Featured Project of the Month: A Product Due Diligence on the New Tamedia Fintech Venture “Monito”
A young high-performing visionary in the Swiss startup-world
François, Pascal and Laurent founded a digital product in the fintech field: Monito. They are young and ambitious and enjoy the adrenalin kick of the startup-life. And they have a vision of a product for comparing international money transactions in different currencies. In the last years they have been working to turn their vision into reality.
Tamedia as a startup scout for strategic investments
Tamedia owns and is invested in many well-known companies and brands. It is currently invested in four fintech startups. But who decides if the company is worth investing in and how is the success of those investments being measured? There are many aspects that need to be considered beforehand.
Krzysztof Bialkowski and Remo Kyburz, working for the department Technology & Ventures at Tamedia, constantly look for technically well-established digital ventures from the fintech field, with capable people and a promising innovation behind it. In an ongoing process with the Dealflow Team (including Benedikt Förster) they scout the market for new opportunities to expand the fintech of Tamedia’s portfolio. On the conference circuit as well as from desk research and through spontaneous requests, they screened over two hundred fintech startups since the beginning of the year. It was Krzysztof and his team who were introduced to François', Pascal’s and Laurent's product through one of Tamedia Ventures' partners.
Criteria for starting investment negotiations with a startup
Krzysztof looks at the unit economics, numbers like customer acquisition costs and customer lifetime value and many other metrics. But one of the most important metric for early stage startups is the team behind the product.
The process of auditing the company
After looking at the general commercial aspects and evaluating if it can be successful on the market, a team of specialists from all business-relevant departments inside Tamedia is invited: Legal, HR, Finance, Technology, Marketing and Product.
At a first kick-off meeting all departments are briefed about the investment under consideration. There normally exists an online platform for information exchange between the departments where all streams have access to the relevant documents. This is where the due diligence of every department starts off. All further questions from the streams are collected in a spreadsheet and forwarded to the startup of interest for further information. After the kick-off presentation, all teams evaluate their field of expertise and report back to the project manager. However, sending questions and answers back and forth is not instantaneous and the duration varies.
Where the product people come into play
René Wenaweser is the Head of Growth and Team-Lead of the Product & UX-Team and carries out a detailed evaluation of companies from a product perspective.
The product due diligence
There is a standardized template with relevant product questions René answers in the evaluation process. Following this template, depending on the size of a company, a due diligence can take anywhere between four days and two weeks (excluding waiting times for documents and such logistics).
A core aspect in the evaluation are the development processes and the right people behind the product.
Without the right people, the most ambitious business model cannot be set into practice. This is why for René the people behind the product are as important as is its roadmap. (Align is the keyword here). He pays most attention to the setup of the team and to whether there’s a responsible person in the product field with enough relevant experience and down-to-earth mentality for a realistic approach to product-related problem solving.
So, the main core aspects of a product due diligence are:
The product roadmap of the company:
Is it data-driven?
Is it actionable and realizable?
The product team of the company:
How is the team set up?
Is there a dedicated person for product development?
Does the team have the right mindset?
What data is the company using (user feedback, testing outcomes…)?
If so, do they know how to interpret the data?
Do they know how to factor the research outcomes into the roadmap?
A red flag and potential “deal breakers” from a product perspective
The team behind the product is the key component on which every good plan stands or falls. The skillset of venture founders becomes visible at a very early level of evaluation. Absence of analytics data for the product would indicate that the team either does not have the skills to extract them or did not collect the data in the first place - both of which would show a missing competence. In contrast, if the team is competent but the plan is not elaborated, it can be solved with the right mindset and high-performing manpower. A clear red flag goes to a low-skilled product team.
A strong recommendation is often the introduction of a product-lead who can present the product from a user perspective on management level.
The startup "Monito" from a product perspective
In “Monito” René saw a product that solves a customer problem and a smart and highly skilled team behind the product. To his satisfaction, their development approach was data-driven with a solid plan for the future. The KPI’s were clear and realistic and up to the due diligence the data collected from customers had included positive feedback. He did not raise any red flags, though he marked some orange flags where he saw room for improvement: One of them were some minor UX issues he spotted, and which he related to the fact that a dedicated UX person responsible for the realisation on user-perspective was missing. In his due diligence he concluded that from a product perspective there were no major problems, and pointed out positively that the work was very transparent and that the team could also pivot if necessary.
Personally René likes “Monito” because it is simple and clear but fulfills its goal. He saw a value for both sides, François and his team as well as the product community of Tamedia where both stakeholders could benefit in an experience-exchange from each other’s knowledge.
René and Krzysztof see both a great benefit in synergy effects between newly founded startup companies and Tamedia. A chance to learn from each other. Tamedia can offer its experience and relevant contacts and in return learn from motivated startup founders. In fintech investments there are many learning opportunities as well as cooperative possibilities for Tamedia, according to Krzysztof.
What happened after the investment
The investment was settled in December 2018. Krzysztof monitors them from a distance since then and wherever he feels that Tamedia could assist, he offers our services. At this stage, initial exchanges with Monito have already taken place on marketing topics.
The future plans
Since December 2018, around 1 million users visited Monito's comparison website while transaction volume increased by 50% during this period. Krzysztof is looking closely into the further development with, of course, an eye on possible future investments.