How much money should a Fintech startup raise

You may have a revolutionary idea that will change the fintech industry. You might even have the blueprints, developers, and PR vision to make it happen. But you need money to take it past the concept.The seed investment round is the stage in which you raise money to get your startup off the ground. It is meant to support your company until its generating its own funds.

The question every fintech innovator needs to ask is, how much money do I need at this stage?

Let’s look at a few big and small fintech companies that have launched in the recent past to see how much got them going.


The List

*All data is from CrunchBase


Seed round: $1.2M

Description: A popular mobile app that allows users to share and make payments with friends.


Seed round: $1.75M

Description: Online lending platform that brings together high potential borrowers and investors.


Seed round: $1.5M

Description: Payment analytics and alerts platform for SaaS, subscription and eCommerce businesses.


Seed round: $3M over 2 seed rounds

Description: Smart 3D maps that deliver rich data about the urban environment & property market.


Seed round: $650,000 over 2 seed rounds

Description: Connects Latin American millennials with credit options.


Seed round: $277,000 over 2 seed rounds

Description: Online financial software for debt and credit protection.


Seed round: $20,000

Description: International fintech company developing mobile only banking application.


Seed round: $1.8M + undisclosed amount

Description: Connects sales and marketing teams with data sources.

Tyro Payments

Seed round: $1.3M

Description: Australian financial institution specializing in merchant credit, debit and EFTPOS acquisition.


Seed round: $2.5M

Description: Mobile person-to-person international money transfer service like Currencies Direct or Transferwise.


The average fintech company

Calculating an average from the above amounts would be misleading, as the range is just too large. While most of these companies raised $1M to $3M in their sed rounds, others raised only hundreds of thousands (or less). However, the bigger, well-known companies raised over $1M.

Why so much money?

Let’s say you’ve developed the concept and have developers and a finance team on board. You’re ready to get started. Do you really need that much money? What did other fintech companies need it for?

Finance by its very nature is full of complexity – much more so than the technology side of the business. This is because financial crime can be so devastating and the financial industry can be made vulnerable by new technologies.

These are some of the costs you’ll need to cover with your seed round.

Legal department

Chances are, you’re not in partnership with a lawyer. Fintech companies are generally started by those interested in economics and IT. But financial services come with a lot of legal risks and admin. If you’re not careful, you can accidentally transgress money laundering laws or commit tax fraud simply because you don’t know better. In addition, people might find ways to use your service for illegal purposes. You need a legal team to guide you in what you can and cannot do. They’ll help you get in line with regulations, and thereby relieve you of liability for the actions of others.

The overheads for a legal team are high. But without one, you’re going to lose a whole lot more than you save.

Know Your Client (KYC)

If you’re in the investment industry, you’re ethically bound by the requirement to know detailed information about the client’s risk tolerance, investment knowledge, and financial position.

KYC regulations can cost you millions with the amount of time and resources that goes into getting the necessary information. Of course, the amounts will be lower for startups, with the massive amounts applying to firms with huge customer bases. However, you’ll need to be KYC ready for your first clients, and will need investor input to help.

Regulatory tests

In order to be regulated by the region’s financial services authority, you need to comply with and pass regulatory tests. These ensure you’re complying with all the regulations. Other tests determine whether your company can deal with an economic crisis.

These tests are expensive, and you need to be adequately prepared. Doing your own due diligence takes time and resources, even before you pay the associated fees.

The financial industry is expensive

Fintech startups need a lot of money. Their early investment rounds often need to raise amounts of over $1M, so that they can get up and running. This is mainly due to the inherent complexity of the financial industry. There are significant legal and regulatory processes, and to deal with them you need resources. Legal teams and KYC systems can cost a fortune, as well as the fees for the regulation itself.

Fintech is a great industry, changing from day to day. But you need more than a good idea to become an innovator.

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