How to Fund your Fintech Startup 

Funding a startup is one of the most difficult things to do. As competition goes higher, the chances of winning a grant or getting financial aid for startups become slimmer. However, it is highly profound that business needs money to thrive.

This is why founders and startups must be very focused on researching startup funding options before launching their idea. With financial aid, it is much easier to scale your idea than to grow an idea without funds.

There are few Fintech-focused grants that are provided every year; however, the applicants are usually way more than the available grant opportunities, and the requirements are usually too high to accommodate only a few.

To find rewarding FinTech startup funding opportunities, one needs to stay alert and consistent in following industry-based notifications. Some of the ways you can find Fintech funding opportunities is by following industry blogs, joining an online community of founders, and participating in an incubator programme.

Importance of Funding for Fintech Startups

Understanding how to get funding and the necessary strategies to apply to gain an edge in grant applications is a must for every entrepreneur who wants to build a profitable business. To start your fintech business, you need to have the right financial backing and strategies to get the financial support you need for your business. Studying other fintech stories and exploring the full range of grant options is a good start to building your idea. Apart from the general reasons you must have guessed, here are the relevance of fintech startups:

1. Startups need a lot of funding to enable them to allocate adequate resources to necessary activities such as digital marketing and app development. This includes the purchase of online licenses and payment for developers.
2. Funding helps to align compliance with fintech regulations and continuous innovation to ensure the application is robust, secure, and holds a lot of features.
3. Funding helps startups grow in the fast-evolving fintech landscape by integrating advanced technologies like AI.
4. Funding startups helps in covering high initial costs and operational expenses such as salary.
5. Funding enhances your strategy and impacts the long-term success of your business.

Before you begin researching for funding opportunities, you want to outline what you need funding for. What are your funding needs?

This is the primary concern every investor or grant provider would be interested in. What are the reasons you need funds or financial aid in your business? You can’t just gernereally state that you need the money to grow your business. You need to outline in what sense you need the money to grow your business.

How much do you need?

This is a trap question for most Fintech startups who have failed to do the homework of researching their brand needs and developing it into a robust plan. The size of the fintech project you’re working on will determine the amount of funding you need. You cannot present an abstract figure to your investors. They want to be sure you are not being greedy and trying to expand your lifestyle with money from your business. Here is a simple breakdown of factors that impact the amount of funding that your fintech will need:

• Development cost: this cost is mainly dependent on the complexity of your app and the features you intend to include in your project. The cost would escalate to include several minor but huge costs, which include cost for plugins, payments for developers and other technical stack
• Operational Cost: These are the primary costs your business will endure in the cause of the daily running and setup of your business. Costs include salaries of workers, rent for office space, purchase of equipment, data subscription, lighting, and other utilities.
• Marketing Costs: Marketing is a necessity for the growth of every startup business. Marketing costs should include but are not limited to traditional marketing, digital marketing and PR campaigns, and digital advertising.
• Other costs include legal and compliance regulatory setup, technology sets such as cloud services, and investing in a CRM tool.

Funding Options For Fintech Startups in Nigeria

1. Bootstrapping: This is simply the act of funding your business from your personal savings or reinvesting in your startup with profits you have made. It is also called self-funding. Most founders, who are also serial entrepreneurs, fund their startup with earnings from other businesses. While this might limit the speed of your business growth, the founder happens to retain full ownership of their business. Hence, it is advised that if you want to bootstrap as a startup founder, you need to have other sources of income you can strap from to plug into your business. Many successful businesses like Mailchimp started with bootstrapping before they began to secure external funds for their startup.
2. Angel Investors: These are affulent business enthusiasts who are passionate about investing in small businesses and startups at their early stages for a percentage of equity or debt funding. They could also form helpful partners, providing invaluable insights to help you grow your business from scratch and expand your network to enhance your marketing efforts.
3. Venture Capital: This is usually a group of investors who provide a large amount of funding for highly prospective businesses to move them up and enhance their performance. Unlike Angel funding, they engage in multiple rounds of funding. Airbnb is one fo the beneficiaries of this funding opportunity
4. Incubator and Accelerators: This is also an external funding option that comes with a lot of perks. These are programs developed to enhance the profitability of startups by providing them mentorships, resources, and sometimes funding. The emphasis of the training and mentorship exercise is tpo introduction. While there is no guarantee of the amount of funding that will be provided, this is a great option as it empowers the founder with the necessary strategies to build a successful business even from small capital.
5. Government grants: These are non-equity or non-repayable funding provided by the state or federal government to support innovative ideas and business sectors, including fintech. Selection is very slim, and chances of getting selected are usually very small as there is usually a lot of competition amongst several brands to earn the funding from the government. Government agencies, such as the Ministry of Works, also provide special funding for businesses in their category. For fintech startups, they can position themselves to be beneficiaries of grants from organizations such as BOI or the World Bank in Nigeria.

Conclusion

Funding your Fintech startup can be quite challenging and a very long marathon. However, there are several opportunities you can position yourself for. With strategic positioning, dedication, and access to the right information, founders can stand a good chance at gaining funds for their startup.