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Activant is a research-led global investment firm that partners with high-growth companies.

We partner with founders who have won their initial battles and are ready for the next challenge.

We typically invest when two things come together. First, the company has the potential to achieve escape velocity and transform an entire industry. Second, we believe the founders can lead the company through hyper growth, and our support can significantly increase the probability of this success. 

The critical time window to escape competitors and transform an industry is not open for long.

That’s why after we invest, the real work begins.

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We only partner with a few founders per year. But when we do, we’re fully committed.

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Andrew grew up in Northern Ireland on either side of the Good Friday Agreement in a family that lived in the thick of it, but cherished travel and embraced diversity of opinion. He first visited the U.S. to attend a summer camp in Vermont, and later moved full-time to attend Harvard University, where he studied behavioral economics. 

Andrew co-founded an ed-tech platform in 2014 after seeing a gap in the market and ran the company for two and a half years before joining Activant in its first fund. 

As an early team member, Andrew has been part of scaling Activant alongside its portfolio companies and established the firm’s fintech focus.

"For as long as I can remember I’ve always wanted to build companies - partially to beat the big guys, but mostly to push the boundaries of what we’re told is possible. There is no greater privilege in my view than working with, and learning from, founders every day."

Edtech startup focused on development of personalized critical thinking curriculums for students.

We are hardly the first to claim a new technology is poised to upend work as we know it. With every wave of innovation comes a chorus of such pronouncements, many of which turn out to be hyperbole. Technology may make our jobs easier, but most of the time, the core of what we do remains fundamentally the same. 

But spend five minutes on ChatGPT, or any comparable Large Language Model (LLM), and it’s clear: it’s different.

The reason is simple. Most technologies help us accomplish tasks. They’re tools, a means of making us more productive. AI, on the other hand, can think (or at least, provide the appearance of thinking). It’s like having another knowledge worker on the payroll.

Activant Perspective 1: LLM-enabled software will autonomously accomplish highly complex tasks.

This is the beauty (and threat) of LLMs: they can do work we thought would long be the purview of humans.

Given this, one could be forgiven for worrying their job will soon be automated away by an AI. In the short term, this will lead to dislocation. 

But technological revolutions are never zero-sum – in fact, they’ve always been accretive.

 As workers adapt, they become more productive, and the companies they work for can do more with less. Some stop there, to be sure, but most businesses opt to invest the gains back into their infrastructure and people. In the end, revenues go up, and the economy grows.

That said, we’re still in the very first days of this cycle – and critically, of the technology itself.

Activant Perspective 2: LLMs alone are not enough to achieve Perspective 1.

Case in point: a large language model can’t complete most tasks on its own. After all, an LLM is merely a dense set of attention networks; essentially, statistics on a massive scale. Yes, they can engage in human-like “thought,” but to generate real value from any of these models, a human would have to integrate them into actual workflows – and make use of their decision-making prowess.

For example, imagine that you hired someone to lay bricks. You could lead them to a stack of bricks and explain where and how you want them laid. They could perfectly understand your instructions. Yet, understanding isn’t enough – the worker needs to be able to, well, lay bricks.

In this case, they need to have more than just cognition – they need to have arms, legs, and physical strength. Furthermore, they need a memory to recall how you wanted each of the bricks to be arranged, and a way of correcting any errors so they don’t cause the eventual structure to fail.

Put another way, if LLMs are to extend beyond mere Q&A, they need (1) a suite of Tools to actually impact the real world, (2) memory repositories to remember what actions they’ve taken, and (3) auto-critique algorithms to error correct along the way.

When all these components come together, an “Agent” is born.

 An Agent is orchestration software that combines an LLM with memory, tools, and auto-critique algorithms.

 An Agent is a highly advanced bot that can complete work that has been assigned to it in natural language.

Though still in their infancy, Agents are poised to fundamentally reshape the way we work. They will become natural extensions of your organization and complete day-to-day tasks – akin to hiring more employees. They’ll help you get work done, even collaborate with others on your behalf. Eventually, they’ll be able to work together, breaking down tasks into atoms of work able to be handled by a full “office” of Agents, some of which orchestrate, while others specialize.

