3 Reasons Why Fintech Startups Fail

Fintech is one of the hottest industries right now. New and innovative Fintech businesses are continually popping up, and investors look happy to splash the cash backing these businesses. Yet, despite this seemingly fast-paced growth, many Fintech startups seem to be failing. According to the Wall Street Journal, around 75 percent of venture-backed startups fail. There a whole host of factors as to why promising Fintech startups may fail, but these three factors seem to be the most common:

  • A Lack of Capital

Despite more and more investors pouring money into the Fintech industry, the risks are still high for a Fintech startup, even if they manage to receive a reasonable level of funding. Costs such as technology, equipment and staff can very quickly eat into funds before the business is even up and running. It doesn’t matter what line of business you’re in, if you run out of money, you’re going to fail. 

Suppose you’re a Fintech entrepreneur that’s seeking out an investor. In that case, you must choose an investor that can not only provide the necessary funds, but has the experience and know-how to take your company to the highest level. An investor who has a proven track record in helping propel Fintech businesses could deliver far more value than just money.

  • Not Understanding Customers

Some Fintech businesses don’t have a clear understanding of who exactly they are trying to target – which is a mistake. Every person has different financial needs; for example, a millennials financial requirements will be different from that of a retiree. Fintech businesses must learn to understand how different demographics manage their money to serve them best. As the saying goes ‘If you try and sell to everyone, you end up selling to no-one.’ 

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