Emanuele Levi (360 Capital Partners): Our history of finding successful companies that we have been able to support since their very early days and have worked with for many years speaks for itself
08 Oct, 2021
Ulyana Shtybel is Co-Founder and CCO of HighCastle Investments. HighCastle provides growing companies and investors with a unique SaaS solution to manage investment workflow and securities lifecycle finally in one place. She’s served as Senior Executive at the investment services companies and organizations. She has over 15 years of experience in project management, capital markets and finance, financial market transformations and reforms, investors and government relations, multi-stakeholder collaboration and international relationships, research and analytics. She is also a founder and CEO at emerging company Impactsee, portfolio mapping and management software that enables institutional and private investors to track, discover, rebalance and gain a tax benefit from impact portfolios.
I co-founded HighCastle which is an equity management and capital raising platform in 2016, and since that time we’re building this solution with a number of pivots, experimenting with different technologies and different approaches. The platform is providing a solution for private companies to automate the investment’s workflow, to sign documents with investors on there, online, in a secure data room. After the process of the investment is completed, all sides can issue secure digital share certificates, and a company can manage shareholders and communicate with them. We provide an all-in-one solution for private companies to raise capital, close a deal, and manage communication with shareholders, including compliant shareholder’ register and the corporate actions.
It’s our way of saying that my job is a combination of Chief Investment Officer and Chief Financial Officer.
It wasn’t an actual switch from the incubator program, because I’ve co-founded HighCastle while working there. We have been working on our solution, I’ve already built a huge network of FinTech startups and experts. We created a spot where we connected to the 1991 Incubator, had support from a MasterCard, and decided to combine our expertise and launch the first in Ukraine FinTech incubation program – FinTech Master. As a follow-up, 2 incubation programs were organized, with 1991, myself, and OTP Bank. The journey of HighCastle was quite long, but now we have a good product and clients who like our product.
I think, the majority of Ukrainian startups, participating in FinTech incubator programs, are focused on payment solutions. It’s not bad – just not enough to develop a broad fintech ecosystem. And every startup which was not a payment solution was an exotic one for me. OTP bank awarded YouScore (now called YouControl) as the best project of the Open Banking Lab incubator program. Another interesting product was Alpha Protection. Now we are working with the team behind it, they are developing a new startup called TradeEVO. This is a cross-platform CRM solution for companies that use multiple marketplaces to manage their sales, products, and clients.
We started selling our investment product not long ago and (as of November 2020) have about 20 clients who have been closing deals on our platform. Additionally, we have a product-focused on equity management and security issues. It has about 50 clients/companies. It is an ecosystem that we provide to our customers. Of course, they can use these products separately, moving from equity cap table management solution to raising funds as you grow.
Not really. In the UK it is called “registrar services” which is a registration solution for all stocks, working closely with the exchange. We’re providing a solution to manage everything when you are raising capital; it makes private companies more equal to public companies because they can use similar infrastructure. Nevertheless, it’s not a trading platform, because for trading you need to have a regulated market. On our platform, you, as a shareholder, can initiate the secure transfer if you already have a buyer. Secondary market deals have to be settled, documented, and actualized properly according to UK legislation. Talking about the Kickstarter from the perspective of a capital raising: no, not even close. Kickstarter is more about the pre-sale of your product as fundraising. The closest example of what we do could be crowdfunding because it is more about selling your shares for attracting investments, but still, we are not a crowdfunding platform. Most of our clients are B2B companies, and these companies find it more difficult to raise capital because their products are less attractive on crowdfunding platforms. When it comes to the private placement, if you’re not a technology company, but a restaurant network or real estate or something similar, you’re not that attractive, again, for crowdfunding. That’s why our platform is designed for private placement for companies, including technology scaleups, that want to communicate with their pipeline investors safely. We also have a special tool for companies that don’t have their own community of investors – we’re providing them investor matchmaking in a form of email addresses of investors who may be interested in supporting these companies according to those investors’ criteria.
It’s true, still, you’re defined by what you doing more than what your gender is. I always have been focused on my work quality and innovations. When you come to the market with an innovative idea, it is more important than whether you’re female or male. Nevertheless, some minor levels of prejudice might exist, some people may treat women as less competent players. But still, I think, it all comes to the point when you start speaking, afterward, it doesn\t matter that much. Don’t forget, that my experience more relevant for the UK business world but might be less relevant for other regions.