The result is why this time is different: working together, Agents will be able to handle increasingly complex tasks, replacing knowledge workers in a variety of fields.

 As they do, what it means to work – and to lead – will change drastically, as both will increasingly depend on a mix of human and human-like capital.

Activant Perspective 3: Agent Teaming is the future of autonomously completed, complex work – 

Few have sketched a path from where we are today, to the autonomous knowledge workers of the future. But that future is closer than you’d think, and one for which you almost certainly want a roadmap. To learn more about how this transformation will unfold, and how you can best position yourself within it, read on.

The Agent Ecosystem {2}

The Agent Ecosystem of the future has four key components:

provide “conscious thought” within AI Agents and have been trained on text data,

external APIs to facilitate task completion and Agent interaction with the real world,

 includes various data storage mechanisms to retain and recall information, and

the ability to correct mistakes when completing tasks.

To better understand the components, we imagine how each one might erode a job we know quite well: that of an analyst at Activant (sorry, John). Among many other things, we often rely on our analysts to create market maps, which requires them to:

Find companies that exist in that industry,

Compare these companies qualitatively, and

Place them on a 2-dimensional grid according to this comparison.

Until recently, this was almost inconceivable as a task for machines. Now, let’s explore how we’d put our “Agent Analyst” to use.

AI Agent Ecosystem

1. Understanding the Industry (and the Task) – Large Language Models

For our Agent Analyst to understand the task at hand, it requires the capacity to comprehend instructions stated in natural language. While LLMs provide that ability, they come in many different shapes and sizes (literally). For that reason, here we outline a basic framework for evaluating LLM providers, including both foundational model providers and companies offering Fine-Tuning as-a-Service (FTaaS

When comparing foundational models, the number of parameters in a model is often a good approximation of output quality. As a rule of thumb, the more parameters a foundational model has, the better its performance across different benchmarks, 

such as reasoning, web browsing, or even game playing

. Although fine-tuning a model can boost its performance on a particular task, larger models with more parameters tend to have better generalization skills – making them more useful.

As seen below, model sizes are increasing on an exponential basis with base 2, and although not pictured, model performance is similarly increasing – just not at the same rate.

Foundational Models Size Map

At the heart of any LLM lies its architecture: a blueprint dictating how various attention heads and layers are organized. Then, there are the "weights" — numeric values assigned to parameters in the neural network, refined and adjusted through training to enhance performance. Training involves feeding data into the model, allowing it to learn and make predictions, and then adjusting the weights based on its accuracy. It's through this process, often requiring substantial computational resources, that the model obtains its ability to understand and generate human-like text.

, “openly” share their architecture, weights, and sometimes even their training methodologies. This approach not only reveals the intricacies of their design but also democratizes access, allowing enterprises, researchers, and even enthusiasts to build upon, refine, or entirely repurpose these models for their own applications.

Conversely, some entities opt for a more guarded approach. Closed-source models, such as GPT-4 by OpenAI, often protect the details of their architecture, weights, or training processes, presenting them as somewhat of a black box. Instead of allowing direct model access, they employ APIs as intermediaries, thereby controlling and often monetizing the interaction between the end user and the model.

Foundational Models

“Provider Modality” relates to the data type a provider offers models for. This includes various transformations such as text-to-video, text-to-text, text-to-image, and image-to-text, among others. Companies that operate in just one domain are labeled as “Uni-Modal”; by contrast, “Multi-Modal” companies provide models spanning multiple domains. As Agents continue to evolve, we expect a growing emphasis on modality in LLM models, as those able to perform more diverse tasks and offer easier integrations will have a distinct advantage in the marketplace.

While Agents will no doubt depend on the 

, we actually expect most Agents to remain agnostic to the specific LLM they use. 

