5 key takeaways from working with FinTechs at Startupbootcamp
26 August 2016
It’s nearly a year to the day since I began a secondment to Startupbootcamp FinTech London as an executive in residence to their 2015 cohort. I wanted to offer some reflections on the experience, both as a consultant more used to working with major corporates than start-ups, and some thoughts and observations for prospective founders from my experience of working with the cohort.
I went into the accelerator process with no idea what to expect, but come Demo Day I was left with one overriding impression: the maturing process that the start-ups go through over the three months is phenomenal. Now, by maturing some people might assume I mean that a cohort of twenty somethings sporting jeans, check shirts and company branded hoodies ‘grew up’ and learned about the world of starting and doing business. Not so. A better analogy might be the maturing of a whisky or a bottle of wine. The way the start-ups learned, adapted, pivoted, built momentum and ultimately built their businesses over those three months was incredible to be a part of. The confluence of mentors, partners, investors and Startupbootcamp’s own curriculum creates this catalytic environment in which the founders can execute this success. But it’s not all smooth sailing…
The bipolarisation of speed
The pace with which start-ups are able to adapt and develop their ideas and technology is well documented, but I was nevertheless struck by this perception of high speed when working with founders. It’s in everything from their decision making, their learning, the way their products develop and the way they adapt and flex to new information and factors. But there is a harsh contrast to this speed, and it’s especially prevalent in FinTech (and InsurTech / RegTech).
Financial services is an industry with very high friction: getting a proof of concept of your B2B solution into a bank typically takes months, never mind selling a full implementation; regulation, despite a start-up and competition-friendly regulator in the UK, is still complex and challenging, interpretations are difficult, and the licensing process (where necessary) can take the best part of a year. By their very nature, many FinTech companies are capital intensive, and raising that capital takes time (and buckets of energy). In many ways these frictions are immutable facts of the market, but it’s not all doom and gloom – relentless pace and enthusiasm goes a long way to negate these challenges!
The chasm between zero and one
Mathematically it’s obvious, but it’s equally important in the lifecycle of a start-up: the difference between no customers and your first customer is fundamental – especially in a B2B company. This challenge is even greater for those trying to create marketplace businesses (e.g. trading platforms) because you have to persuade both sides of the deal to take a bet on your platform. That first company is a major milestone, and can crop up a number of times: your first proof of concept, your first paid pilot, your first discounted customer, your first full-fee paying customer. Each time, that first customer is a major step forwards and can be used to build momentum. If you’ve persuaded one company to try your tech, it’s a lot easier to persuade the second one – even more so if someone has been prepared to pay you for it.
Cash and customers, and meetings
Every start-up has two overriding priorities: cash and customers. Meetings are one of the key ways to drum up both. But meetings are a tricky topic for founders. Time is an extremely precious commodity for them, and singular focus on only taking meetings which are going to generate cash or customers can often be a good thing, but it’s also easy to become blinkered to alternative viewpoints and contacts. Turning down meetings because you don’t think it’s going to generate progress on one of your priorities can be sensible when you’re trying to get a set of term sheets out of the door by midnight. However, do it too often and you’ll never know the valuable connections and network that you’re failing to build. There is always an opportunity cost with time management.
I would encourage all founders to never be afraid of pivoting, narrowing or expanding the focus. Self-conviction is crucial, but so is learning from experience. Sometimes a business plan is too narrow, sometimes too broad, sometimes the market opportunity isn’t quite what you thought it was when you started out. The old adage “no plan survives contact with the market”, (Helmuth Von Moltke) is a useful one. Resilience is the key, not doctrinism.
And lastly, what about me? Start-up life is certainly seductive. Relentlessly hard work mixed with near-constant setbacks and frustrations, but seductive none the less. I don’t know what the future holds, but if I spot that opportunity in the market which I think shows promise, I couldn’t have had a better grounding and foundation in what it takes to start a business than I gained through my time working with the cohort at Startupbootcamp.
For the most important trends within the FinTech space and what we can expect to see this year, head to our ‘Accelerating change’ report page.