Going Global with Modulr | Season 1 - Episode 4 | Invest2Scale Podcast Episode

Investor Scale Podcast – Episode: Building a FinTech Powerhouse with Myles Stephenson, Co-Founder of Modulr

In this episode of the Investor Scale Podcast, host Ewan Anderson sits down with Myles Stephenson, Co-Founder of Modulr, one of the UK’s leading embedded payments providers. Myles shares the story of building Modulr from the ground up—starting with the irony of struggling to open a bank account, to raising over £150 million in funding, and now scaling towards profitability and global expansion.

We explore how Modulr found product-market fit, built long-term investor relationships, and navigated the challenges of aligning values and ambitions across different funding rounds. Myles also offers candid insights into the differences between UK, European, and US investors, and what it takes to build a resilient FinTech business in a regulated environment.

This episode is packed with practical takeaways for founders, investors, and anyone involved in scaling high-growth tech companies, especially those building from Scotland with global ambitions.

Transcript

Ewan (00:07):

Hi and welcome along to the Investor Scale podcast. Today we are joined by Miles from Modular Miles. Welcome along. Great to have you here.

Myles (00:16):

Thank you. Pleasure to join you. Quick introduction perhaps. Yes.

Ewan (00:19):

If you want to give us an introduction to Modular and

Myles (00:22):

Your role at Modular. So I'm Miles Stevenson, I'm the C founder of the Business and Modular. We're an embedded payments provider, so think of that as three core pillars of technology, platform regulatory, permissions, and access to the payment schemes. Bring all of that together to integrate into platforms such as payroll, accounts payable, travel platforms, booking platforms, lending platforms, and we deliver a service as an alternative for businesses going to their bank for payments. They come to us instead.

Ewan (00:52):

Right, okay. Okay, so you guys have raised quite a lot of money and a lot of investment and we here at Investor Scale today. So I was just keen to get to understand your funding journey where you've gone, the troughs, the peaks and troughs on your journey. Can you just talk us through that? Yeah, sure.

Myles (01:09):

It is been a very gradual journey to me. It hasn't been a go out and raise lots of money just for the sake of it. We've done it on a multi-year basis. So the business now is eight years old, getting known for nine years old. So we started in late 2015. A slightly ironic story was that we given what we do in terms of providing better access to payment systems and accounts, the thing that held us back was actually getting a bank account, put the investment money in. So that was our challenge, first challenge, which actually delayed us about six months in terms of incorporating the company and being able to

(01:48):

Get going. So we would've been going in probably late summer 2015 and it was February, 2016 before we could incorporate the company. So we like to remind ourselves and others of that little story In terms of the journey, we started relatively small with myself and a venture builder, stroke family office, Charcot, putting a small amount of money in to get going and then they carried on funding the business to about 10 and a half million through their own funds and associated funds that they had. And then we started to through that period, get a good sense and feeling for product market fit and their confidence that it would be sensible to go out and raise further funds. And therefore started to put together our first, if you like, institutional round and went out and raised a series A in early 2019 and that's where Fraud Capital invested in the business and came on board at that point alongside the original investors continued to continue space and that's been a really positive thing that most of our investors through all of the funding rounds have continued to participate, including up to the series C in April, 2022. So we've been really, really pleased about that.

(03:08):

We've obviously raised at different times in the market, so we've seen the peaks and maybe not quite the troughs but different approaches and it's been, and also learning and understanding where to find the appropriate investors, building relationships, which has taken time as we've gone through the journey.

Ewan (03:26):

So what in total, how much money have you raised for modular?

Myles (03:29):

So we're just over about 150 million pounds is what we've raised in the business, which has obviously gone into building the technology, building the go-to market, and also as a regulated business we do have a regulatory capital requirement as well, collateral requirement. So we haven't just spent all of that. We actually still do have significant reserves of cash both in regulatory capital and also cash to fund the business as well. Okay.

Ewan (03:57):

So what across all those rounds of funding has been the most challenging? What did you find that was the most challenging to try and get over the line I guess?

Myles (04:05):

I think the biggest thing for us was understanding the fit between different investors and particularly through that 2017 through to 21, 22, there's clearly been a lot of interest in FinTech and tech businesses and getting a real deep understanding of how we put together investors that would be aligned and want to work together from both an investor and board perspective. And then also people that understand financial services and FinTech because investing in a regulated FinTech or financial services business is very different to investing in a pure tech business and therefore the mindset around governance and regulation is really important. So understanding who's really been through that and who really wants to do that at times was a learning experience to find out who wanted to do that.

Ewan (05:00):

Yeah, it is interesting that I've talked to a number of companies and a number of investors and I often wonder about the alignment of values and the alignment of personalities I suppose. Did you try and find that when you were looking for investment because obviously successful start to the business and things were growing, I presume there was probably a few opportunities. Did you really focus in on that alignment with your values and alignment with your personality?

