Financial-technology startups need capital to turn their idea into a viable business, and they need the right strategic advice to operate, expand and then potentially merge or sell the enterprise.
Venture capitalists and angel investors can provide initial funding; consultants can help with operations; investment banks can arrange additional capital raises and advise on M&A. SenaHill Partners is unique in that it has stitched together all that is needed over the ‘fintech’ lifecycle.
“Our merchant-banking value proposition connects the dots at every strategic level between global financial institutions and the entrepreneurial innovators of financial technology,” SenaHill Managing Partner and Co-Founder Justin Brownhill told Markets Media in a June 29 telephone interview. “We feel that we can get the right ideas in front of the right people better than anyone else. That's the mission of our organization.”
New York-based SenaHill, founded in 2013 by Wall Street veterans Neil DeSena and Brownhill, offers principal investing via its SenaHill Investment Group, LLC unit, and investment banking through SenaHill Advisors, LLC.
Wall Street is a relationship-driven business, a fact that is not lost on SenaHill. The company splits its formidable roster of talent into two categories: active advisors, formerly top people in the financial industry who can help startup and emerging fintech companies get the right exposure and introductions; and inactive advisors, who provide guidance, insight and background from their current positions in the industry.
SenaHill’s advisors include Stanley Young, formerly the chief executive officer of NYSE Technologies; David Ogg, CEO and founder of Ogg Trading; Joseph Wald, CEO of Clearpool Group; Sam Ruiz, an independent advisor and former head of equities trading at Nomura; and Craig Marshall, a start-up vet who is credited with creating the general-purpose prepaid category.
“As companies come to us, we can reach back out into the industry to these senior resources in our network and ask them about the space, the people, the product and more,” said DeSena, who headed REDI in 2000-2006, when the global multi-asset trading system was owned by Goldman Sachs.
DeSena will speak at Markets Media's Summer Trading Network, a fintech-themed event that will be held at Carnegie Hall in New York City on Wednesday, July 15.
The idea of SenaHill was spawned in 2012, when DeSena and Brownhill -- whose kids’ activities in their Manhattan neighborhood brought them together -- brainstormed. Both men were getting calls from friends in the industry who were looking for help in developing fintech products; perhaps they would start a fintech-focused VC or private equity firm.
Neil DeSena, SenaHill
“As we fleshed out the idea, we realized the model that we wanted to go forward with was a combination of principal investing and investment banking -- a true merchant bank model,” DeSena said. “We wanted to take advantage of our knowledge and our history in the industry as people who had started, grown and had successful exits with our own companies.”
Brownhill had been founder and CEO of The Receivables Exchange, which The Wall Street Journal named as the world’s most innovative e-commerce company in 2010. Previously, Brownhill held executive positions at Citigroup and Lava Trading.
“Rather than doing what a lot of people do, which is invest a little, advise a little, we thought we'd be the first company to really institutionalize the process with bonafide 20+ year executives who have been operators, advisors, and/or investors,” Brownhill said. “Seven of our eight managing directors have founded a company and gone through the trials and tribulations of raising capital. Most of us have had to fund payroll out of pocket at some point in our careers. And we've all had successful exits.”
“We know what early entrepreneurs and the operators are going through,” Brownhill continued. “We bring institutional capital, institutional insights and operating overlay to small emerging companies in the fintech arena. Everything we do is around financial technology, and hopefully we see value in companies before any other institution gets involved. We invest with a pre-venture capital, pre-private equity perspective.”
SenaHill Investment Group met its 1,000th company last month. The investment group looks for who can be truly disruptive players, and gauges how much and how quickly they would be able to help a company succeed. SenaHill’s average investment is in the order of $250,000 to $500,000.
“We're not always the largest check, but we like to think we're the most important, because with our check comes us,” Brownhill said. “We make a very strong operating and executive overlay investment that we call business acceleration. We help with planning, the road-mapping, the technology, business direction, pricing and the overall opportunity. Then we help them execute and focus on revenue generation.”
Kicking tires and selecting who to move forward with isn’t easy, but as Brownhill noted, the hard work really begins post-investment, as the fledgling faces tough competition from established players including banks, brokers, exchanges, and fintech conglomerates.
The fintech startups are “not necessarily structured and initially organized in a way where they can have their eyes and ears low to the ground,” Brownhill explained. “They trust us, and look to us as a guide and a filter, to help them understand what great things are out there specific to their business needs.”
“In the second phase, the growth phase, we bring our investment banking prowess to bear,” Brownhill said. “We partner with people from a growth capital standpoint, help them find the right financial and strategic investors and other co-investors and lead investors.”
SenaHill Advisors has participated in about 20 growth capital raises since its formation about a year ago, and the group recently announced its first fintech M&A transaction.
Ultimately, it’s the people behind the operation that will determine success for SenaHill. “If you scour the industry including larger investment banking groups and venture capital firms, you'd be hard-pressed to find a group of individuals like the team we have assembled,” DeSena said.
Featured image via Zhu Difeng/Dollar Photo Club
