What’s the best way to fund a fintech startup?

Elizabeth Barry 22 February 2016

fintech startup looks for finance

From startup hubs to networking events, there's one question that is always asked...

The issue of finance is never far from a fintech startup founder's mind. Their product is centred around finance, and technology, but it's the issue of finding funding, especially in early-stage startups, that's at the forefront. However, finding investors and raising capital, while the focus for many startups, isn't the only avenue to take.

Matt Bullock, CEO of online payment platform eWay, spoke to a crowd mixed with startups, banks and other fintechs at an Innovation Bay event last week about how he started his company.

"It's easy to do a startup now...it's easier now than 20 years ago," Bullock said, referring to when he started eWay in 1998 with $50,000 and "one good customer". That one customer helped Bullock pay for everything, which he then reinvested into the business. He said the focus he had was funding the gap.

"I didn't raise a cent," Bullock told the audience, but admitted that the startup scene is very different now to what it was twenty years ago. "There wasn't even a startup scene."

"If there was a startup hub when I was starting I would go there...that would be a cool thing."

Startup hubs facilitated by platforms such as Innovation Bay not only provide networking sessions, but also investor meet-ups, financing advice and funding opportunities. Startups looking to launch can meet the like-minded and the established, while the established can get a chance to invest before the disruption happens.

Sydney fintech

Innovation Bay offers Angel Dinners that brings together entrepreneurs and those looking to invest in companies. Other networking events to foster the collaborative air that hangs around the startup community are also held regularly. Other startup hubs, such as AngelCube, bring together startup founders and mentors to offer advice as well as possible investment opportunities.

A recent proposal by the government may make it more difficult for "mum and dad" investors, making these collaborative platforms more important than ever.

Startup funding can come from a variety of other sources, too. One of the riskier ways, albeit with a lower entry barrier (depending on your credit history) is to fund your business with a credit card.

The funding space is also becoming more diverse. Business loans are not just being offered by banks anymore. More flexible lending criteria are offered by standalone lenders for those looking to start a business or for businesses who need an extra cash injection but flexible repayment options.

Bullock, while noting that his company is "smashing the banks," still seems to know that he wouldn't be where he is without them. His first connection with St.George bank led to establishing connections with the other Big Four, and what has led his company to be making 5.8 billion transactions today.

When do you know when to jump? The sooner the better, according to Bullock. "Then you push," he said.

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