Fortune 500 Innovators: Starting a Technology Revolution

Technology continues to evolve every day and transform the way that all businesses operate. There is rapid innovation happening across nearly every market sector relating to data, fintech, and even organization. This hectic pace has created a new wave of rising stars out of select startups that are beginning to challenge and intimidate the larger Fortune 500 companies.

With massive amounts of resources and funding at their disposal, these Fortune 500 players have shown us that they will not go down without a fight. More and more companies are switching up their approach and modernizing their organizational structure in order to keep up with tech innovations and consumer demand, starting a technology revolution. 

So How Are Fortune 500’s Staying Relevant?

One of the most important new trends in business organizations over the last couple of years has been interoperability

According to data from Pitchbook, leading fintech companies raked in nearly $15 billion in funding from big companies with over 1,300 venture deals in 2019. These included companies buying into technology that helped supplement big data analytics, payments, and money management, among others. 

It is no longer common practice to keep every bit of the company and its functionality in-house – technology is just moving too fast. While many of these big companies were continuing business as usual, new startups were challenging the status quo and threatening the way these entities have operated for decades. Rather than try to develop software independently in response to these threats, many of these companies began using their wealth and power to directly integrate and invest in new technologies with the idea of weaving them right into their own services and workflows. 

Startups have honed in on this trend and have been pushing new ideas and innovations heavily over the past few years that offer backend-interoperability and direct integration into a variety of established markets. 

One of the most prominent and relevant examples of this type of company is PayPal. They were one of the first companies to bridge the gap between the digital and consumer worlds by providing a digital point of sale that any business could weave into their stack. This allowed PayPal to breach the market with virtually no competition initially. PayPal’s innovations paved the way for other companies such as Stripe, Plaid, and even Microsoft to begin to develop products that could be used by other businesses to improve anything from the customer experience, data utilization, and even payment rails. 

According to Ian Sigalow, co-founder of venture capital firm Greycroft, “…suspect that many enterprise software companies will become fintech companies over time — collecting payments on behalf of customers and growing revenues as your customers grow…Business owners generally prefer a model that moves IT expenditures from Operating Expenses into Cost of Goods Sold, because they can increase prices and pass their entire budget onto the customer.”

According to Ian’s point of view, many startup companies would benefit from shifting their focus to how they can better serve the customer at the point of sale and better organize payments. This can also apply to data and analytics on the customer side as well.

Startup Potential Is Ripe

It seems that every week there are a few new potential unicorn startups emerging that are hoping to take over the market. In the past, these players had standalone services and almost exclusively preached to be completely self-sufficient and independent organizations. This is not the case anymore – many of the most successful fintech players in the game are now interwoven directly into big legacy corporations – and this was their plan from the start.

The top categories that startups should be looking to help augment include:

  • Smart Personal Finance Management. Companies such as Robinhood, Mint, and Level Money help users manage money professionally without the help of any financial advisor. LevelMoney was acquired by Capital One in 2015 for an undisclosed amount. 
  • Simplified Accounting for Businesses. Providing an alternative to big enterprise accounting services for small businesses remains a big gap in the market, with only a few companies including the recently acquired Wave and FreshBooks leading the charge. 
  • Payment and Money Transfer Processing. StripeFortune 500 Fintech Innovators: and Square have shown that providing low-cost and simplified payment rails is a huge opportunity in the financial market. These tools easily integrate into any business’ stack and help simplify how they interface with customers. 

The savviest founders will keep in mind that product stacks at the biggest companies of the world now consist of a hybrid suite of both in-house and third-party tools. This has created an entry point into a variety of markets that is not as steep as it once was. This new dynamic makes for a bright future for forward-thinking startups who can leverage these new interoperability trends. 

Daren Trousdell is an early stage investor, advisor and founder focused in the Fintech and Digital Media space.

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