Episode Transcript
Florence: Hello, and welcome to the London Stock Exchange's Be Inspired series. In this series, we talk to CEOs, founders, and senior leaders about their personal and professional journeys. My name is Florence Keelson-Anfu. And I'm the Private Markets Community Manager here at the London Stock Exchange. I'll be in conversation today with Martijn de Wever, the Founder and CEO of Flow, to discuss their partnership with the London Stock Exchange and how that has helped their business become what it is today and their growth plans for the future.
Welcome Martijn.
Martijn: Well, thank you. Thank you for having me Flossy.
Florence: Now, before we dive straight into Floww, why don't we talk about your journey into entrepreneurship? How did you know that this was your calling and that this was for you?
Martijn: I think I, I always knew that I wanted to do something different. I've done quite a few entrepreneurial things within the banking space.
Always on the edge of, trying to pioneer things, do things a little bit more different. I think being a trader and, managing large trading books is, a little bit like running a business on its own. And I guess, you know, even designing new types of products actually in financial services, I've done that before.
I've built some, technology actually within banks. So it was quite logical for me actually to venture into, something on my own. So I was working towards that point for quite a few years before I actually made the decision, to stand on my own. And I ended up setting up a VC firm first, and then after that, the FinTech play, Floww.
So I kind of knew it. It was time, it was time to do it. I had the education of the banking system actually before that. And then you have to make the plunge and actually do it on your own.
Florence: Brilliant. And I think what's really interesting about your journey is that you've got two sides of the story.
You are an investor and you are a founder. And I guess nobody knows, you know, more about the pain points in the current fundraising process than you. So in your own words, how would you say that Floww is helping to solve some of these problems that founders face when fundraising?
Martijn: I think, fundraising is probably one of the most challenging things for the founder.
You know, you're out in the open, you're going to be judged on your business. Especially if you're in, in the beginning of that journey, you need to be able to tell the narrative about your company and transmit that vision actually of what, how you think the future should look like. And so people are going to judge you on that, and going to try to pin holes in it and try to find where, the problems are.
So it is quite, a humbling, type of experience. And so most funds actually hate, the fundraising process because you're gonna have to learn to have a lot of people, say no or have a lot of people, challenge you in the beginning and say somebody else has done it, or, you know, I don't think this is gonna work, or quite a negative type of outlook on your business.
And so you need to be extremely thick skinned actually to go through a journey. And, in the end of the day, it's a numbers game. You do need to be in front of enough people actually to be able to get funded. So how Floww actually helps with that is that, we, solve quite a lot of problems. So first of all, it's one problem is obviously getting access, to the right parties.
The other problem is, that, when it comes to structuring a deal, you need, to have the right legal documentation, et cetera, and we coded that fully in a technology kind of product where they can start building momentum around their fundraise. With a lot of interesting kind of toolings actually that we built in there.
Where they bit by bit bring in more investors, they build up that momentum, that people get more excited around their business. It looks very clean, when, they present their business. So it's brought to total new type of level of professionalism, that if you do that yourself and you don't have that support around it, it is challenging for whatever stage you are.
I'm not talking only about seed companies. I'm talking about series A, B, C. Everybody needs to tell that narrative. In, with numbers, because in the end of the day, people invest in businesses, not just a story. But also that story element and Floww helps actually with that complete suite of toolings actually to be able to do that effectively.
Plus, it also sets you up for the future because once you actually get people into you; your company, you have the responsibility of your investors to, provide a return to those investors. Now, the problem around private assets is it's not a freely tradable instrument, and so I've sooner or later, investors are going to ask for some form of liquidity and say, "Hey, you know, I've made, (if you're doing well), I've made quite a few, a few bucks actually, with your investment in the company, can I get out?" And that "Can I get out?" Is something that wasn't solved.
That's the secondary market piece. And, we've resolved that problem, using both technology, innovation, as well as, financial engineering, and a bit of regulatory innovation as well, so that people can, actually offer, shares in their company knowing, that in the future their investors can also get out more easily.
Florence: And so from your perspective as well, how does Floww democratize access to capital for founders?
Martijn: Yeah, the democratization aspect is quite an interesting one because to understand that you have to understand the nature of VC. VCs are naturally relatively small, organizations. And as a result of that, their job is to select 3% of the companies that come through, to invest in that.
So 97% of the time they say no. If you have, you know, some of these organizations, 10 people, 20, 30, 40, 50, most of them are, of those type of sizes. You have human capital restriction, so you have a restriction of how many people can read a deck, have a meeting with a person and make an assessment call.
Actually, is this right for us? Does it fit our mandate as an investor? Some people only invest in b2b. Some people only invest in FinTech or in AI and et cetera. And that kind of filtering process. They don't use any technology for that. So it's literally people reading decks and then taking it to the next meeting, and then doing that again, and then meeting the founder, et cetera, et cetera.
So there's a lot of things that technology can actually do if you sit on top of that funnel and filtrate actually, straight through that, where you also, giving people a chance actually to be judged, if I may say that, without any bias actually to that. And there is VCs are, there's no intention for VCs actually to have bias in the system.