Today, OpenAI, Google, and Anthropic dominate the industry, but this is hardly set in stone. If anything, the next few years will see considerable competition, with whoever invests the most in R&D in a constant arms race. Given this uncertainty – and the promise of better models always around the bend – it’s hard to imagine Agents relying on a single provider. From an investment perspective, backing one LLM provider is essentially a vote of confidence in its R&D team, but past performance is not (necessarily) indicative of future results.

Having understood the industry (and the task), the Agent Analyst now needs the ability to search for companies. In other words, the Agent Analyst needs a Tool.

Tools are snippets of code that foundational models can use to create, modify, and utilize external resources in order to execute tasks they couldn’t otherwise complete on their own.

Most Tools are problem specific. In this case, all the Agent Analyst needs is a connection to Google, or SerpAPI, a prominent wrapper for Google’s Search API. Unsurprisingly, other tasks will require different Tools. Game this out, and you quickly arrive at the need for Toolkits and Tool Aggregators. As tasks become more complex, Agents will rely on not one, but a variety of Tools to accomplish a single objective. Through Aggregators, Agents will be able to access the resources they need, programmatically, and as those needs arise.

AI & LLM Tooling Companies

Single Tools refer to companies or services that specialize in just one function, such as searching the internet, booking a flight, or creating realistic voice audio files. While these offerings do have certain strengths, integrating them into a Toolbox, and thus into Agents, is often cumbersome. Notably, in prominent Agent libraries

, Toolboxes need to be set up before an Agent itself is even initialized. 

This means if there's a need to integrate additional Tools later – for example, if an Agent encounters a new task that requires a Tool outside of its preset toolkit – the Agent would have to initialized all over again.

 Given these considerations, embedding Single Tools into an Agent's workflow can be quite labor-intensive and time-consuming.

AI Agent Tooling

By contrast, Tool Aggregators offer Toolboxes-as-a-Service (TaaS). Theoretically, aggregators can compile an infinite number of Tools and distribute them via a single, unified API. In practice, they typically provide Tools that have been identified by an Agent as required to complete a given task. If an Agent requires determines it needs additional tools, however, it can access them without restarting.

 companies could provision Tools and/or provide tool-building functionality for Agents. As long as they offer an API, Agents can leverage these solutions as they do Tool Aggregators, integrating (and even custom-building) Tools into their workflows on the fly.

Many LCNC platforms have existed prior to the advent of LLMs and already have large libraries of powerful, ready-built Tools to draw upon. Several companies, including 

, have begun offering Agents-as-a-Service (AaaS), using these libraries to jump ahead of competitors, many of which are starting from scratch. Others may choose to offer APIs to facilitate quick adoption within the Agent Ecosystem and more reliably maintain their market share.

Because of their ease of integration and use, we believe Tool Aggregators and API-based LCNC platforms are the best positioned to take advantage of this new Agent ecosystem

. As platforms like LlamaIndex and Relevance AI grow, Agents will be able to dynamically access a vast library of toolsets without needing to update their structure or code – increasing both their functionality and value.

As our Agent Analyst has progressed, it has gained the capability to discern tasks and search for companies. However, identifying a company means nothing if an Agent can’t remember it for later use. To facilitate this, Agents require a dedicated memory component that can store companies and their associated descriptions.

Memory

Over the years, the software industry has seen a multitude of data-structure innovations, from traditional SQL-based relational tables to modern streaming services like Kafka. Yet, to truly grasp the intricacies of Agent development and the depth of virtual cognition, it's helpful to draw parallels with human memory.

At a high level, human memory is split into three core categories: sensory memory, short-term (or working) memory, and long-term memory.

In humans, sensory memory can be thought of as the direct inputs from our various senses — taste, smell, sight, touch, and hearing. These are perceived subconsciously, processed then filtered for relevance. Similarly, in the realm of Agents, 

sensory memory captures the responses generated from the Tools they employ.

