How New Startups Will Drive Productivity in Financial Services
Change Is In The Air
It has been an exciting time at Vestigo Ventures as we prepare for our AGM with our investors. This year we have a great deal to discuss with many of our portfolio companies moving to their next round of funding with some wonderful new VC partners leading them. In some cases, it's time for us to step off the board, and in other cases, we will remain on the board for the next chapter.
We continue to grow our list of entrepreneurs and their startups that we have met to choose which should go into Fund II or help the founders with perspective. It is the best part of our role as venture capitalists, and we feel honored to lend a hand.
We see a good uptick in startup formation. There continue to be some great ideas using AI as a key tool for productivity, which is the theme of this month's newsletter - the need for productivity in financial services. The lower an incumbent can drive down their cost, the more they can service a larger client base and the more competitive to new B2C players.
Most of our companies are in the enterprise SaaS business to assist the big players in gaining productivity or better serving their clients. These companies have grown very rapidly as they find their market and roll out their solutions. If they can become the industry standard and are easy to do business with, such as using an API interface, they are on their way to creating great and large companies.
It’s good to be back to the new normal at Vestigo.
— Mark & Dave
We are happy to announce that we have officially launched our FinTech podcast!
In our first episode, we have Frazer Anderson speak with co-founder and GP of Vestigo Ventures, Mark Casady to discuss his career in financial services and venture capital.
Envisions Interview
How New Startups Will Drive Productivity in Financial Services
w/ Romy Parzick, Co-Founder and CEO at Vault
A True North for Gaining Efficiency as an Incumbent
This month, Mike Nugent interviews Chaz Perera, CEO, and Co-founder at Roots Automation, about how corporate companies can gain efficiency using tools such as Roots Automation to automate a variety of tasks. In this Q&A, Mike and Chaz speak about the struggles of using RPAs such as UiPath or Automation Anywhere and how Roots Automation is poised to address these issues.
We hope you enjoy the Q&A below and enjoy its plethora of insights!
There continues to be a heavy focus on gaining efficiency across organizations. One tool that companies often look to assist in achieving these targets is RPA, usually from vendors like UiPath and Automation Anywhere. Unfortunately, studies show that only 4% of companies that purchased RPA technology get value from it. Why's that the case?
Traditional RPA, from companies like UiPath and Automation Anywhere, are all about precisely scripting a series of actions and decisions and only leveraging highly structured, digitized data. So, they are great solutions when the operating environment is very mature and highly optimized. The reality is that most companies and their business processes don't meet these requirements. It's precisely why people are involved in executing the process, to begin with.
The annual total cost of ownership of a bot built on traditional RPA software is often 15-20 times the cost of an RPA license because you end up having to spend a lot of money on engineering and machine learning talent, plus infrastructure and adjacent technologies to automate and maintain your business process.
If companies are going down the automation path, what do they need to start or optimize to ensure success?
First and foremost, the introduction of automation into the business is just as important as the technology itself, so prepare an automation roadmap and change management strategy before investing in bots. Look past the upfront costs and factor in long-term maintenance and integration because that number can be surprising.
Lastly, measure success beyond speed and accuracy. Determine non-financial goals, such as the potential customer impact, the value of improved data integrity, or how the technology enables your human employees. Then, create KPIs based on these additional priorities. These other KPIs will ultimately translate to your P&L, but critically, they will establish the trailing indicators that lead to long-term value.
What types of results have companies that partnered with Roots Automation been able to achieve?
Our customers can expect certain wins, like an average 5-month break-even, 4x to 8x increase in efficiency, and high data integrity. While the numbers are impressive, we like to point out the sustainable growth that Digital Coworkers can facilitate. For example, one of our customers, The Pill Club, cut their product delivery time in half, increasing their customer retention and new customer conversion rates significantly. Additionally, without our Digital Coworkers, they wouldn’t be able to maintain their current growth rate beyond a few months because our Digital Coworkers automatically scale to match their needs.
Why are your results so much better than the average RPA vendor and RPA COE?
