Beyond the tech hubs of San Francisco and New York, one Midwest state is gunning to become a global center of innovation in financial technology — via a new accelerator program in Columbus, Ohio, that multiple banks and insurers are setting up.
Fintech71 is an accelerator program for startups operating in banking, payments, insurance, health care, investing and regtech. The accelerator is named for Interstate 71, the highway that connects Ohio’s largest cities of Cincinnati, Columbus and Cleveland. It’s sponsored by some important players such as KeyBank, Grange Insurance, Huntington Bank and Visa, along with JobsOhio, a nonprofit economic development corporation. Industry heavyweights including JPMorgan Chase, Capital One and Silicon Valley Bank will offer support through mentorship. Backers of the accelerator are keen on keeping local talent in the state and attracting global innovators who could possibly set up shop there.
“The world is fighting over people with good ideas,” said Ray Leach, CEO of JumpStart, a Cleveland-based nonprofit and venture development group.
Fintech71 will be housed in 15,000 square feet of space in a remodeled art deco building in Columbus located across the street from the Ohio Statehouse. The Columbus location is a nod to the area’s prominence to the sector, where JPMorgan Chase’s largest tech hub in the world and Morgan Stanley’s recently launched center of excellence are housed. Columbus’ recent designation by real estate and investment firm CBRE as a “new city of finance” seems appropriate.
“The financial services industry is the second-largest private industry in Ohio — you wouldn’t necessarily think that, but there’s a huge number of insurance companies and banks, a lot of acquiring banks, and innovation in fintech is increasingly important for Ohio’s economy,” said Leach.
For one bank partner, the accelerator is a hands-on way of supporting innovation in priority areas it has already identified.
“There are a number of institutions that are writing checks to the fintech companies, and that’s an exploratory method,” said Ken Gavrity, head of KeyBank’s commercial payments group and a Fintech71 board member. “But for us, we start with a customer pain point, what are the salient points, and from that, we work backwards.”
Among the areas being considered, priorities include payments, digital banking and institutional processes, Gavrity said.
The 12 companies selected will be offered $100,000 in investment (Fintech71 takes up to a 6 percent equity stake in the companies) and 10 weeks of training in Columbus. Matt Armstead, executive director of Fintech71, said he hopes the accelerator can help retain the talent coming out of some of Ohio’s best universities, and at the same time, attract some of the best global talent.
“We need to be supportive to bring in anyone from anywhere, and that includes people from around the world,” he said. “We need more diversity in startups.” Armstead added that Fintech71, working with JobsOhio, can help new companies, including those from outside of the country, wade through the red tape to get their businesses off the ground.
Jeff Carter, a general partner at West Loop Ventures, a Chicago-based venture capital firm that focuses on financial technology companies, said the Midwest offers new companies low labor and real estate costs, along with an ecosystem of support. The accelerator program is a good strategy to get startups to stay in the area.
“If they have early success, they’ll stay there,” he said.
Carter said in contrast to the coastal fintech hubs of New York and San Francisco that have major players in business-to-consumer technology, the Midwest has long been a center of innovation for business-to-business financial technology products.
For KeyBank, the accelerator is an opportunity to begin longer-term partnerships or even set the stage for future acquisitions.
“Those business options are always on the table,” said Gavrity. “It may not happen in the accelerator, but maybe it’s five years down the road — anytime we can be early in the funnel to tap talent, that’s a great place for KeyBank to be.”
Photo of Fintech71 workspace courtesy of JobsOhio / Mark Wiggins