This article was first published by Markus Gnirck as a LinkedIn post. He is the Co-founder & Global COO of Startupbootcamp FinTech, an accelerator focused on financial innovation.
People ask us why we have chosen the 10 FinTech teams in particular for the Startupbootcamp FinTech 2015 Singapore accelerator. Obviously there is not an easy answer to this, especially because our Partners (DBS Bank, MasterCard, Infocomm, Route 66 and SBT VC) have been also part of the Selection Committee and we all had our reasons to take the 10 teams out of 300 applications forward. However, having now met more than 200 early stage FinTech startups across Asia in the last months, we had a good comparison between what is good and what is lacking in startups.
In my last post, I have talked about the Rise of FinTech in Asia, and I believe the Top 10 startups we selected represent important themes for this continent (feel free to make up your own opinion). Hence, let's look at the challenges that startups are facing, specifically in Asia:
1) Low Customer Adoption: A very common answer to the question 'So, how many customers / users do you have so far?', is that the startup is trying really hard to gain customers, but actually spends a lot of time educating them that this particular product will solve a pain. That clearly shows they haven't developed the product with potential users and rather spend resources and time on making it more perfect. This results in having low adoption rates where consumers or businesses are slow in taking up the product. On the other side, it raises the question of whether markets are ready in Asia for certain FinTech products, especially if they are 'copied' from the West?!
2) A Local Solution: While it is great to see how many startups are popping up everywhere in Asia, many are focusing on local problems. Only a minority is looking into scaling the business to a global level, maybe a few across Asia. Startups, please think big! Thailand, for example, is not the only market you should focus on! Have a plan in place that makes your company scalable across continents and tell us how you will change the industry you are working in.
3) Where is Smart Money?: As many startups are either self-funded and/or supported by family & friends, there is a clear gap of smart early stage money. Looking across ecosystems, angels and early stage investors with a finance background are scarce. Most startups are lacking the seed support from experts from the industry that push them to the next level, and also help them to overcome challenges 1) and 2). As this is a crucial element of a healthy ecosystem, we yet need to see more smart money activity.
4) Marketing / Go-to-Market: Where there seems to be a lot of focus on Marketing in Europe and the US, it is a mystery sometimes how startups in the East are looking to acquire customers. Having a great technology simply isn't enough; a good marketing strategy is crucial to drive the business forward. Founders get stuck on their product, and forget to be open-minded about their business development.
5) Talked to Regulators / Banks?: Depending on the market it can obviously be challenging to reach out to the right people in banks and regulators. However, startups got to get in touch as early as possible to seek feedback, especially from regulators, and see how they can push the regulatory framework. Additionally, there is no point in "disrupting the banks", rather than figuring out how you can leverage the bank as partner / customer. Most startups we've spoke to have not done that. Do it ASAP!
Besides the above mentioned ones, there are obviously many more challenges startups have that can be found worldwide. For example, setting focus, knowing the customer, long sales cycles, etc. However, these are the top 5 that were observed.
On the other hand, the talent and skill sets that we came across are impressive. In particular, pitching, design and technical skills are highly advanced.
I can't wait to hear the first great FinTech success stories from APAC soon.