Twin Brothers Building a FinTech Venture: Stephen Roche and Gabino Roche, CoFounders of Saphyre (Part 5)

Sramana Mitra: Tell me about the customer progress from 2017 to 2022. You had five years’ worth of customer development that has happened. Tell me about who those customers were, what were the average deal sizes, and at what pace were they coming in.

Stephen Roche: The revenue didn’t start coming in till 2020. In 2020, we had close to 20 to 25 firms working with us on some form of proof of concept. A lot of times, we were just giving the service for free to give confidence. Most of the firms wanted other people to use it. JP Morgan was one of the firsts.

The thing is it’s not typical in finance for large firms to use a product from a small company. They usually buy from other big companies. In order to gain confidence, they need to see other big people using you before they do. There are other fintech firms that specifically just targeted tier B to tier C firms. They didn’t want to work with the top financial institutions.

Sramana Mitra: We have a lot of case studies of fintech companies that have gone to the credit unions and have built significant businesses. The top tier is very hard to get into.

Stephen Roche: Not only hard to get into, but they require high customizations and quick responses. What my brother has done with his team is, they are spotless and flawless in deploying products. It worked fully as expected. Because they were conditioned to this for three of the five years we’ve been in business, they felt more confident to sign subscription agreements.

As the two top came on, so did others. The snowball effect happened slowly. The other challenge that we worked through is, most of the cell site institutions have long information security reviews. We have to do this with every single firm. It takes a birthing period of nine months to a year to just get through that whole process. Their procurement has a vendor validation process. That’s the delay in the revenue when you’re working with top firms.

Once you’re in, you’re in and you can expand that revenue base. That’s how we’ve established today.

Gabino Roche: There’s one more secret that Stephen helped develop. We have patents. There is literally no competition. We have built something that is completely unique. It’s going to revolutionize finance. Stephen has structured a product set for how we offer a base entry into our platform and how the clients can upscale. You asked about pricing and we can’t fully get into it all.

What we did was we socialized this pricing since 2018. We haven’t changed the pricing since 2018. The clients understood that, as they went through that birthing process that Stephen talked about and they’ve seen our products, this is a good way to get accustomed to it. It also met our revenue projection goals.

Sramana Mitra: What do you do in the POC when you bring an institution like this on board? What do you show them?

Gabino Roche: We show them two parts. There’s the issue or the pain point that they want to be resolved. We always want to make sure we show them above and beyond the value proposition. The value proposition is that we have memory around data and documents that are being shared on our platform and how we proactively prompt and anticipate the next steps to straight through processing (STP) all their procedures.

We want to be able to tell the likes of JP Morgan that this helps with your trading business. The trading business for these guys is their breadwinners. We may be meeting with a middle back-office person about collecting tax forms and submitting them. Then we show how this information helps to let them trade faster without errors. Connecting those two is saying not only is there cost savings and better user experience, but it’s also helping your breadwinning business as well.

The POCs are really pilots of our platform. We always grant them access to everything, but we start them with one piece. What you’ll hear a lot of times is these folks will say, “Saphyre does so many things. They can’t be possibly good at it.” We’re using the same framework, just in multiple contexts.

I’ll give an example of what I mean. Things are done in emails, fax, and spreadsheets. We have a header in Saphyre, which is like your envelope. Who’s the recipient of the mail and who’s the sender? There’s a chat messaging component. There’s an audit log. We always allow you to attach documents. We always allow you to assign tasks. We always allow customizable questionnaires. We always track statuses.

Today, these banks and institutions have separate applications for each of those things. Then you have to work in the backend to connect it all. We’re basically creating this operating system for them to seamlessly see it.

Stephen Roche: Think of it as if you went to your main general doctor. You’re filling out all the allergies you have and the medications you take. The doctor says, “Go see the ENT.” You walk into the ENT office and now you got to redo the paperwork. Why don’t they have this information? Aren’t they the same office and database?

Like Gabino said earlier, there’s no competition, but there are companies who are now aware of us and trying to pretend that they have the same solutions. Really it’s this online paper form where, if you are a technology company, you should have memory and context for your clients of where that information is. That’s the analogy I would give you to help you visualize what the finance is going through.

These are compounding issues that go on. You’ll see this dramatically emphasized in the whole GameStop Robinhood fiasco. That’s on the B2C side, but it happens on the B2B side as well. We’re eliminating a lot of that because we’re giving structure before the trade occurs to eliminate those issues in post-trade.

This segment is part 5 in the series : Twin Brothers Building a FinTech Venture: Stephen Roche and Gabino Roche, CoFounders of Saphyre
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