 Research in neuroscience and psychology reveals that of the countless sensory inputs humans encounter every moment, only about 5% ascends to conscious awareness, courtesy of various attention mechanisms. Our neural framework efficiently filters out redundant and useless sensory data, elevating only important information for conscious processing. The sensory memory of an Agent operates on similar principles, 

sieving through vast data while retaining only what's significant.

For example, to store the names and descriptions of any relevant companies it finds, our Agent Analyst might choose to create a vector database. To do that, the Agent could use the 

 API and receive a specifically formatted JSON response directly. Though the Agent could use the LLM to parse that JSON response, it would be far more efficient for the Agent to use the Pinecone Tool from 

 and receive a pre-processed Python dict. In many ways, this is analogous to how our subconscious mind pre-processes data before it needs to be consciously thought about – i.e. you don’t have to process the shoe touching your foot when you’re using your finger to touch your phone because your subconscious brain filters the shoe sensation out.

Over time, we believe that sensory memory will include the ingestion of many different data types,

 from unstructured data files (such as docx, pdf, epub, or recordings) to semi-structured datasets (such as messages and CRM data). 

As of today, it is unclear to us if “sensory” processing should or could be handled at the Tool level,

 like it is in the above Pinecone example, because we don’t know if Tool Aggregators will provide a standardized API for these tools – or if it’s even possible to have a standardized API across all conceivable Tools. What we do believe as a result of our work is that the quality of Agent-handled sensory memory will be highly correlated with the quality of the Agent itself.

Having processed inputs on the subconscious level, Agents are left with the inputs which require conscious thought. In humans, conscious thoughts reside in working or short-term memory. When we actively think about a topic, we do not consciously remember the context for the thought in our “memory,” but it is nevertheless remembered. In fact, our short-term memory is believed to have the capacity of about seven items

 and lasts for 20-30 seconds. For Agents, using the context windows defined by LLMs to store short-term memory is the default solution of most Agents we see today, and we don’t see that changing. As context windows increase in length and new techniques for prompt engineering solve existing constraints, the context window will be an even more effective location for short-term memory.

Interestingly, most short-term memory will be forgotten after a certain time threshold, especially after corresponding actions are finished. Though some of this information may be transitioned into long-term memory (which we discuss below), most of an Agent’s short-term memory will not be useful after a task is completed. Therefore, short-term memory data can be stored in the context and does not require the same complex storage techniques long-term memory does.

In the context of our Agent Analyst, short-term memory can be thought of as remembering the larger task at hand (i.e., creating a market map) when deciding what smaller task (i.e., finding a company) needs to be accomplished next. In practice, this information will largely live inside the context window of the LLM API call – and while it’s essential for the Agent to complete a task, we believe that there is little opportunity for investment in short-term memory due to the limited additional infrastructure required to build it.

Once subconscious and conscious memory is in place, an Agent Analyst will need some way of saving information for longer periods than the immediate task at hand. This is where long-term memory comes into play.

In humans, long-term memory is finite, due to the limited capacity of the brain. As a result, we have developed two primary mechanisms to retain knowledge: repetition and adrenaline. For obvious reasons (i.e., they can use ACID databases), Agents lack this capacity constraint. Instead, they are limited by the amount of memory that they could conceivably “know” how to access. For example, if our Agent Analyst was integrated into our Drive and needed to search for the PowerPoint example of our Market Map, the size of the context window would limit the number of folders that it could select from in its search.

In our view, connections to long-term memory repositories are no different than Tools, in that they are blocks of code that can be executed and return a response.

Over the next decade, we believe that the entire ecosystem of data management will grow even faster than it has historically because of increased Agent data utilization. Agents will be able to build pipelines from company data, leverage it in their own processes, and integrate outside data into existing workflows. The total spend on databases and database management solutions doubled from $38.6B in 2017 to $80B in 2021

. As the Agent ecosystem grows, the demand for data stores will increase even more rapidly, making the volumes of unstructured company data – which today sits untouched – significantly more valuable.

