Democratization of Startup Financing

Over 11,000 FinTech startups are operating around the world across 15+ segments, with payments and lending startups consistently being among the most funded and represented. In the past decade, average deal sizes have grown significantly for startups in late-stage rounds, while seed-stage companies possibly lost their former appeal to an increasingly risk-averse VC community (and institutional investors).

It’s never been easier to set up a business – all software necessary to set up essential functions is on the market today (Stripe Atlas, Holvi, Quickbooks, etc.). Given the team has critical human functions covered, mere financial survival is the persistently problematic part, whether a startup has a great proposition, or not.

In 2010, the average sums offered were $6.84 million for seed-stage companies, $20.31 million for early-stage VC rounds, and $26.64 million for VC rounds. In 2017, the average figures plummeted to $3 million for seed-stage companies but grew to $41 million for early-stage VC rounds and $1.566 billion for large-stage VC rounds.

Between 2010 and 2017, the average funding for seed-stage companies dropped by more than half (57%), as investors became wary of high-risk financial bets. Meanwhile, in the same period, the average funding for late-stage VC rounds went from $26.64 million to $1.566 billion.

As for the total funding for various stages, in 2010, the total funding for seed-stage FinTech companies was at $205.3 million, for early-stage companies at $316.33 million, and at $156 million for late-stage companies. In 2017, only one of those still counts in millions, and you can guess which one. The total funding for seed-stage companies in 2017 reached $851 million, while the total funding of early-stage and late-stage companies hit $7.137 billion and $6.9 billion respectively.

With 9 out of 10 startups failing, the one that becomes a hit has to be not just incrementally better than the competition but offer a 10X better experience. To become that one startup out of ten, a startup requires significant resource investments – time, talent (all of which comes down to money) – to dive deep into understanding the market, performing research, building the product, testing, etc. None of that is possibl ...

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