London is bursting at the seams with fintech startups aiming to be ‘the next big thing’ and to disrupt the status quo. Yet, those who have actually made it are few and far between. Why is this? There’s certainly no shortage of good ideas, and there are plenty of incubators and accelerators to help with tricky early stage funding and growth. We should be seeing London-based businesses flourishing and taking on the world; with ideas, innovation, and investment in UK fintech, there should be more global success stories.
Clearly, the answers aren’t simple. Global competition isn’t easy, and being a star in your own incubator is completely different to taking on the rest of the world. Those companies who are potential clients of these startups are notoriously wary of new solutions and can be extremely slow to adopt. Plus, finding the right people to help turn a vision into reality is challenging at best. These issues, however, are the same as those faced by companies of all sizes and aren’t particularly specific to startups.
As an example, fintech is the fastest growing startup sector, and within this, payments is the fastest growing sub-sector. Over a third (18) of this year’s Fintech 50 are payments companies. Azimo recently raised $20m in funding, and WorldRemit raised $100m in February. An EY report valued the UK payments sector at £10bn, yet we’re not seeing an accelerator or incubator that offers specialist payments expertise.
Payments in particular is a highly complex industry, where working with the right people is too important to simply leave to chance. Should an early stage company really be happy receiving advice from the same mentors who advise a fashion company or a news aggregation service?
Built to exit, not to compete
While advice is important, the mindset of entrepreneurs also has to change. The scene is awash with companies seemingly set up with the sole aim of exiting to the highest bidder; the ultimate goal being to obtain a billion-dollar valuation; to become a unicorn. Investors and potential acquirers are falling over themselves to find these companies and, understandably, entrepreneurs are keen to give them something to invest in. There are now 36 fintech unicorns in the wild. This is up 25 from 11 over the last year.
Not everyone is going to be a Google, but if businesses are built to exit rather than compete, then no one will. There’s a huge opportunity here to help nurture the current crop of early stage companies by making them a part of the community, providing them with specialist advice and insights. Perhaps providing early stage companies with specialist advice is the key to mindset change, so rather than being told to build value until an exit becomes possible, advice from industry specialists could help early stage companies to see the bigger picture.
I believe that advice from those who have been there and done it before is the crucial difference between a company either rewriting the script, or being consigned to the footnotes of fintech history.linkedin Comment on this article below, or join our LinkedIn group: BankNXT.