Grappling with Uncertainty: Fintop Technology Advisors

2 Pages Posted: 11 Aug 2022

See all articles by Joe Andrasko

Joe Andrasko

University of Virginia - Darden School of Business

Sasa Zorc

University of Virginia - Darden School of Business

Samuel E. Bodily

University of Virginia - Darden School of Business

Abstract

Adewale Ogunleye is the founder and CEO of Fintop Technology Advisors, a technology development firm that specializes in providing outsourced software development services to financial technology (fintech) start-ups. Ogunleye has recently met with Leya Ahmed, the founder of Periscope Labs, a new fintech whose promising digital payment technology seeks to revolutionize the e-commerce checkout experience. Ogunleye proposed to Ahmed that Fintop would complete its project for $4.5 million, but Ahmed countered by suggesting either a much lower total cost or a riskier option involving a potential bonus, in either cash or stock options. Ogunleye must calculate the risks and rewards of each option.This case is used at Darden during the Darden Before Darden Program. It would also be suitable in courses covering expected value and risk.

Excerpt

UVA-QA-0948

Jul. 22, 2022

Grappling with Uncertainty: Fintop Technology Advisors

Adewale Ogunleye was the founder and CEO of Fintop Technology Advisors (Fintop), a technology development firm that specialized in supporting early stage financial technology (fintech) companies. Fintop provided outsourced software development services that fintech start-ups could leverage in lieu of building their own product development teams. With annual revenues of approximately $60million, the firm supported a broad client base and employed more than 100 software engineers, data scientists, digital solutions architects, and product managers.

Ogunleye had recently met with the founder of Periscope Labs (Periscope), Leya Ahmed. He found the charismatic entrepreneur to be sharp and confidence inspiring. Equally importantly, he believed that Periscope's digital payment technology, which sought to revolutionize the e-commerce checkout experience, had a real chance of succeeding in the marketplace.

If engaged, Fintop would support the Periscope team in building critical elements of its beta platform. Ogunleye was confident that Fintop could complete the work within eight months. He estimated that his cost to provide all necessary labor and services would be $2.75 million. He generally priced such services to generate a 38%–45% contribution margin. Given the high potential for follow-on engagements with Periscope, he was comfortable pricing this project at the low end of that range. As such, he proposed to Ahmed that Fintop would complete the project for $4.5 million.

. . .

Keywords: expected value, risk, fintech, start-up, negotiation

Suggested Citation

Andrasko, Joe and Zorc, Sasa and Bodily, Samuel E., Grappling with Uncertainty: Fintop Technology Advisors. Darden Case No. UVA-QA-0948, Available at SSRN: https://ssrn.com/abstract=4182744 or http://dx.doi.org/10.2139/ssrn.4182744

Joe Andrasko (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Sasa Zorc

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://https://www.darden.virginia.edu/faculty-research/directory/sasa-zorc

Samuel E. Bodily

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4813 (Phone)
434-293-7677 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/bodily.htm

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