He Sold His Company For $200 Million And Now Has Created An AI Engine For Financial Products
Fahd Rachidy is now on his third startup venture. His second financial services startup was acquired for $200M. His latest venture has already raised close to $15M.
On the Dealmakers Show Fahd Rachidy took us through the series of companies he has launched, grown and funded. We talked about important factors for the success of fintech startups, and his fundraising and business growth strategy. Plus, the power of never taking no for an answer.
Fahd Rachidy was born in France to parents who had emigrated there from Morocco.
He was able to see that level of hard work, embracing new environments, and effort to create a better future. All traits that are certainly helpful, if not necessary as an entrepreneur.
He told the audience of the Dealmakers Show that his big takeaway from growing up was not to take no as an answer.
This proved especially valuable when it came to getting into university, and throughout his fundraising experiences. Even when the cofounder for his latest startup was calling on VCs from his bathroom at home.
Rachidy says that he has enjoyed science and building things for as long as he can remember. He grew up reading biographies of people like Newton and Galileo. Later it became an interest in building applications that can have an impact on the real world and people’s lives.
Fortunately, he also happened to be good at math and science in school. Initially his teachers were resistant to recommending him to the top school, which has produced many presidents and notable companies.
He got the grades, wouldn’t give up, and eventually got those recommendations. That created a new challenge. His parents couldn’t financially cover him going to that school. So, his first fundraising experience was raising the money to go to college.
He found a charity that would help with that. Today, his company has given them free shares, to help return the favor and continue to fuel their mission of providing access to higher education.
After school Fahd spent the next eight or nine years experiencing both private and public banking from the inside.
He began his finance career as a trader at one of the top European banks, Ecole centrale de Paris. Then he did a stint at Calyon.
It was a high paying job. One which provided him money he needed, helped pay his parents mortgage, and put his brother through university. Yet, he found he disliked the work. He didn’t care much for just making money for money’s sake and the pure speculation of the business.
So, he joined the European Central Bank, where he built financial models. In fact, he built the models that the Board of Governors use to predict interest rates, inflation, and to make policy decisions. They are still using it today. Today, that model is still used by the European Central Bank.
After having learned a lot about how big organizations operate, Rachidy banded together with some partners to create his first startup, Vantage Capital Markets.
This investment strategy research platform launched in late 2007, right before the financial crisis. Fortunately, his background with the central bank made the company in demand for investment managers who wanted to understand policies, decisions and where things may be headed.
They managed to continue onboarding clients. At least until regulators changed the rules on them, and effectively killed their business.
Fahd says that he learned valuable lessons in the need to scale faster. As well as to stay ahead of regulatory changes. As often simply reacting to them isn’t going to be fast enough to save you.
Many might have quit after seeing their first startup venture fail. He didn’t. He says. “you need to be resilient and never give up. If you get hit in the face, just start again.” He did. In fact, he rolled right into launching a new company, Scientific Beta.
He found a sweet spot in index investment strategies, at a fraction of the cost others were charging.
They went right after the big whale clients to first establish credibility as a launchpad to scale from. They landed Blackrock as their first customer, followed by Morgan Stanley.
They quickly grew from France to the USA, and Asia. The EFT boom gained them a lot of attention from major stock exchanges around the globe.
In fact, after being contacted by the Singapore Stock Exchange, they were acquired for $200M. A great exit that would never have happened if he would have quit after his first rodeo.
His latest venture is a fintech platform that has already raised close to $15M in capital.
After starting by self-funding the venture, Rachidy and his cofounder took the same strategy of reaching out to the VCs that would give them the most credibility to build on. They refused to take no for an answer, and kept on going back until they landed the investors that they wanted on their cap table.
ABAKA is an AI recommendation engine, with customers like Prudential and HSBC.
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