Funds extended for startup aid

State, financial-tech firm back program with $1M pledges

Grant Easterbrook, chief executive officer of Dream Forward, explains the company’s low-cost 401(k) retirement plan to guests at the FinTech Accelerator program’s Global Investor Demo Day at the Clinton Presidential Center in Little Rock on Wednesday.
Grant Easterbrook, chief executive officer of Dream Forward, explains the company’s low-cost 401(k) retirement plan to guests at the FinTech Accelerator program’s Global Investor Demo Day at the Clinton Presidential Center in Little Rock on Wednesday.

Arkansas and financial-technology company FIS have agreed to give $1 million apiece to aid in funding the FinTech Accelerator program in 2017 and 2018, Gov. Asa Hutchinson and company CEO Gary Norcross said Wednesday.

The two spoke at the presentations of the 10 startup companies that participated in the FinTech program that started in May. The event, held at the Clinton Presidential Center in Little Rock, was the conclusion of the 12-week program.

Almost 300 bankers, venture capitalists, technology professionals and community leaders attended the presentations.

About 150 companies applied to participate in the FinTech Accelerator, a financial technology accelerator program sponsored by FIS and the Venture Center in downtown Little Rock.

Through a fund established by the Venture Center, teams in the accelerator received an initial $50,000 investment. The companies gave up about 6 percent in equity in their companies for the $50,000.

The companies had access to some of the top executives at Jacksonville, Fla.-based Fidelity National Information Services Inc., better known as FIS. The company has about 1,200 employees in Little Rock and 55,000 worldwide.

A goal that FIS and the Venture Center set for each company in the program was to help them reach $1 million in annual revenue.

Arkansas has a history of establishing financial technology companies, Norcross said, including Systematics Inc., which was founded in 1968. Alltel Corp. bought Systematics in 1990 and later sold the subsidiary to Fidelity National in 2003.

The state's $1 million for the FinTech program over two years would come from the governor's discretionary funds, Hutchinson said.

Hutchinson plans to present a more comprehensive accelerator plan to the General Assembly next year, he said.

The proposed legislation would allow Arkansas to support other accelerator programs and not just one in financial technology, Hutchinson said.

"They would be in a broad range of sectors ... such as agricultural and medicine and who knows where else," Hutchinson said.

Hutchinson said he will ask the Legislature for a $2 million investment.

"At a minimum this would be four accelerator programs we would have," Hutchinson said. "We would have an open process for industry to come and say, 'We would like to participate.' We want to make sure that we are in a climate of innovation in this state."

It's good for the state to explore partnerships with the private sector, U.S. Rep. French Hill, R-Ark., said in a phone interview.

Little Rock always has bragged about having an economy that doesn't boom or bust, said Hill, the former chairman and chief executive officer of Delta Trust & Bank, which was sold to Simmons First National Corp. in 2014.

"I think for the future we need to have a more dynamic economy," Hill said. "We need to take more chances and have faster job growth."

The state will be measuring the results of the programs, Hutchinson said.

"We want to see the return to the state," he said. "I'm confident with what we've seen here with these 10 companies that we might capture a couple of them to stay here in Arkansas."

At least one of the 10 startup companies plans to locate in Arkansas -- LumoXchange, currently based in Atlanta and Geneva, Switzerland.

LumoXchange is working with Little Rock-based Bear State Bank to offer its services to customers across the country, said Maf Sonko, the firm's founder and chief executive officer.

LumoXchange offers a low-cost payment process to compare exchange rates and send money online.

Another company in the program, Monotto of Charleston, S.C., announced that it has signed Bear State Bank as its first banking customer. Monotto is a personal finance program that determines how much money a customer can move from his checking account into savings or investing accounts in an effort to promote savings.

James Hendren, chairman of the Venture Center, where the 12-week accelerator program was held, said LumoXchange and a participating company called Akouba will receive additional investment from the Venture Center's fund.

Chicago-based Akouba has a small-business lending platform for regulated financial institutions.

FIS has about 20,000 clients, more than $6 billion in revenue and about 35 million users of its mobile-banking products. It is the world's largest financial technology company and works with more than 50 percent of the world's banks.

Business on 08/04/2016

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