In order to send shockwaves through the market with your amazing start-up idea that’s bound to get snapped up by a major financial institution you need a concept that works, the expertise to get it going and, more importantly, the money.
The lack of funds is often what results in a lot of start-up businesses failing. When it comes to the fintech space there’s lots of competition and in order to get on top, you need money to hire the right developers and other fintech specialists to develop your product or service. And unfortunately the experts in this industry don’t come cheap.
The good news though is that there is more than one way to get funding for your fintech startup without you having to dig too deep in your own pocket. Here are some of the top five options:
- Get a bank to back you: If your concept is a good one there’s no reason why a bank won’t offer you the cash. The founders of fintech startup Bud for instance managed to garner the attention of HSBC and sign a deal with the international bank. They also recently raised £1.5 million from Investec and Sabadell Bank.
- Crowdfunding: This has proven to be a popular way of generating money to launch a business. Check out the likes of Crowdcube, Seedrs, SyndicateRoom and Crowdfunder. Make sure you’re prepared to woo your investors though. Often these sites enable those who pitch for funding to present their business plan, videos or provide explanations for why they’re seeking the funding. If you don’t provide a proper plan, you’re unlikely to get much attention among the thousands of others asking for backing.
- Get the attention of an angel investor: Angel investors will invest their own money in a start-up at their own risk. But, typically, in return for this they will want a stake in the business. Be selective when it comes to choosing your angel investor. They can be invaluable as they can provide expertise, guidance and useful contacts.
- Enter a competition: Earlier this year Tech City UK launched its ‘Fintech For All competition’ supported by the Department for Digital, Culture, Media & Sport (DCMS) and Treasury. It was also supported by Lloyds Banking Group, Bethnal Green Ventures, Mustard Seed Ventures, Citizens Advice, Toynbee Hall and Ascension Ventures. The prize package included customer insight support from the Money Advice Service worth at least £70k, as well as mentoring and promotion across financial services institutions. Unfortunately, entrance to the competition closed on 20 October this year, but there’s no reason why you can’t keep your eyes peeled for similar ones.
- Fintech incubators & accelerators: These can provide great funding and also the right environment with the expertise and space in which to launch your business. Often, desk space is heavily subsidized and includes a range of free professional services all as part of the community. These programmes are immensely popular and are often run out of London and other major cities around Europe. Make sure you have the time to dedicate to them as they can run for a couple of months.