TRISH DROMEY: Hedge your bets on money risks

Barry McCarthy tells Trish Dromey his firm’s software provides SMEs an automated foreign exchange solution

TRISH DROMEY: Hedge your bets on money risks

With technology designed to allow businesses protect themselves against

currency fluctuations, Dublin fintech start-up Assure Hedge believes it can help small companies prepare for the fallout from Brexit.

Assure Hedge CEO and founder Barry McCarthy aims to revolutionise the foreign exchange industry with an automated currency hedging solution which he says is the first solution of this type to be offered to SMEs.

“We provide access to tools and services previously only available to large multinationals. Our technology and proprietary algorithms significantly improve on the expensive and inflexible hedging services provided by traditional institutions,” he said.

Set up two years ago, the company expects to have regulatory approval in both the UK and Ireland in the first quarter of this year. It already launched in the UK in September and now has 15 customers there, mainly small manufacturing operations with exports to the EU and the US.

Based at Dogpatch Labs, a start-up hub in Dublin’s Docklands, Assure Hedge now employs a staff of eight. Currently engaged in fundraising, the company plans to double its workforce by the end of the year.

A former financial trader who worked in London, Singapore and Gibraltar, Mr McCarthy became aware of a gap in the market for this type of solution when a friend with a family business asked his advice about alleviating foreign currency risks.

“There was nothing for small businesses to help protect them from risk and loss,’’ said Mr McCarthy who decided to create a solution using algorithms he had used in his trading career. Pitching his idea and a demo prototype to the National Digital Research Centre, he secured a place on its Launchpad accelerator programme in early 2016.

Recruiting two developers to work on the technology, Assure Hedge was selected to participate in the Enterprise Ireland Silicon Valley programme.

At the start of last year, the company participated in Accenture’s Fintech Innovation Lab, an accelerator programme which helps participants prepare their technology for market.

It also embarked on a fundraising round and secured €500,000 which came from both private investors and Enterprise Ireland which identified it as a High Potential Start Up.

In 2017 it was selected to participate in the UK’s Financial Conduct Authority’s sandbox — which provided it with a six month window to test its product with real customers in a live environment.

Mr McCarthy said this was hugely significant opportunity for Assure Hedge.

“We joined the sandbox in February and went live in August” he said, explaining that the company is in the process of removing the restrictions involved in sandbox participation, and expects to have full regulatory approval early this year.

Using the Assure Hedge currency hedging solution is, Mr McCarthy explains, a bit like having foreign currency insurance.

“Customers pay a small upfront fee which buys them the option to exchange foreign currency at a pre-agreed rate anytime over a protection window. If the rate moves adversely they can send us the currency and we send them back euros at the pre-agreed rate.”

The company earns its revenue much in the same way as an insurance broker, charging a small percentage on each contract.

“The customers deal directly with Assure Hedge and we sell on the risk to other market participants for a profit,” explained Mr McCarthy.

In 2018 the company plans to develop sales in both the UK, and once it gets regulatory approval, in Ireland. The funding which is now being raised will be used to grow the business, recruit staff and also to satisfy regulatory reserves.

“This year we are selling directly to customers but in the future plan to sell through foreign exchange brokers and banks.”

Given the currency fluctuation problems already caused to businesses as a result of the Brexit vote and the major concerns about what is likely to happen as a result of Brexit, Mr McCarthy sees huge scope for Assure Hedge solution in Ireland, the UK and beyond.

This year he’s aiming to achieve a turnover of €1m, next year he plans to expand into other European markets.

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