We’ve listed a handful of data structures, and the impact we anticipate from Agents, below:

AI Agent Use Case w/r/t Databases

4. Placing Company Logos – Auto-Critique

Our Agent Analyst has successfully understood the industry, used a search Tool to find all the companies within it, and saved them in a database for future output. As a final step, we need the Agent to place the logos of each of those companies onto an Activant Market Map – fully understanding the significance of each company’s position. Naturally, this will involve a Tool that enables the Agent to create graphs. In the short term, this Tool will likely be some wrapper around Our Agent Analyst has successfully understood the industry, used a search Tool to find all the companies within it, and saved them in a database for future output. As a final step, we need the Agent to place the logos of each of those companies onto an Activant Market Map – fully understanding the significance of each company’s position. Naturally, this will involve a Tool that enables the Agent to create graphs. In the short term, this Tool will likely be some wrapper around Matplotlib

 but in the long term, this will undoubtedly be an integration into PowerPoint.

Plotting logos, of course, is the easy part of the challenge; understanding where to place a logo in a subjective 2-dimensional plane is the truly complex task. It requires iterations, constant comparisons to other companies, and perhaps even outside input from the Activant team. 

Therefore, the Agent needs a mechanism for critiquing itself. We call this Auto-Critique.

While we foresee potential challenges - like defensibility - this remains a vital component of the ecosystem with several approaches underway: (A) Prompt Engineering, (B) Human-In-The-Loop, and (C) Auto-Critique.

Self-Critique

 Prompt Engineering is the process of forming and refining natural language statements and questions to achieve an optimal outcome from an LLM.

In practice, LLMs are only capable of comprehending and responding to inputs that fit within a defined context window. For example, GPT4’s context window is about eight thousand tokens – meaning only about seven thousand words can be provided as context at any one time.

 In order to maximize the utility of the model, a prompt engineer could write shorter and more effective prompts.

In our view, prompt engineering is likely a temporary solution, one we expect the industry to shift away from as LLMs improve in terms of task comprehension and context window size (though the timeline for this shift remains uncertain). Meanwhile, existing businesses in this domain have a chance to pivot their business model, leveraging their current distribution to tap into emerging opportunities.

Human-In-The-Loop Critique refers to the use of humans to validate that Agents are accurately processing and reasoning through tasks.

Human-In-The-Loop Critique is just what it sounds like: leveraging humans to correct or modify the reasoning of LLMs. Currently, developers use this method when building Agents, as they want visibility into their inner workings. 

Because it requires that people scale linearly with compute resources, it will likely be unsustainable in the long term.

 Auto-Critique refers to the autonomous use of LLMs to check and modify Agent reasoning about a task.

Humans often make decisions in multiple steps: starting with an initial judgement, then assessing its consequences, and evaluating alternatives. Throughout this process, we add new information, remember past experiences, and take note of what others have done. We call this “thinking it through,” and LLMs perform a similar process when refining their own outputs. Like the brain, they begin with a rough first pass – a digital gut instinct, one might say – before iterating to either expand on that conclusion or critique it.

Auto-Critique is an autonomous process that allows Agents to improve and amend their own output by reflecting on past responses and errors, all without human intervention.

 To do this, Agents draw on new input from a variety of sources, including external Tools, other Agents, affiliated LLMs, and heuristic functions. Once they arrive at a sufficient result (governed by predefined metrics for evaluating self-reasoning), a stop condition is granted, allowing Agents to finalize their output.

Teaming: The Rise of the Planet of the Multi-Agent Systems

So far, we’ve focused largely on the mechanisms and potential of standalone Agents. However, to fully appreciate the potential of this nascent sector, we must also look at the collective strength of Agent Teaming, otherwise known as Multi-Agent Systems (MAS). Within the framework of a MAS, the power of individual Agents is not merely aggregated – it’s amplified, boosting the overall effectiveness of the system in a multiplicative and potentially exponential manner.

