The mash between funds and applied sciences led to the creation of a brand new and extremely profitable sector known as fintech (or monetary know-how).
Fintech advanced from the back-end methods utilized in monetary establishments to as we speak’s plethora of customer-oriented providers that make the reference to banks and different comparable establishments smoother and simpler.
Plus, the sector was one big step ahead for the event and use of cryptocurrencies equivalent to Bitcoin, Ethereum, and plenty of others. However, regardless that the newest headlines are primarily about crypto, fintech can even assist startups discover different funding options for their very own growth and progress.
In the event you’re , listed here are a number of ingenious methods wherein fintech makes it simpler for startups to boost capital.
Versatile Funding Options
Historically, small companies in want of funds would have choices equivalent to angel traders, enterprise capitalists, and/or banks. Nevertheless, none of those come low cost and with out restrictions which have a long-term impression. In a nutshell, all these choices are inflexible and have the capability to stifle a startup’s growth if issues don’t go in accordance with plan.
As a result of superb progress of fintech, startups these days have entry to financing options like Capchase where they can turn recurring revenue into flexible growth financing. This type of financing lets you adjust monthly payments to the monthly revenue, which makes it easier to move forward even during slow growth periods.
Easier Access for Investors
Traditional financing solutions are also restrictive when it comes to who can invest. Elevated transaction costs and large minimum tickets raised the bar so high that only the most wealthy could have their choice of projects.
Fintech changed this aspect and opened the investment market to anyone interested. That’s because the minimum investments are very low and if you invest in ICOs, the fees are close to negligible.
As a result, today’s startups have more investment opportunities as more people keep a close eye on what’s new on the market. This makes things a lot more interesting and diversifies the possibilities.
When you say crowdfunding, most people think about the most-famous platforms like Indiegogo, SpeedInvest Technology (great for startups), or GoFundMe (mostly for individuals). However, the crowdfunding market is way more diversified, with over 600 active platforms around the globe.
While crowdfunding is also a system made possible by fintech, it’s mostly for early-stage financing, before your startup catches the eye of a more reliable investor. Through crowdfunding, you also have a great chance to get the brand out into the world and get people to notice you.
It’s also a great way to gather seed money for the initial stages of the startup, but the chances of raising enough capital to move further are rather slim (only 23% of campaigns get funded in full).
Besides the marketing advantages, you can get amazing feedback on your products or services. And since you’re in the early stages, you can make changes and improvements without disrupting the entire production cycle.
Fintech may be an established field right now, but when it first started it was a disruptor and it produced a lot of changes (both positive and negative).
Overall, innovation in technology is the force that drives forward the business sector and the world, which is why tech startups are the most likely to find investors and alternative solutions to raising capital.
Of course, startups in other fields also benefit from the changes produced by fintech. Overall, whether you choose an alternative financing solution or you stick with the traditional system (or a combination of both), it helps to be creative and make use of all the tools at your disposal.