We see
Being an entrepreneur requires many eyes, more than two indeed, when the start-up team sits with the investors around the table.
Fintech space is full of VC money. According to KPMG, a total of approximately 12 billion USD investments have flown into that space in Q1 and Q2 2017 accumulated (especially rebounded in Q2) of which 44% VC money and the rest M&A and PE money.
Investors remain interested in Fintech opportunities so it makes sense for the entrepreneurs to put the investors’ monocles on very often and look at the big picture through their eye.
Start-ups in Fintech area are in general capital restraint, the technology to be built and deployed, the customer attraction, dealing with regulatory bodies and financial institutions take money and lots of time (so also lot of money) before turning the business idea into an ROI.
Getting a lot of dilution and VC money can be expensive capital for the start-ups, so they have to do their homework well before knocking the VC doors and give up some part of their ownership.
VCs are not only good source of capital but also advice and gateways to networks of individuals that the start-up will need to leverage to launch their mvp.
VCs have two straight points to look prior to any deep dive into their decision processes.
One is the “market size”. The market should be “big enough” to attract the VC interest. The start-ups shall size the opportunity to tap in and above all value the solution that they offer against the “other solutions” available out there. The start-ups shall demonstrate to VCs how their business model will be scaled and stretched. They have to give a tangible taste to the investor that the sky is the limit and they found the stairs to heaven.
Once the market opportunity is attractive enough to get the VC’s eyes fixed on the spreadsheet, the start-ups shall be ready to tackle with the next questions such as POCs, customer pipelines, POC return rates over long term contracts, renewal rates, dollars per customer and the list is not short nor the meetings, the happy hours, the dinners, etc.
The other one is “the team”. The executive team shall be very clear about what they want to achieve and how they want to achieve. They shall be loaded by the skill sets and the experience needed for execution and problem solving. They have to be able to challenge the status quo and to be open to advise and innovative thinking, be flexible, curious and creative to push their idea forward.
The team shall be resilient and cohesive to get the “product” stand up. They have to use and assess data – especially very abundant these days, and be one step ahead of the macro trends and competitive dynamics of the market. They have to be able to deal with diversity and make diversity a weapon to kick-out and make a change.
Open minds are gold; consistency is key.
Once the entrepreneur enters into the perspective of the VC, it is easier for him / her to design an execution roadmap and pave the way for investors to get in. Being an entrepreneur in the Fintech space takes guts to get the “thing” done, over and over again.
