653: She Invests $120 Million Into Financial Tech Companies, 39 Graduates, 6-8 New Per Year with New York Partnership Fund CEO Maria Gotsch

Maria Gotsch. She's the president and CEO at the Partnership Fund for New York City, which is the investment arm of the Partnership for New York City. In addition to leading the funds operations, Maria has spearheaded the creation and operation of a number of fund strategic initiatives including The Fintech Innovation Lab. Prior to joining the fund in 1999, Maria was a managing director at a company that is now part of Deutsche Bank, providing strategic and financial advice related to mergers, acquisitions, dispositions, joint ventures and the development of business strategies. Maria worked for LaSalle Partners in the New York area and Merrill Lynch Capital Markets, in both New York and London. She graduated with an MBA from Harvard Business School and a BA from Wellesley College.

Famous Five:

• Favorite Book? – "A book on the Iranian negotiations with the US around the treaty"
• What CEO do you follow? – Henry Kravis
• Favorite online tool? — MyCity Bike app
• How many hours of sleep do you get?— 7 and a half
• If you could let your 20-year old self, know one thing, what would it be? – "Be bold, be bold, be bold!"

Time Stamped Show Notes:

• 01:11 – Nathan introduces Maria to the show
• 02:15 – Partnership Fund is the corporate sector at the table that is trying to grow the NYC economy
  • 02:21 – Henry Kravis of KKR has raised funds in the late 90s and raised from major corporations and individuals, in NYC
  • 02:32 – The investor list is the "who's who" of the private equity
  • 02:36 – Partnership Fund was structured as an evergreen fund
  • 02:48 – "We can do things that are a little bit riskier and take a little bit longer than a traditional private sector investor"
  • 03:02 – "We often work with government, but we're privately funded"
• 03:13 – Partnership Fund is like an interest-free loan for 45 years
• 03:33 – All of Partnership Fund's gains just go back to their funds and they reinvest it
  • 03:41 – "We have the investors' money for 45 years and if we make returns, it comes back to us to fund new projects"
• 03:58 – The Fintech Lab is currently in their 7th year and has 75 graduates
  • 04:08 – It is an elite program and takes 68 companies a year
  • 04:18 – It is structured as a civic program
  • 04:32 – The goal of the program is to help reduce the pain and agony of a small emerging company trying to get into and get attention from large financial institutions
  • 05:06 – "Because it is competitive to get in, it's a shark tank to get in, but once you're in, it's a dolphin tank"
  • 05:18 – They get 150-160 applications a year
  • 05:28 – Companies are selected by their financial institution partners
  • 05:34 – A company's technology has to rise to the level of addressing a major pain point for major financial institutions
  • 06:10 – In some cases, it's not about an acquisition, it's about using
  • 06:15 – The fact that they are a non-profit civic organization is important
  • 06:29 – CTOs and CIOs will come to the table as a civic program, partly to help grow the fintech community in NYC, to create jobs
  • 07:23 – They invest in some of the graduates' post programs
  • 07:30 – The lab is laser-focused in solving problems
  • 07:41 – They are not doing any direct-to-consumer programs
• 08:20 – The big 3: data, security and risk management have been on the top of the CIOs list from the beginning
  • 08:43 – However, new things are coming
  • 08:47 – Disruptive talent management has been added as a new category
  • 08:58 – Blockchain has gone through an interesting cycle
  • 09:14 – This year, there's much less interest in blockchain and distributed ledger
• 09:52 – Maria predicts that in 2 years, there will be an increase of interest in enabling technologies that fit around the distributed ledger
• 10:31 – In data, Digital Reasoning came into the program with an interesting technology that is able to read unstructured data, and they're working for the government
  • 11:03 – They were advised to focus on compliance
• 12:04 – In security, Centripetal Networks has a perimeter defense technology and they're gaining traction from people who have a lot of retail locations
• 12:34 – In risk management, Quarule automates some of the processing of regulatory tracking and flagging operations against the regulations
• 13:23 – In blockchain, Digital Asset Holdings has raised a significant amount of money and has been involved in some major projects
• 13:50 – Maria shares how they are telling companies to create more jobs in NYC
  • 14:02 – The companies will also realize that they need to have people on the ground in NYC
  • 14:20 – Some have moved to their headquarters in NYC
• 14:46 – "We've not raised money since the late 90s"
  • 14:50 – The initial fund size was $120M
• 15:46 – New York is starting to be seen as a center for fintech
• 16:34 – There are some smaller companies that are trying to go after pieces and as they scale, the acquisition cost is increasingly expensive
  • 17:05 – LearnVest is a good example
• 17:40 – The small business lenders come to a market that the banks aren't servicing
  • 18:00 – There are companies who are an exception to the rule
• 18:17 – Most of the companies end up partnering with large institutions
• 18:54 – What the large financial institutions have is expertise and compliance
• 20:10 – The Famous Five

3 Key Points:

1. The trend in the fintech space is constantly changing.
2. Creating more jobs in New York City means more opportunities for companies and for the people of New York.
3. Be BOLD—don't shrink, don't hesitate—just go for it.

Resources Mentioned:

• The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
• Organifi – The juice was Nathan's life saver during his trip in Southeast Asia
• Klipfolio – Track your business performance across all departments for FREE
• Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
• Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
• Audible– Nathan uses Audible when he's driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
• Freshbooks – Nathan doesn't waste time so he uses Freshbooks to send out invoices and collect his money. Get your free month NOW

Show Notes provided by Mallard Creatives