so that Stanford guy has changed his talk to smart Escrow contract and it’s factoring in Courier State.Joris: He needs to credit you on his paper!INDEEDY.
Enjoyed the anecdote. How timely! In a residential setting, you still have an issue of ability to receive (i.e. security). I’ve seen some solutions to this in multifamily projects that could be scaled down. Another issue is if you are not timely, who determines what discount is given or accepts a refund. Are timely delivery and condition of product hard requirements for accepting delivery?
Same people? You are not doubting that opportunities opened up for vastly more people and companies in movie making as a result of digital [1] are you? Without digital there would be no youtube stars. Unless I am missing your point.[1] Take even just non-linear editing systems and Photoshop. Without that I’d still be in the darkroom (loved it there of course, temperature controlled and very quiet..)
Missing it.
another side is government. it’s a massive weapon against illicit financial transactions, the black economy, tax avoidance, et.c., et.c.
UBS team just presented at Ethereum Devcon an example of how they’re using Blockchain for bond contracts.The hybridization between centralized (trusted legacy parties, closed IP, private chain) and decentralized (trust-distributed to general public, open source, public chain) is something that will need to happen during the transition of Blockchain to mass adoption.The question is: HOW to do it coherently.Otherwise, Blockchain ends up being a bolt-on acquisition to legacy systems rather than new form+function.Do we want a Time Warner & AOL merger or do we want an Alphabet?
golden rule of survival. incumbent must invest in disrupter.
Neither.I thought all the mouthing of this as democratizing the exchange of value had reality to it.UBS’s goal in life-and for that matter–Google is certainly not that.
One of the devs here likens Blockchain to a new form of Communism. Meanwhile, Jarod Lanier likened social media and the old paradigm to “Digital Maoism” where user-generated content has been pooled by incumbent platforms without payment to users but all the equity value and profit generation flowing to those incumbents.I’ve been trying to think through the diminishing returns as more and more code+data is posted onto Blockchain.How will people make money when all the data is so commoditized and open source? There would be reduced information asymmetry so that will affect how the market functions and the wage/income earnable from code+data that’s no longer commanding a proprietary premium.If it all becomes pure Service rather than code+data Production because that’s all automated (via combination of Blockchain and AI), what does that mean?This is new territory for Economics.
yes, my first impression too. The sponsoring firms are 100% huge, old, incumbents. That’s great and important, but it’s interesting that there doesn’t seem to be any “new world” fintech representation.
Honesty being enforced through mathematics rather than governmental regulation? Even if all the players remain the same, it makes things a lot lighter.
as an aside, how does one construct an exclusively blockchain based persona, and is it even possible to do at this juncture?i have a Onename identity on the bitcoin blockchain, but how i do construct a completely decentralised ‘me’ in cyberspace? for example, i won’t use facebook, but is there a blockchain based equivalent?
Onename needs to hookup to Apps. It’s coming I understand.
thanks William.”hookup to Apps” – to enable the migration of personal data to the blockchain?
Kind of. A hash is on bloclchain, not your identity.
Correct. Last year we accepted our first blockchain company (Digital Asset Holdings) to the lab and the banks are excited for more potentially
.Read Jamie Dimon’s comments. Head fake?Messenger.JLMwww.themusingsofthebigredca…
To read one needs a link (messenger):http://www.coindesk.com/jam…
Yes, I did. He is scared, which is a good sign for the blockchain.
.Not sure I read his comments that way.He appears to dismiss bitcoin, the currency, while suggesting the blockchain may have promise even of being used for USD transactions.JLMwww.themusingsofthebigredca…
Right, but Bitcoin is already out in the wild. I don’t think it can be stopped even if the banks don’t want to have anything to do with it. It’s an alternative network.
Interesting that Barclays is on the main sponsor list. They have their own “innovation accelerators”, also in NYC and London: http://www.barclaysaccelera…I recently attended their demo day, which was great. This would seem to be in direct competition.Santander has a similar big well-funded program too, although it’s more of a straight up “fund”, and is London-based: http://santanderinnoventure…
Santander has made 5 investments from 820 pitches:* http://www.businessinsider….
I like the Santander pitch, it’s pretty clear. Thanks for the link
Barclays is focused a little earlier in the value chain, (albeit not exclusively). Barclays use the accelerator to work with startups and want to see the startups that they work with survive so getting them in front of other banks is not a bad way to do that.
FinTech, SwedTech, NorTech… The Scandinavians are all great innovators.
Then in that ontology, what happens to Ireland?IreTech.I <3 the Irish by the way. They gave the world Guinness and pots of gold at ends of rainbows!
Ha! I can’t help but hear the same thing when I hear FinTech.
DanTech. a ‘little’ country but with some interesting social and economic rules of governance.a person is only allowed to own one residential property, and it is intended that they do live in it.owning a car amounts to twice the cost of buying it.
MexTech is where you find the best innovators in the food space.(Also sometimes pronounced “TechMex”)
In DC, they do TaxTech.
In Alaska NoTech
hawaii: HiTech
The blind leading the blind, eh?What we don’t need is more of the same money-backed ventures, we need new goodwill-backed ventures that tackle climate change, inequality and economic equity.New York, New York. They should rename it $$$moneysville.
I dunno. Doesn’t have the same ring to it.
Ha ha – very good 🙂 How’s about removing the words – how does that look?
What’s their data on companies getting funded coming out of it?
Graduates of the program have raised over $175mm and 4 have had exits
Nice. In this cohort, how many teams will there be? How many of those teams will be able to raise capital at the end?I am not skewering the accelerator, just looking for data. I know your accelerator is a good one but there are a lot of accelerators that make big promises and really aren’t worth the time.
No problem, these are good questions!6-8 companies per cohortThere is no promise of capital raised at the end of the program, but most companies do end up looking for capital within 6 months of demo day and most are successful. In addition to 25 financial institutions at the table for the program, we partner with 8 VCs as well who provide mentorship and feedback. Program acts as early diligence for the VCs
“I was thinking how extraordinary it was that you had a finance minister and the head of a tech company (Tim Cook) talking about the future of banking,” (George) Osborne told a conference organized by the Bank of England on Wednesday. “I want the U.K. to be the global center of fintech. We will go out of our way to make that happen.”
What is the advantage of this Innovation Lab for an entrepreneur? The founders will be either (1) people from within the industry who have some major problems to solve or (2) people from outside of the industry who because of their outsider status have an unorthodox perspective that may not be immediately appreciated by insiders.I recently attended a conference in Philly and listened in on the commercial real estate FinTech startups. 3 of the 4 (maybe all 4, the fourth may not have taken any outside seed capital) took initial money from VCs and not insiders. The reasons were because these founders were already insiders and needed support in growing a tech , not how to be relevant in their industry.If a product becomes obviously hugely beneficial to one of the sponsors of this Innovation Lab, it seems like one of them would make an investment or acquisition that would significantly limit the upside for the creators. I see how this can mostly benefit the sponsors.I’d like to add that this seems like a way for financial firms to outsource R&D cheaply.