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Jo Ann Barefoot explores how to create fair and inclusive consumer financial services through innovative ideas for industry and regulators

Barefoot Innovation Podcast

Filtering by Category: Venture Capital

The VC Perspective: Miles Reidy of QED Investors

Jo Ann Barefoot

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This episode is a special treat because it’s both fascinating and fun. My guest is Miles Reidy, partner at QED Investors in Alexandria, Virginia. Many people know that QED was founded by former leaders of Capital One, including Cap One co-founder Nigel Morris. They have a terrific track record of investing, focused mainly especially on fintech.

Miles and I discussed two topics. One is the outlook for regtech, which he’s excited about and so am I. The other, which I know is going to be an audience favorite, is how to find and work with a venture capital firm.

On regtech, Miles talks about the technology that’s about to make compliance both more accurate and less expensive, at the same time. He talks about compliance costs rising at 20% a year, the impossibility of traditional compliance systems preventing human errors, and how we can now move beyond old sampling-based compliance processes to 100%, real-time data that enables a financial company to know, for sure, if it’s compliance or not. I’m excited about it too, because technology is breaking the old binary choice between spending more for better results, or spending less and sacrificing performance. Innovators are making it possible to be better and cheaper, both. On regtech, he also has a cautionary note for the U.S., where our regulatory complexity creates headwinds for innovation.

The second half of the show is about working with VC’s. I talk all the time with venture firms and have done some angel investing myself, but most of Miles’ insights were new to me. He shares what he’s learned, especially, from seeing people do all these things wrong, at every stage, from how to approach a VC firm cold (he describes one thing to be sure NOT to do), to how the startup should evaluate the VC, to how to work with the VC when your firm hits problems, which it will.  

He’s especially interesting, I think, on what questions to ask a VC directly, from where their funding comes from and where the fund is in its maturity cycle, to how it handles adversity (he describes the four typical scenarios, three of which are bad!). He also has advice on truly doing diligence on them, including by talking with their companies. The typical startup is so eager for money that it gets seduced by it, and can pick the wrong firm.  

Miles also explains how he evaluates potential investments. Which factors count more than others? What key metric does he want to see that the founders totally understand?  What weaknesses are fatal? And once the company is funded, what are the common mistakes? What mistake is most dangerous for a young CEO? How do you avoid the death trap of hitting the end of the funding runway before you can take off (hint: “sip” on your funds).

After we turned off the mic, I asked one more question that people often raise, which is whether fintech and financial regtech firms should focus on the great east coast VC’s that specialize in the field -- Miles mentions several in the episode -- or try to get backing from the big, famous firms in the Bay Area. There are pros and cons to each, in terms of sector knowledge, sector network, reputation “glamor,” and drawing in talent. Miles has the answer:  get both.

If we were scoring shows by how many times the guest makes me laugh, I think this one might be the winner. I know you’ll enjoy my fascinating conversation with Miles Reidy.

More about the episode

This is the November conference QED is co-sponsoring (I’ll be speaking) RegTech Enable

Here is the past podcast I mentioned with Sanjay Jain on the India Stack Sanjay Jain Podcast

And here’s more on Miles:

Miles Reidy is a Partner at QED. Previously he was the Chief Financial Officer for Audax Health, Inc., which offered a digital health engagement product.Miles reoriented the business strategy, built out the analytics functions, raised capital, and oversaw the sale of the company to United Health/Optum.  Prior to Audax, Miles was Chief Operating Officer and Chief Financial Officer for Network Solutions, one of the largest domestic providers of Internet hosting and marketing services to small businesses, and Executive Vice President and Chief Financial Officer for Sears Holdings Corporation.

Miles spent almost a decade in several executive roles at Capital One Financial Corporation, including Executive in Charge of Banking Integration, Chief Corporate Planning / Financial Strategy Officer and Chief Financial Officer of Capital One Bank and Credit Card. His responsibilities included development and implementation of the corporation’s capital and financial strategies, oversight of the card businesses’ financials and consumer analytics, and strategic planning.

Miles serves on the Boards of the Royal Bank of Canada, US, Heinz School of Public Policy at Carnegie Mellon University, and the Easter Seals of Baltimore/Washington. He is also a investor in Fenway Summer. He holds a B.S. from Georgetown University and a M.S. from Carnegie-Mellon University.

More for our listeners

Please remember to review Barefoot Innovation on ITunes, and sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Be sure to follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going.

Support our Podcast

I’ll hope to see you at the events where I’ll be speaking this fall:

  • RegTech: Compliance Transformed, October 3-4th, Brooklyn, NY

  • BAI Beacon/Fintech Stage, October 4-5, Atlanta, GA

  • CFSI Network Summit, Fireside Chat with Thomas Curry, October 5, Chicago, IL

  • FISCA, October 5-8th, Las Vegas, NV

  • Money 20/20, October 25th, Las Vegas, NV (I’ll MC the Sunday regulatory track, host a town hall with senior regulators, moderate a panel, and do a fireside chat with the FCA’s Chris Woolard. Be sure to come for Sunday!)

