Fintech and the startup movement

According to Alex Lazarow the startup movement is growing like daisies. Indeed, there has never been a better time to launch an entrepreneurial, technology-led project anywhere. Why is that?

To start with, the cost of cloud computing has dropped significantly and this enables startup growth with fewer barriers to entry. As Lazarow comments, anyone can now rent Google’s enormous computing power by the hour, eliminating the need to purchase and maintain your own server. Telecoms costs are also heading downward and when combined with collaboration software, it is easier now for teams to enjoy frictionless remote work.

Global markets are also looking more attractive for startups thanks to the five billion mobile phone users worldwide and the two billion people with online identities on social media all ready to be the consumers that “ over 480 innovation hubs globally and over 1.3 million venture backed companies” are looking for.

Furthermore, according to the 2020 edition of Startup Genome’s Global Startup Ecosystem Report there is exciting news about the future potential for innovation ecosystems globally.

Highlights of the Startup report

  1. The incidence of ‘unicorns’ (companies valued at over a billion) has increased. They used to only be found in Silicon Valley, but there are now 400 of them spread around the world and fintech is the core component of their success.
  2. The report ranks the tech hubs around the world, and shows that the challengers to Silicon Valley are muscling up at pace, with New York, London and Tel Aviv amongst the big contenders, including the Asia Pacific region. Indeed, Asia Pacific accounts for 30% of the leading ecosystems.
  3. Covid-19 has presented a challenge, especially in the tougher, less resource-rich ecosystems around the world. Venture Capital investment has dropped by 20% globally, plus over 72% of startups saw their revenues drop. The knock-on effect of this is the loss of employees in 60% of startups.

The way forward for fintech startups

Future success will require resilience, and Lazarow suggests it also requires a new playbook, something he explores in his recently published book : Out-Innovate: How Global Entrepreneurs – from Delhi to Detroit – Are Rewriting the Rules of Silicon Valley (HBR Press).

As he points out, it is vital that startups get it right this time round, especially as entrepreneurship is “the largest force of job growth globally.” In a positive way, this is a good time to rethink how to be an entrepreneur, rather than follow the old routes, because it’s a good time to act for success and join the startup movement.

Don’t Sell Your Startup App Too Soon

Entrepreneurs love to sell an idea. Once they see that an idea has got some traction, they have a strong urge to pitch and sell it in the early stages. However, that is a mistake, as Abdo Riani explains. 

He suggests that rather than trying to sell, entrepreneurs should instead be “listening to your customers’ needs and developing deep insights that can shape your startup idea into a viable product.” He also suggests that once you can get customers asking about your value proposition, “then selling will not only be easy, it will be unnecessary.”

The steps to success

First, it is obvious that the early customers are likely to be a competitor’s customers. What they will want to know is how does your app compete on three things: cost versus value, strong brand, and or unique solution.

Riani says, “If you’re going to offer superior value at the same price, you need to figure out the problems your competitors’ customers face using those solutions.” In other words, look for the gap you can fill.

Second, discover your customers’ most urgent needs. Riani says, “A simple yet effective approach is to build a Customer Advisory Board comprised of your most engaged early buyers.” You’ll gather insights you wouldn’t get with a simple survey or interview.

He also points out: “As a rule of thumb, if customers can gain ten times more from your solution than it would cost them to cancel their existing contracts and memberships, your product becomes your most important, maybe only, sales tool.”

Third, your app solution must be irresistible to the consumer. Even though the first version of an app may not be the complete vision of what you want it to do, Riani suggests “you can focus on introducing high-impact features that delight and WOW the customer.”

You can do this even in a highly competitive market by focusing on a niche segment and tailoring the product to the needs of consumers in that sector. That alone can give your app the WOW factor.

Ultimately, the secret of success for startup app lies in “building a product customers cannot refuse to try, use, and recommend, even in the presence of solid competitors.”

If entrepreneurs follow this advice, they will have no need to sell their startup app at the beginning of its journey.

Tips on startup cash

Tips on startup cash

As an entrepreneur I am well aware that managing your cash flow in the early days of a business startup can be challenging. Not everyone has the comfort of a generous investor who provides a safety net, and those that don’t have sufficient liquidity need to take a ‘bootstrapping’ approach. This has saved many a new business from failing before it has barely begun and in my opinion, if you can rescue your business by yourself, you will be better prepared for what lies ahead. Therefore, I have put together 8 tips about the various ways in which you can bootstrap your business.

  1. Generate cash quickly

A business model that has the potential to generate cash rapidly is most likely to succeed if you’re bootstrapping and relying on your own finances. Not all business models will do this, so from the outset look at how you can bring cash in from the start.

  1. Watch your expenditure

Open a business bank account at the first opportunity. Using your personal bank account is risky because it is harder to keep track of incoming funds and outgoings. Discipline yourself to watch where cash goes and what demands more of it and when. There are free tools available that track spending and you should be monitoring your expenditure on a daily basis.

  1. Reduce personal spending

This is just common sense. You may have your own business but that doesn’t mean you can immediately start living the high life. You don’t have a salary as such, so think very hard about every purchase and only buy what is absolutely necessary. If possible, look at other ways to save money, such as reducing your rent by sharing with a friend.

  1. Do the job yourself

It would be lovely to outsource some tasks, but this is both an unnecessary expense and one that stops you from learning more about your business.

  1. Learn a new skill

This is related to the previous tip – if you don’t know how to perform a task that is required by your business, learn it rather than ask somebody else to do it. If you need to write code but have never done it before, now is the time to acquire the skill. You’ll save money and have a new skill.

  1. Learn the art of thrift

Apart from reducing personal spending, look at ways to reduce business expenditure. Make good use of all the freebies available, such as free versions of Dropbox and other online tools. Do you really need an office or can you work from home? Choose the latter first until you actually need to pay for premises.

  1. Invest in your website and business incorporation

This is one exception to the being thrifty tip. Make sure you use a respected incorporation service, because in the long term a shoddy service may come back to haunt you. Also, buy the web domain you want from Day One and build your brand around it from the start. It won’t cost less if you wait and you’ll miss the opportunity to establish your branding.

  1. Refuse to take ‘No’ for an answer

You might find that when you are small some suppliers don’t want to work with you. It’s essential that you build a personal relationship with these people, because by doing so you are more likely to get the service at a price you can afford. Tell them your story and what you are trying to achieve – appealing to people’s emotions is all part and parcel of running a business.

I can tell you that none of this is a walk in the park as they say, but if you follow these tips, the pay-off is considerable and you’re more likely to find you have a solid, long-term business.

I hope you enjoyed this and found it useful. Please subscribe to my blog if you’d like to receive an alert when I post new content.