This is the Standard Treasury pitch deck used in their failed attempt to raise a series-A. The deck is fab and very much worth reading and sharing, so have done so. They were grads of Y-Combinator. Silicon Valley Bank acquired them in 2015. They previously raised a $2.7m seed round.
They were working on making it easier for businesses to deal with their banks through standard APIs that ease transfers and other transactions.
Whilst the full deck for Standard Treasury including the appendix is long, it really does a pretty compelling job on many fronts. I personally enjoyed reading the thought in the appendix as was assuming there was a lot of consideration given to a rather huge task at hand. They adeptly preempt a lot of “why don’t you” questions too.
Despite an awesome deck, they were unable to raise a series-a which surprises me! They describe this below.
“Dan and I started Standard Treasury a little more than two years ago because we saw that APIs would become the dominant way that commercial clients connect with their financial institutions. Since then we have had the honor to collaborate with leading bank’s in the US and Europe in their goal of creating open APIs for their customers. We have also worked with hundreds of start-ups around the world to understand how they consume banking services and how doing so over secure RESTful APIs would dramatically improve their business processes.
Last year we decided that the best way to bring the Standard Treasury vision to fruition was to build our own bank. That’s a big dream. Earlier this year, primarily because of concerns around regulatory and geographic risks, we were unable to raise a Series A funding round against that goal. With that door closed, we decided the next best thing was to closely align ourselves with one bank, in order to build a richer, more full featured, set of API based services for customers. The more we learned about SVB, the more we believe this partnership will be a faster, better, way to create the impact that we sought to create.”
About Standard Treasury
Zachary wrote a great blog in 2015 about “Standard Treasury as a Startup Bank” which is very solid. If you want to get into details of the logic. Check this out.
At Standard Treasury we are building an API banking platform, becoming our own bank, and doing so in the United Kingdom. I want to address these three aspects of our work and also talk about the long-term social potential for our bank.
Banking as a platform
Over the last six years, we have seen a proliferation of startups at the application layer of banking. Some examples include LendingClub, OnDeck, Braintree, Stripe, WePay, Betterment, Wealthfront, Osper, TrueLink, Angelist, Seedrs, GoCardLess, FutureAdvisor, Square, LendUp, etc.
Behind each one of those institutions is a bank. Sometimes these are big banks like Wells Fargo or JP Morgan, while sometimes they are small banks like BanCorp or WebBank. At either size, the technology is terrible at these banks. The interfaces which one has to deal with are foolishly designed, risk and compliance management are often done by hand, and the entire infrastructure often uses legacy technology that makes speed, consistency, and reliability very difficult.
We are building the programatic banking platform which should underlie the new, growing application layer of finance. We want to be the Amazon Web Services of banking. Our wholesale commercial banking infrastructure will be unknown to most of the public, but it will power some of the biggest applications and companies in the world.
Becoming a bank
We must be our own regulated, deposit-taking institution in order to build the platform and product we are planning. We have to own the entire regulatory and technology stack.
On the regulatory front, we will be foot-forward on things like risk management, AML detection, sanction-list referencing, etc. We need to understand what our partners are doing and build our technology to work to underwrite and manage our risk. We have to understand our customers (specifically financial technology startups), so that we can help regulators understand our customers. In short, we have to be a purpose built communications layer between our partners and everyone else — including regulators and payment systems. Today, bankers are doing a bad job of this. (In fact, regulators have hit a lot of the small banks in this space with consent decrees, exactly because they did not manage risk properly).
On the technology front, after building out APIs for core banking systems in the US, we determined that none of the standard offerings met our desire to drive the entire bank with a secure API in a highly performant manner. We have been unimpressed with existing bank infrastructures. Both homegrown (often ancient) systems and the ones provided by vendors like FIS, Fiserv, and Jack Henry cannot fulfill basic requirements around security, auditability, reliability, speed, and usability.
