With Fintech disrupting the market of traditional banking systems, financial payments, investment in technology start-ups are faced with a high level of competition. As innovation rises and with the pandemic transitioning to many online platforms preferred, investment into this industry will only rise. Global funding has risen to over $100 billion, which will continue to rise with the coming years. With this in mind, it is important to consider the shortcomings many companies and startup founders must consider when developing in this industry.
1. Raising Capital
When raising capital, potential investors will be looking deeply into the process of diligence and strength of the company before making the hurdle. Is the management team strong? Is a company addressing a crucial financial process in the hopes to solve a prevalent problem? Is there a market big enough? What has been the forthcomings of the company so far? How have the founders made an impact? Does the company have a strong pitch deck with deep understanding of the financial arrangement and aspects of the model? Is this a product that is unique or a competitor product? What is the current and projected valuation of the service or product offered? Is it a great service or product?
2. Strong Pitch deck to appeal to Investors
Refining the market plan and structure of the company in a way that investors are able to understand the potential customers, strategic partners, ways of financing, capital investors interested in the company, as well as the team who is in charge of management. IT is necessary to provide a strong company overview, explanation of the mission and vision of the company, the problem attempted to solve, the product at hand, customers, technology, competition, and so on..
Through high quality visuals and presentation, the “look and feel” for the company must be backed up with a solid professional understanding of the structure and financial structure and direction of the company is required for investors to believe in the product and company.
3. Overcoming regulatory hurdles
Regulatory hurdles are inevitable in the financial technology world as when it comes to dealing with financial payments and decentralized methods of payments, it is dealing with highly sensitive information and monetary value which can be easily compromised if in the wrong hands. This is why it is important to make sure there is a camped team who is able to understand the market needs of regulatory systems to abide by the laws and create a framework of security for the product. Legal counsel and governmental support via agencies will be helpful in navigating the regulatory framework.
4. Misunderstanding the markets + Needs
Many times, startup founders do not take into consideration how their audience will receive and understand their product. They should never forget to take into consideration the lack of people’s awareness of certain technologies and options within the financial technology space. As 42% of startup failures arise from founders targeting a market unfamiliar with a certain product and avenue of use. 90% of startups fail, 1/5th in their first year – it is important to know who your market is and how they will understand and find purpose for it. If the market is in the shadows, the company is set out for disaster.