Five common mistakes fintech founders should avoid
But the uncomfortable truth is that few will reach these heights, and too many fall at the same hurdles. But as all good founders know you can learn from failure, and there is a lot to learn.
After seeing the same mistakes happen time and time again, I collaborated with board adviser and global strategist Lana Tahirly Abdullayeva to create The . Combining our 40 years of experience combines into an easy to access five-point guide for how to grow a fintech and the common mistakes for founders to avoid. I’ve outlined five of those pitfalls here.
1. Thinking it will be easy
No matter how great your idea is, making it a reality will never be easy. A found that 40% of founders saw a negative impact on their finances, a third stated it negatively impacted their family and social lives, and a quarter worked roughly 70 hours a week. It’s tough, but at the end of it all 75% would do it all over again.
Founders should only start this journey if they’re prepared to put in the hard yards. They should make sure they have a team around them that’s ready for failures, negative feedback and unwelcomed surprises. Founders need to exhibit boundless passion, drive, and a commitment.
2. Misunderstanding the market, the product or the consumer
Founders should never assume they know how the market will receive their product; they should never underestimate how important this lack of knowledge is.
A good product should deliver a solution to a problem, it shouldn’t be a solution seeking a problem. Before taking this product to market, there is more research to be done. are attributable to disastrous unfamiliarity with their target market. This is entirely avoidable, and there is no substitute for doing the research- what are you disrupting? Who are the incumbents? How will they challenge you?
3. Taking it all on yourself
For a great idea to succeed, it needs a team who will help it do so. Founders need to be challenged, pushed and improved by those around them. Get this balance right, and they’re set for success.
A leadership team should be supported by a board that compliments the founders’ weaknesses. They should bring together industry credibility, specialists in the sector, freedom, and the right mindset to make this all work.
4. Losing control
Staying in control by leveraging the best investors is essential. Always research your target investors – understand who they are, how they operate and plan your strategy to engage them. Be aware that not every deal is in your best interest and be ready and able to walk away.
Additional dilution might help land early-stage deals, but later stage investors will look unfavourably on businesses with insufficient CEO/founder equity.
It is important to recognise when you need to bring in partners to bolster your knowledge and skill set. Early-stage funding can be done by the founding team but once you move into Series B & C you'll need guidance on the market.
5. Failed execution
It may have been individual brilliance that started a fintech journey, but that won’t be enough on its own. Systematic processes and high performing teams will ensure a company survives, thrives and grows. With proper attention to repeatable, measurable processes that empower predictable growth, start-ups can balance their agility and innovation with stability and security.
Founders will know that starting a fintech isn’t easy. But with the right advice, partnerships, processes, and plans, the business will align and start to make sense. Once this is all in place, then the sky is the limit, and a great concept could grow to be much more. My advice is to learn from the mistakes of others as we and to always keep learning.
The FinTech Show: Bitcoin, crypto mining, and payments
In episode six of the FinTech Show (originally broadcast live on 11 June at 2pm BST), Scott Birch and Will Girling discuss:
- El Salvador becoming the first country to make Bitcoin legal tender
- China's decision to clamp down on crypto mining operations
- The new developments in post-COVID payments, including the EU's decision to give every citizen a digital wallet
We also explore the newly released June '21 edition of FinTech Magazine, including a special look at our profile piece on HOOPP and the future of small business lending (guided by iwoca). Special thanks go to Valeria Simantob for providing the front cover of that issue.
Before you go! Follow us on LinkedIn and make sure to tune in on 25 June for the next FinTech Show.