Tool Aggregators

Multi-Modal Data Stores

A Technical Guide for Founders & Operators Building Agents

Towards the AI Agent Ecosystem

Under the Surface: the Embedded Finance Opportunity

For as long as we’ve had banks, they’ve been fundamentally separate from business. Banks are singular institutions, operating in their own buildings — away from where we run our companies. Finance is available, but you need to actively seek out and engage with it.

This separation makes sense. You can’t have (and arguably wouldn’t want) a physical bank in every office. Of course, this isn't without its headaches. Business may be 24/7, but when the bank closes, everyone waits. At best, commerce is delayed; at worst, transactions are put off entirely.

As work has increasingly moved from physical spaces and into software, however, many are rethinking this separation. A handful of early movers, such as Shopify and Square, took the first steps, building the functionality of banks into their platforms — transforming the market and laying the groundwork for millions in VC investment. Now, a growing constellation of companies are embedding finance into the very core of our organizations.

The business case is compelling. The core is where finance is the easiest; after all, it’s where everything is already happening. It’s also where finance knows the most. Unlike a bank, which must learn your business on the spot, Shopify knows every transaction your business has ever made. Who do you think can better or more rapidly underwrite you?

The challenge, of course, is how quickly we can evaluate risk, drawing on internal data as well as that held by third parties. Banks are slow for a reason; this analysis takes time. Traditionally, bank personnel would weigh some combination of incomplete data and (perhaps) a personal relationship for days or weeks before making a lending decision. Now, software can pull on a variety of sources instantly, greatly clarifying risk and making finance a boost rather than a bottleneck.

To be fair, this kind of analysis is nothing new. The credit bureaus have been doing it for decades. The sea change, however, is the incredible rise of the embedded finance ecosystem, which finally makes possible the ability to leverage these data programmatically - and in real-time.

 - while a merchant has a seamless experience with an embedded loan "above the surface," there's a much larger world below making that experience possible:

Embedded Finance

It’s hard to overstate the momentum in this space - or the mission, which increasingly looks less like old school finance and more like building the future of commerce. Consider how software (and particularly the internet) revolutionized shopping. No more waiting for stores to open. Always finding what you needed. The result? Less friction, more commerce. Embedded finance is no different. By harnessing data flows to power real-time, personalized offers for financial products, we can unlock whatever end-transaction we - or our customers - are trying to make. Again: less friction, more commerce.

As for momentum: 10 years ago, 90% of the logos above didn’t exist. 20 years ago, none of them did.

 Though much of the market is already mature (particularly the Data Platforms and Credit & Charge Cards layers), there are white spaces abound, with much room for innovation.

The question, then, is what will the market look like in one year? Or ten?

At Activant, we believe the scale of the opportunity has never been greater. Herein, we present a guide to seize on the current moment: 

The “great white whale” of embedded finance: B2B

If you shop online, you’ve likely interacted with (or at least seen) embedded finance, most commonly in the form of the 

 button that has become all but ubiquitous during online checkout. Though just one example, today, the vast majority of embedded finance products are B2C, owing to a buying journey that is simpler and far easier to digitize.

For all B2C’s success, however, the “

” of embedded finance is undoubtedly B2B. Most B2B sales are for huge ($100K - $1M+), mission-critical purchases, for which financing is not an option, but a 

 Contrast that with a shirt from Zara, and it comes as no surprise that B2B is where all the money is: $120T annually, versus $24T for B2C:

Global B2C and B2B Sales, Online and Offline

Put simply, much of that is up for grabs. 

Though we no longer work via paper mail or fax, B2B is still fundamentally offline. Transactions may be digital, in that they are mediated by email or entered into ERP systems. But the payment processes themselves are largely the same as they were 10 or 20 years ago: you call the bank, provide them with wire information, and authorize the transfer of funds. Imagine doing this every time you wanted to buy something on Amazon, and the difference between 

 becomes painfully clear. Solve this, and you’re looking at not just a durable lead in the market, but a chance to transform the entirety of B2B.

What kills most businesses (82%, in fact) is not their product quality, demand, or cost structure, but cash flow.

