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The Innovators — A Conversation with Juan Colón, CEO of Darwinex

“We’re living through a once in a generation opportunity to disrupt financial services — in a way that wasn’t possible before the advent of the cloud and internet, and won’t be once regulators step in. The next wave of regulatory intervention may very well end up raising the barriers to entry for new players. It’s now or never!” — Juan Colón

What is your current position, and what has your journey there involved in terms of finance/tech experience?

My personal experience dates back to before the days when “FinTech” was called Fintech. I was a consultant to most European banks. At some point it dawned on me that the Internet would make optimal company sizes far smaller than banks — and would expose their hopeless inefficiency.

This was 2007 — and I started a role in what was then “shadow banking” & capital markets. In 2011, my brother — who had transitioned into full-time trading — was making decent returns on capital… for peanuts: he’d hit a wall when trying to raise investor capital. That’s when it dawned on us that there had to be an online marketplace listing traders, and we started Tradeslide.

2014, Tradeslide pivoted onto Darwinex — an FCA regulated broker that has since grown 10% month-on-month on average. We’ve now hit EUR 5 MM ARR, employ 40 employees and cater to the needs of traders and investors in 100 countries. Our core market is in the EU, but we also have significant presence in Asia in general and China in particular.

Could you describe what your company offers? What differentiates it, and what has enabled that?

Darwinex is an Exchange that lists trading strategies. We pair investors who want to grow their money with managers who compete to grow it.

What sets us apart is we’re “by traders, for traders” — we solve the traders’ capital raising challenge with a completely online solution. We certify, list & distribute trading strategies under our FCA regulatory umbrella, for the cost of the transaction fees they pay our brokerage.

From the standpoint of the trader, there’s no risk — legal, economic, intellectual property theft or operational — in tapping investor capital for a 20% success fee. Unlike traditional cap-intro programs, we’re 100% online. Unlike Prop trading outfits, we’re open & transparent. Unlike social trading sites, we protect trader intellectual property, and investor capital through our proprietary risk management engine.

What have been the major challenges in the development of that concept?

Every phase brings its own challenges.

5 years into the project, the core focus has been technology & hiring. As the company grows larger (our headcount is now 40 FTE), other elements come into play: internal organisation, ongoing management of the product cycle, finding new sources of growth…

That’s the beauty of it — no day is like the one before :-)

Are there any technology or regulatory changes on the horizon that excite or concern you?

We’re very excited by the steady improvements in AI and data processing in general, and the rise of algorithmic trading in general. The Blockchain — if further down the line than AI — can also potentially be a game changer.

In addition to managing the impact of Brexit, regulation is a source of concern in that the application of MifiD2, and in particular to retail OTC markets, can be a great opportunity for us — if the regulators apply the spirit of the law in a way that aligns the interests of consumers with brokerage providers.

Regulators forcing retail OTC trading products (forex, CFDs, etc.) on Exchange — would heal the CFD industry and level the playing field in our favour. We currently compete in inferiority against market makers who internalise customer losses, and this would change our game.

In a broader sense, what excites you about the future of financial technology?

We’re living through a once in a generation opportunity to disrupt financial services — in a way that wasn’t possible before the advent of the cloud & internet, and won’t be once regulators step in.

The next wave of regulatory intervention may very well end up raising the barriers to entry for new players. It’s now or never!

Outside of your own market, what startups or founders do you look to for inspiration?

We draw significant inspiration from Seth Godin (tribes!), Jeff Bezos (ruthless execution!) and Elon Musk (aim for Mars, reach the Moon!).

Closer to our Spanish heritage, CartoDB is doing a terrific job.

You are granted one wish to change the financial technology industry in 2018 — what do you wish for?

Inspiration to continue the journey and health to keep up with it!

If you could give one piece of advice to the aspiring Fintech folk reading this interview, what would it be?

Starting up a company is too humbling an experience for me to dare provide unsolicited advice :-)

"The Innovators" is a series of interviews we are sharing in collaboration with the Luxembourg House of Financial Technology - follow them here. If you would like to be featured in an upcoming issue please send an email to hello@fintechfeed.com!

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