How to get funding for fintech companies and crypto startups
In the last few years, funding for fintech companies and crypto startups is on the high-rise.
Many crypto projects and startups have gotten funds that seem too much for the market.
Rather than the funding being reduced, it keeps increasing with many startups, mostly tech startups taking the lead.
In 2021, according to a report from Nairalytics, Nigerian startups received $1.6billion in funding at different funding stages.
Out of the total amount of funding raised in the US, more than 60% came to Africa with Nigeria taking the lead while most of the businesses are fintech companies.
This research shows that there are investors at different funding stages that are ready to invest in startups that prove to be worth it.
What do I need to get funding for my startup?
Irrespective of the line of business, a pitch deck is needed to get funding for a business.
A Pitch deck according to CooleyGo is a presentation deck that is used to communicate your idea or company to any number of audiences, generally investors.
One of the single most important aspects of an effective pitch deck is to organize it based on the audience and the forum to which it is being presented.
Key components of a pitch deck
Several important components must be available as a pitch deck though it can vary from business to business, industry to industry generally it must include high-level summary slides, the problem statement, the product, the market strategy, the team, financial projection/modeling, whitepaper or lite paper among others.
This is a two-page summary of what the company is all about. It is part of the business plan.
It must be concise and detailed enough to give investors a rundown of what the company is all about.
The problem statement
No business can survive without saving a particular problem.
So while preparing your pitch deck, make sure your company is solving a particular problem.
The product is not the end but a means of solving the problem such as the Bitsave protocol.
- How can your product solve the problem?
- Is your product the best solution to the stated problem?
The market strategy
The best is not always known, what we know is the best known.
Your products might satisfy all the requirements but if there is no workable strategy to present it to the end-user, then it is as good as if it never existed.
Who is the team behind the project?
No one will invest in a project with a hidden team or with a team of people with a bad track record.
Do you know anyone who invests just because he or she wanted to invest?
No, all investors are after the gain whether now or later.
To get an investor for your project or startup, you must have financial projections that indicate that you can generate funds with your normal activities.
Investors are more concerned about your cash flow, most especially your operating cash flow.
With all these being known, it is important to know the types of funding that are available for every business.
Types of funding
This kind of funding is mainly provided by the founders and family and friends.
It can also extend to the funds that are being provided by partners if there are any.
This type of fund is basically before the business idea is being acted upon.
It is the type of funding that allows you to execute your ideas. In short, it is the money available for operational setup.
External investors are not likely to invest in Pre-seed funding.
For better understating, think of the whole investing and funding as a tree.
At this stage, the operational setup has been completed and probably the business has begun activities.
With the tree scenario, the land has been prepared (Pre-seed funding) and seeds can be planted.
The seed funding stage is the stage when the fintech companies need funds to launch its product fully.
These are the people who invest in high-risk business startups but the fund is usually between $10,000 to $2m
Series A funding
The series funding comprises 3 different series which are A, B, and C.
Series A funding is also called the development stage funding. This is the funding provided for a business to fully develop its products.
It is only available to startups with a track record in terms of an established user base, consistent revenue figures, or other key performance indicators.
At this stage, investors are willing to invest in money-making businesses and not just businesses with expected future gains.
Investment at this stage is usually between $2m to $15m
Series B funding
This is also referred to as later-stage investing which is mainly for expansion.
Series B funding is available to businesses that have successfully developed their products fully but want to expand to a new environment or another market.
For instance, after developing your business in Nigeria, you might want to expand to Africa at large.
The funding at that stage is Series B funding and is usually between $15m to $60m.
Series C Funding
This type of funding is usually in preparation for Initial Public Offering and it is meant for acquisition.
At this stage, the business has become successful and is now ready to dominate the market by buying all possible competitors.
The investment is based on hard data and not based on expectations for future success.
Specifically, Series funding is for businesses with proven business models and money-making businesses.
The possible solution
Now that you are aware of the different funding that is available at different stages, do you know you can easily get funding through upscaling?
Upscaling to the blockchain is a way of getting investors to invest in your business. Specifically, it is a proven way of funding fintech companies.
The type of investment gathered through upscaling is always based on an expectation of future gain.
So it can be regarded as seed funding.
Do you still have a question yet unanswered or will you like one-on-one consultancy services?
You can contact CS consult, the consultancy arm of Crypto Smart, Africa’s №1 B2B Asset management company.