 The problem is almost always one of time - how to navigate periods when you’re holding inputs or finished goods, but before revenue is generated. Those inside the company can see that eventually, the math will work out. But for a multitude of reasons, traditional finance struggles to keep up. This is the power of bringing credit directly into a company’s operating system, be it Square, Shopify, or any other system of record. We can ease this friction, or eliminate it altogether.

Why, then, is it still anyone’s game? The answer is equal parts people and tech. For one, legacy businesses are slow to adapt. Decision makers are typically older, and not versed in the technologies underlying embedded finance. Building consensus is hard. Also, there are legacy workflows and systems to consider, most of which are unwieldy, but have been bolted into place for years.

The psychology of buyer behavior is also markedly different at a B2B scale. While a consumer may feel comfortable buying a $50-100 product online, a business will certainly think twice before spending $100K.

Truthfully, though, it’s the tech that’s the hard part. The B2B buying journey is complicated, and myriad pieces need to come together to execute real-time underwriting based on the macro (and micro) environment.

After years of growth, however, the embedded finance ecosystem has finally reached a critical mass — 

giving us just enough pieces to glimpse the finished puzzle.

Unlike B2C, a B2B purchase unfolds across a variety of spaces, from email and websites to trade shows and phone calls. No two transactions are the same; they’re nuanced, high touch, and hard to digitize. Put simply, there’s a reason we’re still waiting for a “Shopify for B2B.”

This same reason is why we also pay great salespeople so well. After all, this is exactly what they do today. Rather than push products, a great salesperson unlocks or solves problems, guiding their customers to solutions that add value - whether by putting out fires, or enabling future growth. Doing this well is inherently omnichannel, and means knowing the business inside and out.

The promise - and challenge - of embedded finance is to move all of this into software in a way that enhances the ability to serve the customer. It’s not about merely extending credit, but reducing the friction between problems and solutions in B2B.

What would such a platform even look like? What kind of buying journey would it enable?

In many ways, the hope is to close the gap between B2C and B2B, but with a twist: 

early on, B2B buyers would learn not just if a product is right for them, but if it’s right for them financially.

 Combining a variety of on- and offline data, software would answer questions like: 

Can I afford this thing? How would it affect my profitability this year? In the next five years? How long will it take me to pay it off? Should I lease or buy?

Today, these answers are provided by a person, with all the benefits (and baggage) that entails. To succeed, software must do the same, but instantly, across channels, and with more and better data.

Remember: the value is in the software, not the financing

For the past decade, capital was cheap. A lot of companies grew rapidly, offering competitive lines of credit to their customers. Most differentiated based on distribution - going to where the customer was - which they cited as the basis for a slight markup over bank rates. To the extent that their offering was online, it was often a thin digital layer on top of financing, while money was the real product.

As recent history has shown, this is hardly a durable advantage. Rates change, and more importantly, you’ll never be as cheap as the bank. Instead, leaders in this space are putting the technology first, weaving themselves into their customer’s workflow.

Unlike their predecessors, these companies realize that the “embedded” part of embedded finance is where the value is, and that if you have incredible software, you can serve anyone a relevant financial product, cheaply and without human intervention - because you understand their risk.

 have built foundational data infrastructure to help embedded lending tools better assess the risks of underwriting businesses:

The lesson: build software that makes the B2B transaction better, and you can offer financial services when they’re needed most.

A Guide for How and Where to Play - to Win

The Next Chapter of Embedded Finance

Trusted advisor to founders. Passionate ecosystem builder. Recognized fintech expert.

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Andrew
Steele

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How Andrew supports portfolio companies

Partnerships & BD intros

Product narrative and strategy

Industry perspectives - particularly in payments and fintech

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Hometown

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Andrew Steele

Partner

Office

Hometown

Residence

Role

How Andrew supports portfolio companies

Partnerships & BD intros

Product narrative and strategy

Industry perspectives - particularly in payments and fintech

Research

Relevant Experiences

Andrew
Steele