Important Things To Consider Before Launching A FinTech Startup

Posted on Mar 5 2018 - 7:59am by Editor

Fintech, shorthand for financial technology, joins words like robo-advisors and blockchain as buzzwords revolutionizing the financial world. More specifically, it’s a promising sector that’s disrupting the traditional ways people bank. It’s leveraging new technologies in order to improve existing financial services, which is forcing banking institutions to match innovations spearheaded by fintech startups. With its high cultural currency, fintech seems like an obvious money-maker for intrepid entrepreneurs, but don’t let its current popularity fool you. Like any emerging industry, it promises risks that only careful planning will help you avoid. If you’re thinking about launching a fintech startup, make sure consider these things before you take your first step.


What is your add-value?

Ten years ago, your industry was an emerging sector with very few entrepreneurs willing to take the leap into this tech. Now that its pioneers have proven it a lucrative venture, throngs of savvy business people have joined the industry.

While there’s something to be said for standing on the shoulders of giants, you need to carve out your own niche within the industry. Try not to copy any one platform too closely, as it puts you at an immediate disadvantage. Your competitors have had time to establish its brand and services. You’ll have to work extra hard to prove you’re better at what you do.

Fintech runs the gamut of financial ventures. It may help people monitor their personal finances. It may help people find online cash loans. It could even help customers pick an investment portfolio fit for their lifestyle. You have a lot of opportunities to find a novel approach to any of these established services.

Where will you get your funding?

Starting any business from the ground up is expensive, and a fintech startup is no different. On top of the typical expenses associated with running a business, you’ll have to bankroll a strong team of tech and business experts who can develop your app. As the number of fintech startups increase—and as traditional financial organizations start to copy your industry—finding talent can be a challenge. Everyone’s headhunting for that indispensable addition to their team; you may end up having to shell out more to entice a potential hire away from your competitors.

Since fintech is still a hot industry, there is a huge potential for your startup to secure venture capital. But with each year you wait, increased competition will lower your chances of acquiring a venture capital investment. Many startup founders fall back on their personal savings accounts to bridge the gap, leaving them unprepared for expenses in their home life.

Take the time to figure out how you expect to pay your bills, both professionally and personally. Check to see what kind of professional investments are available to your startup. See if you qualify for a government grant and compare this assistance to venture capitalist or crowdfunding to see which is more suitable for your product.

Then find out what modern fintech companies are doing to supplement their savings accounts when they empty out their emergency funds and can’t make essential household or medical purchases.Go online and see if entrepreneurs have shared any of their tips to keeping their personal finances balanced and separate from their startup.

Though it may be one of the hottest buzzwords of the year, don’t mistake it for anything but a competitive, fast-paced, and often unpredictable industry. Not everyone has what it takes to lead a fintech startup to success.You need to spend some introspective time determining if it’s the right industry for you. Consider how you intend to separate yourself from the competition while staying on budget. This exercise is a great springboard for ideas about your future as a startup entrepreneur.