Your options when financing a FinTech start-up
FinTech start-ups are hot property right now. Venture capitalists, investors and big banks are backing companies who deliver something new, valuable and transformational in the financial services sector.
Whether it’s a new ecommerce payment platform or cryptocurrency exchange, FinTech start-ups are attracting big money.
Just how hot are they? Funding and venture capital database PitchBook performed research into FinTech investment for 2017, finding that the sector attracted £1.34 billion of venture capital funding in the United Kingdom alone.
Suffice to say, then, FinTech is a booming industry. Faced with this, it makes no wonder entrepreneurs are looking for a smoking gun to bring to market.
If you have a great business idea for a FinTech company, financing it may seem impossible faced with the figures mentioned above. But you need not be dismayed by the billions being invested by venture capitalists. It is possible to succeed at a fraction of the price. The key is getting the money you need from the right source.
Financing a FinTech start-up
As previously touch on, venture capitalists, investors and big banks are backing transformational FinTech start-ups.
But, not every start-up attracts such attention. Some go under the radar and seek funding through another reliable source. That source is independent lenders, who specialise in lending to start-ups who show great potential.
Independent lenders are like banks, only they aren’t on the high street. Their product offerings offer the same security as those offered by banks, but they come in cheaper with lower interest rates on average. You could borrow from £10k to £500k with an independent lender such as Nationwide Corporate Finance. Many FinTech start-ups can launch with such a budget and sustain their service for months.
If your FinTech start-up lacks the internal resources to succeed (perhaps you don’t have an established scaling strategy, or a workable retention model), bringing in outside investment could be just the ticket to getting off the ground.
Outside investors can bring money to the table, or their own skills in return for shares or guaranteed returns in the future. The upside to this over, say, borrowing, is that you won’t just have a pile of money to work with. You’ll have people to work with too.
Finding people with the necessary experience to help grow your start-up is not easy. The best ideas tend to attract people by themselves. Under-the-radar start-ups, and those that want to soft launch, will have success scouting professional networks. LinkedIn (the paid version with InMail) is an excellent platform for initial scouting. You might also find it useful to put a feeler out about your FinTech start-up. A press release, distributed in the right places, is the perfect medium for this.
Finding your inspiration
Have a great idea for a FinTech start-up? Look no further than the success entrepreneurs are having right now with their ideas. Global FinTech funding topped £22 billion in 2017 according to KPMG, and funding through 2018 is set to top that.