Myles (05:22):

Yeah, absolutely. I think that's where we've been, I think to a degree fortunate in finding the right fit. And people obviously have different views, opinions, different funds have different requirements, but I think we've got a good fit of like-minded people that are around the board table and that have invested and clear on why they're investing and alignment on how they want to grow the business as

Ewan (05:47):

Well. Because that's the thing, isn't it? Sometimes you've got a certain direction you want to grow in or there's certain opportunities you see and it perhaps doesn't align with the values or the vision your investors. And I guess that must be a real challenge if you've not done your due diligence and really brought on people who align with you.

Myles (06:03):

Yeah. An example for us when we were certainly through our series B, series C, there was quite a lot of push. We were certainly getting into, as was shown at the conference, that raising money from funds that were in the US or further afield and quite a lot of push for what's the international, what's the US investment plan and expansion plan. And we've been until very recently we wanted to be really focused, we've been very clear on the opportunity is significant here in the UK and Europe and therefore very focused and some investors found that really attractive the focus others were pushing for, well what's beyond that? And then now we have started to go beyond that and will be launching in the US later this year or early next

Ewan (06:46):

Year,

Myles (06:48):

But also wanted to be focused. And again, getting that fit between people that believed that versus people that wanted to push harder, have faster expansion.

Ewan (06:57):

Is it a different conversation between investors in this country, perhaps even investors in Europe and then investors in the states? Are they looking for for different things in the pitch? Obviously they're looking for a good business, I don't know, but is there different ambitions? Is there different levels they're looking for in terms of the ask, in terms of what they're looking for in terms of return?

Myles (07:19):

I think there's a style, there's a style style difference, but I don't think there are, the fundamentals are very similar in terms of what people are looking for. Maybe subtle differences, but I think it's broadly the same. Maybe there's different levels of understanding of geographic markets and local go to market, but it's trying to pull that together with the industry vertical, the regulatory perspective that we have and then also how we want to build the business, trying to bring all of that together and different investors bring different aspects. We've also as well as pure financial investors, so venture capital firms. We also do have two corporate strategic investors as well. So we have PayPal ventures and FIS ventures, which is slightly different discussion around why they're investing and their purposes a venture fund.

Ewan (08:14):

Okay. So is there anything you would do slightly differently if you had this journey again and you would maybe go in a different direction or do something differently that you would

Myles (08:24):

I don't think the learnings for me it is really the structure and approach and applying as much rigor as you would to in your go to market around account management and sales leads around how you build the relationships with investors, how you really track when you've met people, how you go back to them and just being really rigorous about that. And I think to an extent we've done that well, but I think there's always room for improvement as there is in go to market and pipeline. But certainly that building the relationships and there is that tension between running the business and fundraising,

Ewan (09:03):

Building up relationships is critically important. We heard that from Mercy and from Robert at Green Backer. So is that something you had pulled

Myles (09:11):

Together? Totally agree. And we was talking earlier about that. We've got examples. In fact all of our investors we had a significant relationship with in terms of length of relationship prior to investment. So it wasn't one day go in, here's the pitch deck and here's actually put people into a process. All of our investors, we'd built up a relationship, some to a larger degree than others, but for example, general Atlantic who led our series C, I think we'd met certainly five years prior to it and had built the relationship gradually over a period of time. So yeah, it does. I mean that's not significant amounts of time during that five years, but regularly checking in with your

Ewan (09:55):

Team, just checking. Yeah, absolutely. So again, we've touched on it, we're at invested scale today, so we're looking to try and help companies to grow and to learn from someone like yourself. So what sort of things can we do as an ecosystem and what sort of things can some of our companies do to make sure that they can go out there and build that investor

Myles (10:12):

Profile? So I think there's probably two parts to it. There's having the ecosystem here in Scotland to ensure that the businesses are on a really firm foundation and ecosystem. You're grounded in talent and access to talent. Both, both experienced talent, but also what we find really attractive are the universities here and the academic excellence.

(10:33):

So the universities are a great source of talent, which is really important. And I think the need to continue to build that both locally in terms of local talent coming from the schools in Scotland, but also international talent coming in and then how do we retain and keep that talent is absolutely critical, but then how people work as an ecosystem. So the investments in FinTech Scotland I think has been fantastic and that creates that natural sort of ecosystem network across the FinTech businesses. So huge supporters and families of that and have tried to replicate that in the other areas that regions that we're in as well.

Ewan (11:14):

Brilliant. And so what's next for Modlin and where do you guys go next?

Myles (11:18):

Yeah, so a big milestone coming up in the next few months is breaking even and then continuing to grow. So we want to go deeper into the markets we're in both the geographic markets and the industry verticals and continue to build a self-sustaining enduring company. And then that's the key for us and then see what happens after that.

Ewan (11:41):

Brilliant. Well thank you very much for your time today, miles. That was excellent. And yeah, good to catch up. Excellent. Thank you very much. Thank you.