Our core banking system is built using an API-first design. Every operation in the bank is controlled by a secured rest API, with a micro-services architecture on the backend. Because we started from scratch, we built our system with security, reliability, speed, and usability. We are using Clojure, PostgreSQL, Storm, docker, etc .
A bank in the United Kingdom
The UK regulatory environment favors more competition in the banking sector. They are actively encouraging new challenger banks. After extensive research, we have decided that it is more capital- and time-efficient to start a bank in the UK and build our wholesale services there with any number of great financial technology customers. We will then come back to the United States, either through a branch or agency (which traditionally emphasizes wholesale commercial banking activities) or through a US-based subsidiary.
By working closely with our UK regulators (the Prudential Regulatory Authority and the Financial Conduct Authority), by being competently run, and by proving our business model in the UK, we will be able to return to the United States more easily than we could pivot a purchased bank’s model to it.
Additionally, the US is averse to granting new banking licenses, and buying a bank often leads to more headaches than opportunities. (See my post Startup Banking’s Looming Leviathan).
The long-term opportunities
When we talk to venture capitalists, we talk about the size of the opportunity. We have a small target market (financial technology startups) and also a clear larger target market (the $259 billion a year wholesale banking market).
But I want to touch on something else. I care about the potential social impact of a bank that changes the cost structure of financial services. I want to build a bank that disrupts banking. And not just because I might do well economically, but because it would be one of the most powerful ways for me to help others do well economically.
Many people cannot access financial services because banks simply cannot make money off them. Starting a business, raising one’s family out of poverty, or just saving for a rainy day are all far more difficult without access to a bank. I hope to radically change the equation through our systems, allowing many more people to have access to the financial system.
By creating a platform which makes it cost-effective for smart folks everywhere to build applications, companies, and non-profits that use our services, I believe that we will impact millions of Americans and tens (if not hundreds) of millions of global citizens.
That might sound grandiose, but fixing the banking system is not an abstraction to me. It is what gets me up every morning — and reminds me that even though we likely have to do six or seven nearly impossible things to make this dream of an open, safe, compliant, risk-managed, technologically-enabled, and regulated banking API platform a reality, it is all worth it.
Pitch deck review summary
Founders do mess things up. Here is some commentary from Zachary:
“we decided to publish our Series A deck. It’s imperfect (slide 7 is inaccurate, we got asked a thousand times to explain slide 14 (it’s in ‘000s), the appendixes tend to be too long, we did not focus enough on the already built product), but Dan and I think it might be instructive for others.”
Structured summary review
Standard Treasury Pitch Deck
The cover is solid. I add a short tagline so investors know what they are getting.
Always start with a slide explaining what you do in super simple words. Investors have no clue what you do, so tell them. When they then read your deck they already have 50% comprehension and all your slides build on the basics (I call this the “one liner”. It doesn’t have to be one line, in which case it’s a 3 liner.)
You have no idea how many decks I have read and at the end of the deck I’m like “so, what the heck do they do?”
Great. The way to start you deck is to explain the industry. Provide context. Investors are almost never experts in what you do. And it’s all very well to be a ‘fintech investor’, but dude, do you know how big and compex the fintech space is? It’s huge.
I designed slides so that you have a header and a sub-header. The header tell the story, the sub explains the slide.
This slide is good, but I still have to think a little. If you had a sub-header, you could explain the exact point of the slide. What’s happening in the last and next 6 years?
Point of note: this deck is clearly designed for investors who understand fintech. It’s great for the educated, but if you are pitching to generalist investors you need to approach the deck differently. Do you know what the “application layer of financial services are”? Ok, I worked in FIG and I know a little about a bit, but I still need to think. Call me a moron, but whatever. See, thinking is the enemy, just like fear is the mindkiller.
Nagging point – I don’t like superlatives like exploding. Let invesors decide that.
This is a baller slide. There’s lots of ways to try explain things and making three examples with logos makes my nethers feel pleasent.
