MIT 15.S09 – Fintech Ventures Fall 2015

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MASSACHUSETTS INSTITUTE OF TECHNOLOGY 15.S09 FINTECH VENTURES

Fall 2015 H2 – 6 units (2-0-4) COURSE SYLLABUS

Course Meeting Times and Locations 15.S09 Tuesday, 5:30 – 7:30pm, 32-XXX (MIT Stata Center) H2 Course, classes start October 27th Requirements The faculty strongly recommends the concepts and skills developed in 15.401 Finance Theory I, 15.402 Finance Theory II and 15.390 New Enterprises. Proven experience in finance, entrepreneurship and start-ups may allow exceptions. This course places a strong emphasis on presentation and discussion skills. It will be important for you to explain your positions or arguments to each other and to try to argue for the implementation of your recommendations. Course Overview High margins, underserved customers, and accumulated inefficiencies have made the financial services industry a perfect target for entrepreneurs and innovators. And digital technology has given the very necessary power to their punch. Dozens of digital disruptors are giving consumers and companies cheaper, better, or entirely new ways to manage their financial lives. And the change is not also affecting the way the financial services industry interacts with clients because technology also promises to change the way the commercial and back-office backbone of incumbents (banks and financial institutions) work. Fintech Ventures is the class where students will work to capture opportunities in this space. MIT leverages its unique position to create a class of multidisciplinary teams (Business, Law, Computer Science and Operations) that can use their combined skill-set and networks to build the next generation of Fintech Ventures. This is an advance entrepreneurship class that is sector focused to go beyond general entrepreneurship concepts and do a deeper dive on the special challenges in the Financial Services industry and how to best address them. Student will learn through a mix of lectures, cases, guest speakers and exercises while building their own team projects. Teams will be formed during the first three weeks of the class. Throughout the remainder of the semester, each team will work together to create a new business plan. Lectures will focus both on the how-to’s of starting a new venture and the unique challenges faced by Fintech startups. The class is application-only, and all students should come ready to actively engage. Entrepreneurship is not a spectator sport.

MIT 15.S09 – Fintech Ventures Fall 2015

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Required Materials - Disciplined Entrepreneurship: 24 Steps to a Successful Startup (Wiley, 1st Edition), William Aulet, ISBN

1118692284- The Future of Finance. Part 1, 2 and 3, Goldman Sachs Equity Research - The Future of Financial Services, World Economic Forum Suggested Readings - Next Generation Finance: Adapting the financial services industry to changes in technology,

regulation and consumer behavior, Paul D. Stallard, Robert Lempka - Breaking Banks – The Innovators, Rogues and Strategists, Brett King - The 50 Best Fintech Innovator Report, KPMG, AWI Limited - The Fintech 2.0 paper, Santander Innoventures Instructors

Bill Aulet Senior Lecturer & MD of the Trust Center MIT Office: E40-160 Tel: (617) 253-2473 Email: aulet@mit.edu Antoinette Schoar Michael M. Koerner (1949) Professor of Entrepreneurship and a Professor of Finance MIT Office: E62-638 Tel: (617) 253-3763 Email: aschoar@mit.edu Teaching Assistant Borja Moreno Tel: (857) 209-1300 Email: bmoreno@mit.edu Additional Advisory Resources Available For information on the 24 steps, please refer to http://www.detoolbox.com. We also strongly encourage you to take advantage of the Entrepreneurs In Residence (EIR) program available through the Trust Center for MIT Entrepreneurship. For more information and to schedule a time with an EIR, go to http://entrepreneurship.mit.edu/eir. For resources more specific to Finance Innovation and Fintech, please reach out to the Finance Practice at the Trust Center for MIT Entrepreneurship (fintech@mit.edu) or the MIT Fintech Club (www.mitfintech.com)

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Grading Grades will be based on class participation (30%), measured primarily through business plan assignments (50%) and final presentation (20%). Note Regarding Intellectual Property Rights Work done in the class is purely for academic purposes and there is no explicit or implicit agreement that teams that are formed in the class are obligated in any way to share their intellectual property or equity in a new venture that comes out of the class. All marketing and business analysis that is produced is considered public domain unless explicitly specified and agreed to by the instructors. Schedule Overview There will be 7 classes of 2 hours: - Class 1 will include:

Discussion of what is going on in the FinTech industry Ideas panel: Presentations of company challenges, MIT technologies and students’ ideas Team formation

- Classes 2-6 will follow the same structure: Review of one FinTech topic by relevant faculty (e.g., Payments – 30-40 min) Relevant speaker presentation + Q&A (30-40 min) Team presentations + Feedback from Speaker and class (30 min) Closing: Key takeaways of the day (5min)

- Class 7 will include: Presentation of all business plans in front of a panel of Fintech related people (including not only

Fintech entrepreneurs but VCs, Accelerator people, incumbents…) Next steps where faculty will give an overview on available resources at MIT, and next steps

(prizes, top accelerators, etc…)

Key topics, deliverables and readings are outlined below.

Class Date Topic Preparation Deliverables 1 10/27 What is going on in Fintech?

Project Pitches (Company challenges) + Team Formation

Readings: - “Foreword,” “Six Themes of

the 24 Steps,” and “Step 0: Getting Started” from 24 steps

- The fintech scene is so hot, it's boiling, Chris Skinner Blog (http://thefinanser.co.uk/fsclub/2015/02/the-fintech-scene-is-so-hot-its-boiling.html)

- Upload resume to Stellar by 11:59pm on Friday before 1st week

- Fintech Idea Journal (List of 15 problems Finance consumers/ companies

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- The Future of Financial Services (World Economic Forum)

face with solutions)

2 11/3 Consumer Finance/ Behavioral Finance (advice and financial literacy) - Overview of space

(Faculty) - Speaker: TBD - Team presentations

Readings: - Review steps 1-5 - The Future of Finance: The

Socialization of Finance (Pages 1 to 9, GS Research)

Team formation and idea pitch

3 11/10 Payments - Overview of space

(Faculty) - Speaker - Team presentations

Readings: - Review steps 6-12,13,18 - The Future of Finance: The

Way We Pay (Part 2, GS Research)

Deliverable 1 (Customer/ Market)

4 11/17 Investing and Trading - Overview of space

(Faculty) - Speaker - Team presentations

Readings: - The Future of Finance: The

Socialization of Finance (Pg 19-31, GS Research)

Deliverable 2 (Product and customer acquisition)

5 11/24 Cryptocurrencies/ Blockchain - Overview of space

(Faculty) - Speaker - Team presentations

Readings: - Bitcoin: A peer-to-peer cash

system (S Nakamoto)

Deliverable 3 (Business model)

6 12/1 Crowdfunding/ Lending - Overview of space

(Faculty) - Speaker - Team presentations

Readings: - The Future of Finance: The

Shadow Bank (Part 1, GS Research)

Deliverable 4 (Regulatory review)

7 12/8 Team presentations - Final presentations by

teams - Feedback from industry

panel - Next steps: Forming a

team and taking the company forward + resources at Trust Center and MIT

- Team presentations

TBD Consolidated deliverable 1-4