Banxware #FintechPortraits

Miriam Wohlfarth founded her first start-up in the middle of the financial crisis in 2009. Her second start-up followed during the Corona crisis. We talk to her about how one of the first female fintech founders got started back then, why she is now entering a completely new market again with banxware, and what advice she has for aspiring fintech founders.

Dear Miriam, thank you very much for taking the time. First of all, we would like to know where the idea for your second startup Banxware came from.

At the time, the idea for Banxware came out of my first company Ratepay, which I co-founded. Ratepay is an online payment provider for invoice purchases from online merchants, which guarantees merchants that they will get their money. The idea for Banxware was then born out of a customer need about 1.5 years ago.

I received frequent requests if it would be possible for Ratepay to give additional liquidity to the merchants on the marketplaces - i.e. money paid out much earlier. Especially smaller and medium-sized merchants often have the problem that they have short-term liquidity problems due to a lack of a finance department or because they are not yet creditworthy. This has not been easily solved in Germany so far, as merchants younger than two years are not yet eligible for a loan from the bank itself. And even with established merchants who are creditworthy, it takes about two weeks to get a loan.

So I asked myself, how is it possible to support young companies and at the same time speed up the process of obtaining short-term liquidity? In the USA, for example, there are already solutions for this. This gave rise to the idea that if you can see a trader's sales, it is also possible to provide him with money quickly and unbureaucratically.

And that's what you do now with Banxware?

Yes exactly, with Banxware we provide short-term liquidity to merchants from different platforms. To do this, we have a three-step process that checks the creditworthiness of a merchant. This process takes 15 min with us, so in 15 min a merchant knows whether he will get the support or not.

And how exactly do you check if a merchant is creditworthy?

We have several ways to do that. On the one hand, we do so-called revenue-based financing. In other words, we see the merchants' revenues because we cooperate with the platforms and can thus check how much money they are taking in and which offer is right for them. On top of that, we have visibility into the merchants' accounts, so we can provide an in-depth analysis. And in addition to that, we have built artificial intelligence, which will now be used more and more as we gain more customers and more data. So we want to ensure even better credit scoring in the future.

So the money you give to the merchants comes from you?

No, we cooperate with Volksbank Odenwald, which has provided us with a credit volume of 100 million euros. So after we've done the underwriting and checked whether a retailer is creditworthy according to both our criteria and the bank's standard regulations, the retailer receives its money on the same day.

Does that also have advantages for the bank?

Yes definitely, the bank is building a completely new sales channel. And it doesn't need to build up any technological knowledge to do so; it works with us. We are, so to speak, the middleware between the banks and the platforms.

If you think back to your beginnings as a founder. What were the biggest hurdles there?

With my first start-up, Ratepay, it was definitely the financing. We founded Ratepay back in 2009, which was marked by the financial crisis. If you talked to a VC back then and presented them with a financial product, they would say, "Get away from me with that, nobody wants that right now." That was part of the problem, the other was that we were not the typical founders. We didn't come from WHU or work in consulting. We weren't that young at the time either.

And how did you manage it anyway?

We got a chance through a friend. He was a former McKinsey guy and had also founded a company himself. He helped us to create a business plan and told us how to go about it. He was basically like a mentor for us.

Do you think an accelerator could play such a role?

Yes, definitely. I've never worked with an accelerator myself, but I could very well imagine that it could fill some gaps and solve some problems. For example, I recently had a conversation with a banker who told me it was actually his dream to start a company. He has really great ideas and would like to start his own business, but it's hard to do it alone. He told me, for example, that he can't program himself and would need a programmer to do it for him.

I think there are a lot of great ideas in the fintech sector. But as a single founder, the ideas don't work. And I think an accelerator in this area could help by simply trying to bring the right people together.

Most founders always think they have to do everything themselves. But I don't believe so much in these individual start-ups, especially not in the technology sector. There are often founders who are very very smart and do their thing insanely well, but then they can't get anyone excited about their product, for example. And that's just as much a part of it: You also have to inspire a team, you have to ignite people for your idea. And I think it's very difficult to combine all these qualities in one person, you're much stronger in a team.

That's why I think an accelerator has to promote the network, because there are already a lot of people who are thinking about starting their own company but don't really know how to go about it.

What tips would you give to aspiring fintech founders?

As a first tip, I would tell all fintech founders: get a lawyer on board right from the start!

If you don't have any legal expertise yourself then it's very difficult. Often, the founders don't know enough about the regulations. Then you come up with great products, but they can't be implemented at all because it simply doesn't work. We also had this problem to some extent with Ratepay. With Banxware it is much easier now, because we have a lawyer in the team. So I can rely on what my co-founder Jens says, because he has the necessary know-how to make the right decisions.

Apart from that, I think the most important thing is to start out of passion. I've often seen people fail who said, "Well, these are the 5 hottest topics that work and we're going in there now." But that's often where the passion is missing, that you have a product that can improve the world. I think the most successful startups are the ones that have products that think from the customer's point of view and fulfill their needs.

What direction do you think the fintech market is heading?

I think there are two major trends that will play an important role in the next few years. One is platforms, keyword: embedded-financial-services and the other is cryptocurrency.

The consumer today has simply changed and also the role of the bank as such. Consumers often lack a relationship with banks, and it is much easier to be close to customers nowadays thanks to technology. That's why I think embedded financial services offer exactly what tomorrow's customers will be looking for. Through the cooperation of fintechs and banks, the infrastructure of the bank is connected with the technology of the fintech. This makes it possible to be closer to the customer and meet their needs, while at the same time offering all banking services. The bank thus represents one part of the value chain and the fintech the other, ultimately integrating the service where the customer is, which is very often on platforms.

The second big trend that I think is emerging is cryptocurrency. So what's going to come is programmable money at some point. And that, of course, needs cryptocode. If you think about where the future is going:

Devices are networked, the refrigerator will have to make purchases automatically at some point, and of course payment will have to be made for that. But if I now have to control a payment from every application, that will eventually become too complex. This is where cryptocurrency would come into play.

Thank you very much for the interview. Personal details: Miriam Wohlfarth started her career in the sales department of a travel agency, which brought her into contact with the founder of Bibit Global Payment Services and gave her her first insights into the online payment scene. Together with her former company, she helped build up the online payment industry in Germany herself. In 2009, she was one of the first women in Germany to found a fintech, with the second to follow in 2020.

About our partner fintogether:

The state accelerator "fintogether" is an early-stage startup support program that provides targeted support for FinTechs from their founding to their market entry. The goal is to build a lively and successful FinTech scene in Baden-Württemberg so that companies, startups and investors can benefit from it. Further information via: info@fintogether.de.