At the rate of which fintech is growing as an industry, there’s little doubt thousands of innovators, investors, and tech-savvy entrepreneurs are looking for ways to join in on the fun. The fintech boom promises lucrative opportunities for those who can provide online financial services to digital consumers. But like any business venture, it isn’t without risk. As more people aim to create fintech solutions, the number of competitors eyeing venture capitalists rise.
If you expect to launch within the fintech industry and make a name for yourself, you’ll need to plan carefully. Make sure you consider the following before you dive in head first.
1. Solve for X creatively.
Sure, compared to other areas of Silicon Valley, the fintech world is still technically new, but that doesn’t mean you aren’t free from competition. Experts who have followed the slow birth of fintech are no longer calling it a niche industry. It’s at a stage of its development that comes just before a huge growth spurt.
The financial institutions the pioneers of fintech aimed to disrupt are now appealing to emerging fintech startups as a way to keep up with these changes. That means you’ll have plenty of competition, so you need to make sure your services stand out clearly from the rest. As fintech evolves, so does its possibilities, so don’t let anything stifle your creative approach.
2. Consider a strategic move.
Location, like timing, is very important when it comes to your startup. But where you should set up shop is no longer as easy as it once was. Silicon Valley is an obvious choice for many entrepreneurs, as even Google and Apple have their headquarters there. This area of San Francisco means you’ll be rubbing shoulders with your colleagues, and you might just network yourself into a deal that can help your business.
On the other hand, it is the most famous tech-startup site in the world. (It even has a TV show named after it, remember).You’ll increase your competition 10-fold moving here. You’ll also face some of the highest housing and commercial leasing prices in the country, as it’s one of the most expensive cities to live in the US. Take the time to weigh both the pros and cons of any location. Moving further afield may end up saving you a considerable amount.
3. Keep personal and professional accounts separate.
As the founder of your startup, you’re responsible for its finances. Many entrepreneurs take this to mean using their personal savings accounts to patch any holes in their professional budgets. Don’t follow their lead. Emptying out your savings only makes things worse. For one thing, you aren’t focusing on the root cause of your deficit. Though you can expect any startup to have a burn rate at first, it should lessen with each quarter.
For another, it leaves you totally unprepared should unexpected bills or repairs occur in your home life. In a pinch, you can turn to a niche within the fintech industry for help. Online direct lenders counter traditional financial services provided by the biggest banks with their online payday loans. Used by the underbanked and the underserved, these online cash loans are growing in popularity — especially since the underbanked are joined by those wary of relying on traditional financial institutions for help. Since they side-step much of the bureaucracy slowing down traditional avenues, they’re easier and quicker than most loans.
Keep these in mind as you start your journey with the fintech world. Though it’s experiencing unbridled success, it’s like any business venture. There are risks involved in beginning any company. It’s up to you to mitigate them.