We’re providing them data rooms to run due diligence. Now we’re planning to integrate some third-party providers who can do it in the cases when you really need deep due diligence, but usually, it’s handled by investors – VCs or private – on their own, following their own procedures. What we do, as a platform, we provide KYC and AML for all users – to open an account at HighCastle you have to come through this process. KYC stands for “know your customer/client” and, basically, this is a process of identification of a person. We verify his/her identity by checking an ID and getting proof of address/residence. AML stands for “anti-money laundering”; we connect to databases and third-party providers of AML services. Of course, we cannot do a thorough search, but we need to know that our clients are the people they claim they are and not involved in scum schemes.
1991 Platform wasn’t working as an investor and issued no checks. It was an Angel-type non-governmental organization. The awards were provided by OTP bank, it was $10,000 in form of grant money. This is, probably, Ukrainian reality – we still don’t have a developed ecosystem of Angels, incubators, accelerators, and investors. Still, it’s a very big step forward in making the Ukrainian FinTech community see that there are tech startups in Ukraine and work to be supported. Those startups that I follow have raised money later from Ukrainian VCs and Angels. One of those deals was closed on the HighCastle platform.
For startup teams, the persistence of founders and, of course, their professional qualifications are essential. There is a lot of myths about being a startup founder in Ukraine and all over the world. Many people think that it is enough to just start something or have a good idea – and they will get money from investors right away. They don’t understand what the process is. And it is like that: you start your business, build MVP on your own expenses, in a best-case scenario you get your first Angel investor, and once you have an MVP and the first sales, you might see next Angel investors joining. You will see VCs, probably, only when you have $10,000 or $20,000 MRR – and I’m speaking about seed-stage VCs. That’s why the persistence of the founders is very good quality: they need to understand that this would not be taken easily – they need to put effort, try again and again, test their product, make it work out, pivot it, sell it. At all these stages persistence and professional qualifications, some experience, even previous failures would be really good. You spend a lot of time learning how to be a startupper, how to establish a business. The good idea here is to have a co-founder with such previous business experience if you have none of your own.
I think it’s not too over the judge because there are many applications and startups contacting VCs, that they start to be too much picky, forgetting they’re not private equity, but VC funds. From the quality perspective, it’s, of course, a good approach – to look for revenue, to stay on the safe side. But in this race for revenue, I would really love to see more VC partners looking for innovations, for innovative solutions – even at the idea stage, and make it possible to follow the process of interesting teams even at too early stages for your fund.
It’s more opportunity because it’s more about being online, and if you didn’t have any other stimulus to get a mobile app, you probably do it now. So, it is a good punch for fintech organizations to start developing and using online services. Still, in the majority of countries, even developing, the FinTech industry already using online services, and COVID revealed other industries that can gain from going online – events, online conferences, VR (still depending on internet quality, it revealed to be needed – not just for fun, but for business). COVID showed that even if you cannot work online, you should think about making your business visible online.
In the UK, Revolut was definitely a break for the European market and they are still a benchmark for many others. Another important startup is Robinhood which makes public stocks more available to individuals. Revolut, as far as I know, builds a similar solution for the UK and European markets. And I should say that crowdfunding is a FinTech product that made a big change for retail and investing markets, making public money available for those raising capital. Crowdcube was such a company for the UK market. With the platforms like HighCastle, a new type of solution for private companies in raising money are coming. So, my choice is Revolut, Robinhood, and Crowdcube.
For me, tZero was a failure of an idea, as well as most companies promising to trade securities on the blockchain. I don’t see anyone who was really popular back in 2017-2018 who is now really providing what they promised. We, in HighCastle, were never been saying that we’re working with public companies, we were always working with private companies. There is a big problem from a legal perspective with blockchain that you still need to have central securities depositaries taking part in all settlements. Maybe it’s not really a problem of a FinTech startup, but rather a problem with the flexibility of regulation, but so far it exists, and you cannot enter which blockchain in all the areas.
First: Analyse at what stage you are, because it will save you a lot of time when you try to understand what type of investor should you reach. If you’re a pre-revenue company, build your product, sell it to the first client – only then you would understand whether you have a product and how to change it to reach your customers. Second: Raise from Angels. Usually, it would be your community or Angel investors’ networks. You have to have your MVP while looking for the first outside money. Third: VCs would expect you to have enough revenue. For both having revenue and being visible for VC, do not neglect marketing. It is a huge part of your solution. You may have a brilliant product, but no one would know it, no one would buy it, no investor would give your money if it is not visible. Marketing should be a big part of your business.
I really can’t compare it to a game, because our product is partly FinTech, partly LegalTech, so the rules we follow are too strict to make it a game.