Two years after adding Toronto-based wearables firm Nymi to its first list of supported companies, MasterCard Inc.’s Start Path program returned to Ontario’s capital yesterday, inviting startups from around the world to showcase their products and services for both MasterCard and partners such as the Royal Bank of Canada (RBC).
In all, 13 new and growing companies — only one of which was from Canada — competed for a place in the program by participating in an “elevator pitch” session at the Ryerson DMZ on May 11, while an additional six “alumni” who recently completed the six-month program will be joining them today to make a series of private, in-depth presentations for MasterCard and around 10 corporate partners.
“Even if we don’t pick any of these startups, they still have an opportunity to… get one on one time with other corporate customers,” Smart Path’s New York City-based global lead, Stephane Wyper, told ITBusiness.ca.
Launched by MasterCard’s innovation division last summer, Start Path is a largely virtual program that welcomes a new group of commerce-based startups every three months, first by inviting them to apply for the pitch session, known as “selection day,” then by providing the winners with operational support, partnership support, mentoring, and potential financing over the six-month period.
This year MasterCard received more than 500 applications from more than 60 countries, according to company materials, before narrowing the number of candidates down to 13. Each pitch is evaluated by a panel of judges, who ultimately invite between four and eight startups to participate in the program.
While many similar programs would be funding-first, Wyper said he didn’t pitch Start Path to MasterCard with financial returns in mind. Instead, the company requests an investment option from each startup, and does not invest unless it believes both sides can benefit — though Wyper admitted that MasterCard gains “strategic value” from helping each startup.
“One of the big things that we’ll do is look at how some of the startups that we’re working with can benefit our own business,” he said. “Where are the technologies that we want to get closer to, that we want to start testing, that we should be using as an incentive to try something new?”
To date, MasterCard has worked with more than 60 startups from across the world, Wyper said, investing in some four to six startups over the last year.
As for why this year’s selection day was held in Toronto, Wyper said that MasterCard tries to rotate the program’s on-site events across different cities where they see a lot of innovation happening.
“Toronto is a market that we’ve been looking at fairly closely, and Nymi was the first investment that we made,” he said. “There’s a lot of innovation that’s being developed here…. We feel it’s important to bring the startups in to understand this ecosystem.”
A Dragon goes from judge to contestant
The 13 startups that gave their elevator pitches during yesterday’s selection day all followed a similar pattern, starting with a problem the product or service was addressing and ending with a reference to how collaborating with the company would help MasterCard.
Only one was Canadian: Clearbanc, a financial services firm aimed at freelancers and entrepreneurs co-founded by tech entrepreneur (and Dragon’s Den star) Michele Romanow.
“As you know, the future of work is changing,” Romanow said during the beginning of her presentation. “Millennials are choosing… to be their own boss… to choose their own working hours, and that’s being enabled by the on-demand service platforms that are allowing them to take that more entrepreneurial lifestyle.”
In Clearbanc’s case, the main problem the company was solving was how to provide banking service to the 50 million freelancers and on-demand service workers, such as Uber drivers, across the U.S. – a number expected to double in the next 10 years, Romanow said.
“Much of this company was started because I was an AirBNB host myself, and was collecting this additional income but had no idea what to do,” she told the audience.
Many banks don’t support freelancers, Romanow said, considering them a credit risk because of their fluctuating incomes. As if their precarious work situations weren’t challenging enough, freelancers can also have difficulty organizing their taxes, often forgetting they need to set a certain amount aside in the first place, and budgeting can be a challenge as well.
The graduate’s perspective
MasterCard’s Wyper said that while Smart Path is intended for commerce companies, “commerce” itself is a flexible enough term that it can encompass payment solutions, wearable devices, artificial intelligence, logistics, the customer experience – and, in the case of Kathryn Loewen’s Vancouver-based analytics firm, Control, security.
Founded in 2014, Control was among the startups that pitched at MasterCard’s fall selection day event in London. The company provides small and medium-sized businesses with payment analytics, anti-fraud tools, and operational tools.
“A lot of SMEs don’t understand some of the technicalities or complexities of payments,” Loewen told ITBusiness.ca. “They don’t understand that if they have any online prescence, they’re all of a sudden open 24/7, they’re accepting payments from faceless, anonymous customers, and they may not understand why they suddenly start getting chargebacks or what have you.”
Loewen said that when she made her pitch last year, she talked about a pivotal trend happening with mobile apps.
“For many years mobile apps were monopolized by consumer experiences or simple utility-based apps, like FX calculators or Zynga-type games,” she said. “And I saw this trend moving towards mobile commerce… empowering workers, businesspeople, to manage their businesses from any location.”
Today, Control provides its customers with what Loewen calls simple, affordable, SaaS-based tools that provide each company with metrics they can monitor, or mobile apps that alert them if potentially fraudulent transactions are taking place.
Loewen said that from her observations, the companies selected for Start Path tend to be payment-oriented, to have received a minimum amount of seed funding — usually around $1 million — and already have a market-ready product.
Control has benefited tremendously from its relationship with MasterCard, Loewen said, noting that an especially useful element of the program was the advisor who MasterCard assigned to them: they met on a weekly basis, and the advisor helped arrange meetings with others throughout the organization who could provide them with insights, information, or integration opportunities.
As a final farewell, she and the other graduates were invited back to present pitches of their own to MasterCard and its partners, once again outlining their value proposition and augmenting it with lessons learned from the program.
“I hope the relationship [with MasterCard] continues from here, because it’s been fantastic working with them,” Loewen said.