Digital Coworkers are up and running quickly, typically within 6 to 8 weeks, and they only require a VPN connection into the customer’s network when required. Because the implementation time is so fast and there isn’t any tech setup on the customer side, the breakeven point arrives much more quickly. Our model is intended to democratize automation, meaning that we have a low barrier to entry with a high return – an ideal solution for small and early enterprise organizations but equally valuable to the largest companies in the world. We see the same set of processes, business rules, and systems time and time again across companies in the same industry, so we’ve developed a library of bot parts that allows us to offer a bot quickly. And because our user case-specific machine learning models are baked into every bot, they are constantly improving, which continues to shorten the time to value curve for customers.
So, if a company were to partner with you, how do they start? What would that journey be?
The first step is typically a conversation, where we explore problems the company faces and whether automation is a viable solution. If it is, then we analyze their business in-depth during our process reviews. Afterward, we move on to create an Automation Roadmap, where we sequence the bots in the most impactful order, so our customers can reach ROI quickly and easily. This also helps pave the way for automation expansion in the mid-and long term.
Can you elaborate more on how your bots ultimately pay for themselves?
Each Digital Coworker has a fast time-to-value because it’s typically deployed in just weeks, not 7-9 months. Not only does it work 24/7, but it learns 24/7, and it shares its knowledge with its counterparts – i.e., we federate the learning amongst similar bots. Because of this, it evolves alongside a company’s processes and people, whereas RPA breaks when people, processes, or systems change. Digital Coworkers are designed to pay for themselves by increasing efficiency and quality and emphasizing constant learning and scalability.
When you talk about efficiency, it's not simply about the bots being efficient. How do bots enable people at the company also to be efficient?
Today’s talent looks for resources and tools that increase their productivity and allow them to engage in more challenging work. They realize that promotions are given based on their ingenuity and drive, not their data entry skills. When companies relegate mundane tasks to a bot, they allow the best of their workforce to truly utilize the skills and talent that made these employees an ideal hire in the first place.
How do you see the automation space evolving, and how should companies stay ahead of the curve?
Automation is only gaining traction. Because major players in every industry emphasize the usage of bots, automation will continue to increase in commonality. Additionally, companies that have yet to consider automation will find themselves struggling to catch up with their competitors in the next 5 to 10 years. To stay ahead of the curve, leadership should become familiar with the automation landscape and utilize learning resources like peer discussion groups to avoid the trial and error approach that hasn’t lead to long-term success.
Lastly, why should companies partner with Roots Automation instead of vendors like UiPath and Automation Anywhere?
Between development costs, payroll for maintenance, adjacent technologies, troubleshooting, and third-party licenses, it’s challenging to project your initial investment with UiPath or Automation Anywhere. When you partner with Roots Automation, you always know all costs upfront. We’re the automation experts, so you don’t have to build bots yourself – or worse, overspend on outside developers while trying. We take care of everything so that you can focus on broader strategies and initiatives.
If you would like to learn more about Roots Automation and the innovative solutions they are bringing to life, don't hesitate to contact Chaz (chaz@rootsautomation.com) or watch this short video of John Cottongim, co-founder, and COO of Roots Automation, to learn more about the business. Our limited partners will have the benefit of meeting him at our AGM on September 23rd.
Portfolio Updates
Romy Parzick Co-Authors Book and AWS Startup Club Highlights Vault
It is great to see Romy Parzick, co-founder and CEO of Vault; co-author a new book focused on "The Future of Building Wealth." We are also excited to see AWS Startup Club highlight Vault's promising work tackling the student debt burden.
bring your own ideas Ltd.
Vestmark Honored Among ThinkAdvisor's Inaugural Luminaries Class of 2021
We are pleased to see the continued success of Vestmark and how they are driving the wealth, investment, and retirement industry forward.
PRESS RELEASE PR Newswire
Railz Announced as FinTech Winner and Roots Automation as Finalist in Constellation Research "The Pitch"
We continue to be impressed by the team at Railz being named the winner of Constellation Research's "The Pitch"! We are excited to see that Roots Automation is recognized as both a sophisticated AI tool but also a trailblazer in the Future of Work and Employee Experience.
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Guest Author
Ben Dickson
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