It is just comes naturally because, VCs need to make, create, a filtration system, for all these opportunities. And they do that with humans. So how do humans interact? They basically, you know, people and other kind of, communities of people and naturally come through. But because of that, there is a risk of bias entering a system, because it becomes about who do you know and not what do you do?
And, how can you change the world, which, or technology. And so bit like the voice talent show where people are being judged for singing, not on, their appearance or, whether they fit the camera or something like that. But they're being judged actually for the quality. I think when it comes to businesses, there's a lot to that as well.
And when we are sitting on, and we actually are the back office for funds? Which we can fully be; deals come in and people see, okay, it's a FinTech company. It's that in that stage, this is the prognosis and forecast of their revenues. We do all that work already for them, so they can probably filtrate actually a thousand times more deals on a yearly basis with the same amount of human capital.
Florence: In your vision, what does the next 12 months hold for Floww? What does that feel like for Floww?
Martijn: It will be exciting. That's for sure. I think sometimes things take a long time to build. And Floww is very much a unique play when it comes to that, which, in many cases has almost a resemblance actually to things that you see in the biotech space or in the medical space where you have a lot of lead into it.
Because you build a lot of technology actually to get the call, a culmination point where it all comes down together. And so the vision actually for the company was always, you know, how do we power up innovation almost? How do you power up innovation, and make capital flow at the speed of innovation?
Yeah: A nice strap line, that I should be using. That's a very difficult question actually, to answer, and I've,engaged in the innovation space with every type of player out there, so we had to build technology that actually understand private markets; respects data privacy, deals with its, with integrity and control.
And so that's a lot of innovation on that side. But we are now at the point where we are, delivering to all three; what we classified as three different players in the market tech, technology that really answers their core needs. First on the primary market side, and then, for next year it will be the secondary market side.
Private asset space is around 10 trillion, which is a pretty punchy number. And the turnover speed is 0.013 times. Because ownership actually in private stakes don't exchange hands freely. You don't give people an opportunity that backs companies early on to get out at the later point in time.
And to solving that problem, I think you can just, amplify, the amount of capital that can actually, back innovation on a global level and not only a local level. I think you can amplify it by a 100 times. So you're looking at a 10 row market currently. Things are getting to astronomically high numbers, but yeah, you have to solve a lot of problems actually to get to that point.
I think this year is the point where we had to become regulated by the FSA. It was very important for us, so that we can start running transactions. So we started running transactions, which is met with great enthusiasm by, defining community. And so that we are going to do a global rollout of that functionality of the primary market, raising capital for companies, allowing companies to spend more time building, less time fundraising.
That's sort of a strap line on, on that side. So we do global regulatory rollout, so that we can run transactions globally, so that we can invest in the US, US can invest in us. We can invest in companies in Asia and visa versa. So kind of break the barriers in the way transactions can actually, take place.
But to get there, we had to solve massive amounts of compliance problems, on how to navigate the regulatory world. And then next level up will become secondary market where we allow people actually not only to buy investments on the mobile phone with that ease, but also to be able to take profit at certain points without jeopardizing the journey of the founder.
And that was traditionally always the problem around secondary markets is that the problem is you don't want to jeopardize that journey of innovation. You want to empower it, but don't, threaten, for instance, that if you are selling your shares, that it will have a negative impact actually for the founder to raise the next funding round, for instance.
So it's a very complicated, play. We've innovated so much over the last 7 years. A huge amount of technology has been built. A lot of regulatory work has been done. Also with the regulators. Actually, the structure that we have designed is, unique in its own kind. And so now it's go time.
So now it's just, you know, go time and push hard and get it done: globally.
Florence: Brilliant! Finally, to wrap things up, how do you think Floww and the London Stock Exchange are going to change the private market space?
Martijn: Quite, I think, for me, having, the London Stock Exchange as a partner, was quite, very logical, step, because the neutrality actually of a Stock Exchange, and the symbiotic relationship is there.
So the lines between private markets and public markets are, blurring. They were very early on with that vision actually compared to other exchanges in the world. I think that's, I've always fully respected that from the moment we started talking with each other. It is logical because Stock Exchange is providing product for, investors who invest, in companies and have that listing process.
But why not provide product actually in the whole journey that led up to that point. And, even, you know, some companies could stay private forever in the way we can run liquidity in the future. So it's a very, it's a very natural partner to have on board and our collaboration, our tight collaboration and thinking about, you know, how do we power up innovation and get, as much capital as we can, in our future.
Pretty much, I think we're fully aligned with, that goal, without, stepping on each other's toes. So I think that for me, that relationship works so well. And that's why, you know, we have such a close, relationship with the larger organization here at LSE. I think there's very bright, bright future ahead, for this collaboration, and this combined strategy.
Florence: Well, thank you very much Martijn.
Martijn: You're welcome.
Florence: Thank you. Well, thank you very much for joining us for this episode. You can see more episodes of the Be Inspired series on lsegissuerservices.com/spark.