  • Regtech Rising, November 2, London

  • Monetary Authority of Singapore Fintech Festival, November 13-17, Singapore

  • University of Michigan, November 17, Ann Arbor, MI

  • RegTech Enable, November 27-29th, Washington, DC

  • UN/ITU conference on financial inclusion in Bangalore (invitation only)

  • Fintech Connect Live, December 6th, London

  • S&P’s Fintech Intel, December 13, New York

  • Dutch Central Bank, December 20, Amsterdam

We have wonderful shows coming up. I’ll be talking with Andres Wolberg-Stok of Citi Fin Tech. We’ll have a show based on my recent fascinating experience with a U.S. Army Threatcasting exercise, learning how to creatively imagine cyber risk and then pinpoint how to prevent it. At Money 2020 I’ll record a show with Christopher Woolard, who heads strategy for the U.K. Financial Conduct Authority, and one with Nerd Wallet CEO Tim Chen.                                                                                                                                                    

I’m very proud to say that the firm I co-founded, Hummingbird Regtech, has been selected to present at Money 2020 in the startup pitch session. Be sure to come and watch!

Meanwhile, keep innovating!



Insure-Tech : QED Founding Partner Caribou Honig

Jo Ann Barefoot

Today we have our first-ever episode on Insure-tech. Happily, it also turned out to be one of the most fun, funny and thought-provoking shows we've ever done. I'm pretty sure it's the first one where we've talked about the internet of things, and CRISPR gene research, transportation as a service, and drones.


My fascinating guest is Caribou Honig, founding partner of QED Investors.


QED is a venture fund cofounded by Caribou, Frank Rotman, and Nigel Morris, who first came together in the early days of Capital One. They have helped launch some great fintech companies - for instance LendUp and DriveFactor. Caribou's investments span an array of marketing, payments, and insurance technology companies, particularly where B2C customer acquisition drives the business success. He developed a passion for data-driven marketing when he led key marketing initiatives at Capital One, including responsibility for a $50 mm marketing budget, managing a 200-person underwriting operation, and cracking the code on digital credit card originations. Recent investments led by Caribou include, Remitly, TheMuse, and KNIP.  He also serves on the Advisory Council for the CFSI Financial Solutions Lab.

As you'll hear in our conversation, moreover, he's a Renaissance man. He holds a bachelor's degree in Physics and Philosophy from Harvard University, an MBA from the Darden School of Business, and a JD from the University of Virginia School of Law. He and his wife have two children and, what he describes as two occasionally annoying dogs. Over the years He's taken time off to be Mr. Mom and to listen to the universe, as he puts it. And of course, he has an interesting name, which he'll explain in our discussion.

I reached out to Caribou because I knew he was working in Insure-Tech, which has been on a slower track than other kinds of fintech but is starting to gain real traction. Caribou is Chairman of the InsureTech Connect, a new conference that's scheduled for October 5-6 in Las Vegas.

I found our conversation incredibly interesting, especially in how insurance is being transformed by types of technology that have nothing to do with finance -- because its product is usually about managing risks in the physical world ranging from health to roofing materials to self-driving cars.

As it turned out, about half of our talk is on insurance, and half is on his broader thoughts oninnovation, and also on regulation. He really sparked my own thinking on some of the tough regulatory issues, like how to resolve the conflicts between alternative data and fair lending disparate impact, and the pros and cons of state-based regulation, and his advice to regulators.

Plus I'm stilling thinking about "parametric insurance" - skipping the adjudication process and agreeing in advance to let outside parameters - big data - determine the appropriate claim. New ideas, everywhere!

Finally, for all you innovators in the audience, note that Caribou shares an open invitation to bring him interesting ideas.  I know you'll enjoy hearing him.
 



Vote for my SXSW Panel!

Also, remember to vote to help get my Regulation Innovation panel selected for SXSW 2017 - it's at http://panelpicker.sxsw.com/vote/67829. My panelists will be Simple's Josh Reich, Adrienne Harris of the White House, and CFSI's CEO, Jennifer Tescher. We need your vote - voting is only open to  September 2. And please plan to come to SX in Austin.
 


Support Barefoot Innovation!

Don't forget to send in your buck-a-show to support Barefoot Innovation -- and leave a review on ITunes.

Support the Podcast

Upcoming Shows

Finally, come back next time. We have fantastic guests coming up, including Lauren Saunders of the National Consumer Law Center, Sam Hodges of Funding Circle, Colin Walsh of Varo, and Harvard professor Brigitte Madrian.

See you soon!