Recently I overheard someone saying that FinTech startups are 10x times harder to build than usual Saas or mobile app startups that were swarming the Silicon Valley over the last decade. The reason for that is naturally regulation and compliance issues which make launching and expanding FinTechs so much harder and expensive. But is there a better way?
And then there’s a long-term trend of increasing requirements for angel and early-stage investments, with 75% of the last year rounds going into past-revenue startups. This issue is particularly significant for FinTech startups, where most of the founders are in their mid-30s or early 40s with families and established life’s, who can’t afford themselves to run a startup out of the RV on a San Francisco street.
Enters FinHub Global Ventures, a curious mix between a venture lab and a tech company, sometimes called ‘a company builder.’ We provide a controlled and safe environment for FinTech founders to rapidly build and launch MVPs. This how we do it.
FinHub is a group of like-minded individuals who have a lot of experience running financial technology companies. It is only natural to spot an opportunity on the market and move quickly to launch a product targeting a specific niche. FinHub portfolio always addresses very particular problems which are present in the current market. We also tend to break more complex ideas into multiple simple products, thus making possible to use the same technology to pursue the market from different angles.
Centralized infrastructure and compliance
Since the biggest hurdle for FinTech startups is financial regulation, this is the issue we addressed first. We are building a network of payment institutions, money transmitters, banks and other licensed entities around the world, licensed and regulated by the local financial authorities. We run these entities in-house in a centralized and cost-effective manner, by standardizing our KYC and AML procedures between them.
Whenever we have a startup who needs to process payments in Europe or send money transfers in Canada, we just plug-in it into one of our entities and it’s good to go.
FinHub is all about reducing risks for investors and founders. Sometimes, investing early-stage is called ‘pay and pray.’ We beg to differ. When a founder joins FinHub with a bright idea, together we rapidly develop a minimal product using our in-house software development resources, launch it with our regulated entity and do initial marketing using our infrastructure and cross-selling capabilities. And if it flies, we send the startup team on onwards, to raise further funding and to scale.
At times, finance has not been very ethical industry, and it’s FinHub’s goal to break this stigma. We develop startups doing things cheaper, faster, simpler and in a more transparent way than the current market leaders. Is it acceptable to make 8% on charitable donations? Is it acceptable to charge hard-working migrants 10% on money transfers? Why there’re hidden fees in banking? Such are issues that we address, and this is how we can compete with the corporate incumbents on the market.
Shared engineering resources
Every founder can tell a story how he raised a small funding round and then went on to try and hire cheap software developers in Asia. And how he fought to make those people build his product in a meaningful way.
With FinHub, founders get access to world-class software development capability, standing by to work with you. Experienced in FinTech, of course, and using cutting-edge technology stack including serverless computing, React and GraphQL. The untold multitude of time and stress is saved for the founders while reducing risks for investors at the same time? That’s an incredible advantage of FinHub.
Since all of our projects are in the same industry, it’s easy for them to support each other. Consider payment gateway promoting mobile wallet, mobile wallet offering affordable money transfers or a small business banking service selling a payment gateway. Or vice versa. And since the most of marketing activities these days are done on social media, with every new startup it becomes easier to promote the next one.
FinHub in a nutshell
- Focused on one industry, FinTech
- Global market reach
- Building startups from ground-up at a very low level of venture risk
- Controlled environment for founders
- Centralized compliance
- Shared IT capability
- Startups promoting each other