Fintech Venture Capital for Startups is a guide that features a list of venture capital or funding available for Fintech startups globally.
Fintech companies are increasing rapidly as financial services are almost compulsively important to individuals and businesses. They are also cost-intensive, as any other startup, causing the innovative founders to seek external sources of capital.
This article on ‘Fintech Venture Capital for Startups’ promises to be beneficial for your financial decisions.
What is Fintech?
It is a portmanteau of ‘finance’ and ‘technology’. It offers the delivery of financial services using emerging technology such as Artificial intelligence, Machine learning, Blockchain, Data Analytics, and more.
What is Venture Capital?
This is a type of funding provided by investors to startups and small businesses.
The investors are not limited to investment banks and other financial institutions but they can be private individuals with high net worth.
Venture Capital can provide monetary, specialized, or administrative expertise that helps businesses launch or move towards sustainable growth.
Investors favor startups with a growth potential because they get equity in the company which is usually between 25% to 50% of the companies ownership.
Another favorite is a small business that has grown quickly and shows a continuous potential to expand.
Venture Capital and the Fintech Industry
Fintech companies are presently dominating venture capital funding as the future is reckoned to be ruled by fiat money.
Hence, Investors gather like hornet bees around the industry because they see it as buoyant and highly scalable.
In the US, $98 billion venture capital was invested in Fintech in the first half of 2021.
Some of the Benefits of Venture Capital
- It generates a large amount of capital for the Startup to commence operation and for the medium-scale business to facilitate growth.
- It offers opportunities for startups to build strong business connections that drive productivity.
- It reduces the risk of starting a business for the founder and startup.
How to get Fintech Venture Capital for Startups
Though the market is saturated, and numerous startups vie for the attention of Venture capitals, you can find them online or meet them in person where you can schedule an appointment.
- Be aware of the preference of Venture Capitals. They seek leadership, management, marketing, and communication skills as well as the provision of well-laid-out financial data.
- Prepare a business plan and a concise pitch deck.
- Submit your business plan either to the venture firm or angel investor.
- If it is an existing business, the firm thoroughly investigates the business to ascertain its growth potential.
- For a startup, the firm or investor invites the founder for a pitch or business presentation.
- If the business or idea meets the criteria of the investors, they pledge investment in exchange for equity.
- The funds can be provided once or in batches.
- The investor(s) take an active role in the company providing managerial expertise for quick and rapid growth.
Venture Capital is not for the long term, but for a short time before the investor exits the company either by a trade sale, or liquidity provided by public or private equity markets.
So Startups are advised to take note of this.
Venture Capital for Fintech Startups
The following are some of the venture capital for fintech startups globally:
1. Fintech Ventures Fund
Founded by Sergei Kouzmine, the company seeks to invest in early-stage fintech and insurtech companies.
2. Accion Venture Lab.
Accion invests in seed-stage startups. They also provide support to companies from the seed to the growth stage.
3. Bessemer Venture Partners
This offers financial and technical support to Fintech companies.
The US company has had over 200 investments since its inception. For example Venmo and Acorns.
5. Bain Capital Venture
Since 2000, it has helped launch over 200 companies from founding to growth like Rapid7 and daVinci payments
6. Andressen Horowitz
The company is called A16z and it invests in seed to late-stage tech companies.
7. Canaan Partners
It is an early-stage venture capital firm that invests in entrepreneurs.
8. General Catalyst
Founded in 2000, the company is known for its strong relationship with startups and businesses.
Final Words On Fintech Venture Capital for Startups
If you ever have to opt for a fintech venture capital to get your ideas off the ground, ensure you do proper research into the venture firm to obtain accurate information.
I hope you now have a better understanding of how Fintech Venture Capital for Startups works.
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