What has been the evolution of the AIR Summit?
Bill Stephenson: A big part of our evolution was expanding the event outside of the US. We were seeing more innovation and companies coming out of London and Europe in general, so it made sense for that to be the natural next step.
Another part of that evolution was getting more outside perspectives and broader opinions of companies, and use cases that could solve investment challenges across the investment management landscape. With that, my partner Morgan Dunbar and I have created a seasoned advisory board to help us make sure those viewpoints are weaved into the content and the selection decisions for presenting AlphaTech companies. This collaboration is a really important part of the evolution, and one of the initial principals of the AIR Summit when I conceived this event at Franklin Templeton in 2013.
What types of FinTech companies are curated at AIR Summit?
BS: Any company that presents at the AIR Summit needs to be innovating around the creation or preservation of alpha in the investment process; we call this AlphaTech. Since FinTech is very broad, we wanted to focus on innovation specific to the buy-side investment management process. We think we have done a pretty good job over the years of finding undiscovered or emerging technology and talent that fits squarely into this silo of FinTech. One way we have measured our success in curating these companies is by how well they are growing their businesses or if they are successfully raising new capital; 30 of the companies that we have featured at our events have raised an additional $1.5 billion since they have presented and another 15 have been acquired for well over $6 billion in aggregate.
The key objective of the AIR Summit, since the beginning, was to help these companies acquire customers and attract capital so they can evolve their businesses as they refine and innovate around their offerings. If they are successful, then the asset managers that utilise this technology can be successful.
As an example from our original program in 2014, we had an AI firm called Kensho, which was acquired by S&P Global in 2017 for $550 million, and we had Orbital Insights which is a satellite company that was counting cars in retail parking lots and providing other analytics that many large investment managers had not seen in January 2014. We also had OTAS Technologies which we helped grow as a beta client at Franklin Templeton and was bought by Liquidnet in 2017, and Visible Alpha was another presenter before they even had a viable product in late 2013.
What are the biggest challenges for the buy-side relating to the implementation of innovative ideas?
BS: First and foremost, the largest challenges seem to be around culture and talent. When you are trying to re-work investment processes that have been successful for a long time to incorporate more technology or data, it becomes much harder to make those changes unless a culture of innovation and new ideas is prevalent. If you can develop the right culture and executive buy-in when it comes to thinking and spending on innovation, then attracting the right talent becomes much easier.
At the AIR Summit, we showcase all this great technology and innovative ideas, but many times the buy-side will say that they don’t know if they even have the right people to implement these innovations. Because of that, we think it is really important to spend just as much time on setting a good foundation for innovation as the innovative ideas themselves.
Why did Plato get involved with AIR Summit and what could this mean for the asset management industry moving forward?
Mike Bellaro: Plato is a consortium of buy- and sell-side firms that is really trying to change the world of equity trading, to stimulate and facilitate future designs for market structure. Everything that Plato does is around identifying where there are problems, find if there is a conventional solution, see if we can make the market potentially more efficient and, ultimately, review the potential for the end investor to benefit from the changes we are trying to implement.
We had a keynote speaker, Daniel Hulme from Satalia, who was suggesting that the successful FinTechs of the future will be those who also give back to society and that resonated with us, because that is the goal of Plato; to improve the market for the investor and give back to the investor. This was the perfect opportunity for Plato to give back to the marketplace.
The second part is that there was clearly a need in the market for an event like this. The one place where we thought there was very little going on was around the FinTech space, focusing on helping the asset managers understand what is going on from a technology innovation perspective. We thought this was a perfect opportunity to team up with Bill and Morgan to bring the fantastic work that they run in the US to Europe, and to really make sure that the asset management firms really understand what are new innovations in technology are actually out there, especially in some of the early stages, because that’s relevant buy-side firms to understand.Asset managers should be looking for opportunities that are intriguing, that can be of strategic use, and if they find that in the early stages they can help in the development through working in partnerships, making sure that the technology is implemented in a way that is strategically aligned with the corporate structure that these firms are working to.