From 3D printing to blockchain and even quantum computing, it’s hard to say what will dominate the headlines in the future, but throughout 2018 fintech has been the talk on the London tech scene.
It’s terrific to see the UK is leading the way when it comes to fintech. Funding is at an all-time high with the UK having attracted more fintech investment in the first half of 2018 than any other country in the world. But for entrepreneurs, these hot tech trends can present a challenge. With fintech’s popularity growing, investors are rushing to pump money into businesses, but often young businesses will not necessarily know what areas of funding will sustain and drive their business forward in the next five, 10 and 20 years.
If the UK’s fintech scene wants to secure continued success for the future, it’s vital that these young companies are able to scale successfully, especially if they want to overcome their upcoming challenges. Increased uncertainty around Brexit and how this will impact the UK’s access to the digital single market, the availability of skilled technical workers and even funding for R&D are all key risks for small businesses. Those who are able to have a clear and structured business plan to tackle these issues – and more importantly, know when to stick to it - will be able to keep on track and scale successfully.
Keeping on the right track for success
Businesses need to focus their efforts towards long-term success; it’s not necessarily about being the biggest money maker. The risk is companies often lose sight of what they originally set out to do, a trap in which young companies can easily fall into, when not careful. Take Crowdmix, a now-bankrupt music start-up spent £14 million of investment on parties, staff trips and outrageous office decorations, before they even launched. With the co-founders unable to agree on its strategy, the start-up did not set themselves up for long-term success. Leaders must take a methodical and responsible approach to how they use investment, matching it to their aims.
Money is often spent on marketing, office space, or in-hiring. The right approach depends on the business model. To really maximise the value of that funding in the long-term, a longer-term, holistic and honest plan must be in place before a single penny of investment is poured into different areas of the business that are not critical to its growth. It’s that long-term planning stage that’s needed and the reality is that this simply doesn’t happen enough.
Scaling fintech companies must address and identify their sweet spot in the market and develop a business plan focused on which best suits its model. That way, scaling businesses can secure success in the market, and grow in a way that is right for the business.