Again, if there was a subheader which explained the slide for hte people in the cheep seats, it would be a tonne better. Founder explains well, numptys like me get the whole point.
If you’re looking for slide examples to steal, this is a good one. I showed it to a client and he said “that’s awesome”.
I do not like this slide. I haven’t even read it yet, but it’s a gutteral response.
Why couldn’t they have used a similar structure similar to the preceeding one?
My thing is that founders can say whatever they want if they prove it because I know you want my money.
There are three points, and they should have three proof points. I love three. Read: rule of three.
Also, never use lower case text. Sentance case please.
Should there really be two points about tech here? Are tech and culture so different?
Where is the proof point? The largest banks asked? Prove it. I have the largest… slide into my DMs for more.
The proof is a picture of a weird coding environment? Tbh, this would have been a solid title for the team slide.
We have another of the interstitial like slides I hate.
So what they were a consulting business before?
What’s the actual point of this slide. If there really is one, I can’t tell without you explaining it in person, which isn’t the point of slides.
Apparently this is BS. Zachary said “slide 7 is inaccurate”
Regardless, the body content is an awesome slide.
The header is total and absolute BS. One word” Really? Explain every single slide so morons like me can understand. Never make me think.
I do not like the look of this slide.
The nomenclature is dubious. I mean you can calculate TAM top down?
I invented a new slide approach to marekt sizing that explains things in a way normal people can understand.
The header is rubbish. What is the market? Apparently it is ball park starp wholesale banking. That is a questionable market back in 2015. Maybe still now, but yet there is Tenemos etc, and I know f-all about enterprise fintech.
They oscilalte between great slides and crap like this.
The structure is bizarre. My is “…what it takes” so close to their 4 bullet points?
The header could be far better and each of the four points could be graphically illustrated.
Why now does matter.
They start off strong, but now they feel like they have given up trying.
Ok, they have three key reasons, but one are explained.
- What reg changes?
- What tech has matured?
- How the heck do I know there are eager customers?
I don’t like superlatives. Let investors decide if you should be working at KFC or not.
Fon size should decline. Decriptors should be smaller than the title.
No one really fives a crap if you have a degree at this level. It’s taken for granted, but I guess it is an American thing. Use the space for things taht seem cool. Publishing 2 books is cool.
We are out of the story section and in the execution section, which is why you. They’ve totally given up on telling a story. #NarrativeDead
What’s the point. Who knows. Gutteral vomit of two words. I have to read to figure it out.
Gross, stop with the lower case font.
I question some of the points. Is risk management really a key concern?
Ok. $10m they get their licence in the UK. I’m expecting this to be just about that. It is not. This is horrible to look at. I literally have to read it all to figure out it is what, a product roadmap?
It’s cool that it is all consistent, but it is an ugly ass slide.
Zachary said “we got asked a thousand times to explain slide 14 (it’s in ‘000s),”
Do not do a slide like this. You can have 7 lines. It’s horrible to look at.
In fact I hate financials so much I invented a new approach to address is.
This is the special sauce/defensibility slide which are super hard to do. I frequently just don’t go there.
So after a few weeks of thinking I figured out that startups have core competencies which they can parlay long term into competitive advantages.
They don’t use the “competitive advantage” phrase on the slide so I can’t slame them.
I feel there are a lot of strings attached with the four points.
This is not a core slide unless you own it. These are lame risk factors. Ok, I mean if you are raising and the licence is all investors care about… and you are low-credible as a founder, ok. But this is small dick angel stage energy.
Don’t do thank you slide. They are gross.
If you are premier league add in an investment thesis slide.
For mortals, write what I term the “three things to remember”. What investors should take away from your deck.
Do not do appendix slides. This is overkill. If it doesn’t deserve to be in the deck, save it for once investors are interested. You do not need a TOC either.
I’m not going to dignify commenting on an appendix. Just don’t do it.
Zachary also mentioned he shouldn’t have done this.
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