What is the attitude of VCs towards fintech today and how is it possible for a startup to attract the attention of top investors? We asked Paolo Gesess, Co-Founder and Managing Partner at United Ventures who has given a mentorship session with the startups of our community on this very topic.

Fundraising for fintech: what are the specificities of this sector?

I wouldn’t say that fundraising for fintech has specific sector-related peculiarities. The differences are mostly related to the business model: in the case of a B2C model, the company will need to be funded for several years, with a considerable capital injection, as the cost of customer acquisition is high and the process is slow. On the other side a B2B model, such as an enterprise software, is streamlined, faster and easier to invest in. Marketing costs are much lower, and so are the funding needs.

Fundraising in Italy: has the situation improved in recent years compared to other countries?

The situation has certainly improved in recent years: new operators have appeared and, more generally, several measures have developed the venture capital market in Italy, and consequently facilitated the fundraising activity of startups. What I recommend to the target companies, in any case, is not to stop at Italian investors, but to open up to investors from other European countries. United Ventures is an European focused VC with a global portfolio, and partnering with many international VCs we can tell that the European tech investing community is getting more and more interested in the Italian startup scenario.

What is the actual attitude of VCs towards fintech?

The fintech sector has exploded in the last few years, but it remains very attractive to investors. The disruption of financial services is ongoing and this process will continue for many more years. In this regard, it is important to remember that the time horizon for venture capital is around 10 years: experience has taught us that disruption takes time. With regard to our portfolio, Moneyfarm is a great example of a long-term investment, able to create enduring, transformative value along the years. We first backed the company in 2012, when the concept of fintech was not as widely popular as today, and a few days ago we celebrated its agreement with Poste Italiane, launching the largest API-based digital wealth management partnership in Europe.

Do’s and Don’ts for a young reality to attract the attention of the VCs?

First of all, to draw the attention of a VC, you need to be very focused on the problem you want to solve and very clear on the solution that you propose. Do (well) one thing and not one hundred. Another crucial point is the coherence between the financial requirements and the stage of development. Founders need to have clear ideas about their financing needs and long-term growth plans. Finally, they must have a perfect understanding of the competitive landscape at European level and, in a regulated landscape such as that of financial services, of the relevant European legislation.

From your point of view, can a structure like Fintech District have a positive impact on the growth of fintech companies?

Certainly, the Fintech District can contribute to the growth of fintech in Italy. As a facilitator of relations between the various subjects of the ecosystem, it can play a role in helping founders and their teams to build a valuable network of professionals with which to deal on different issues. Education and training are extremely important: very often for fintech companies is difficult to recruit profiles that combine the knowledge of financial issues with specific technical and IT skills. The mentorship program itself – of which I am very happy to be part – is an important tile of this knowledge sharing process. Talent and capital go together: they are both crucial for a company to grow internationally and make a meaningful impact.

Discover our mentorship program. If you join our community, you can participate for free!

How much does Fintech need to invest in time and resources in order to promote its brand? Is it really necessary and how can it do this effectively? The mentor of our mentorship program Mark A Bell, Marketing Strategist and Brand Value Builder at Bell Consulting tells you us how to keep an eye on things and what mistakes not to make.

A young brand must set off on the right foot, even in marketing. Three mistakes not to be made?

1. Thinking that marketing is a set of activities, more or less tactical, developed to launch on the market a product already created. Marketing, on the contrary, is a process that must be integrated into the product itself. That product is marketing.
2. Thinking that product innovation is the aim and not the means of their own activity. Thinking that innovation is so irresistible and differantiating that it can be sold without any effort
3. Forgetting that the world has changed: today the real competition is not generated by other companies but by strong background noise present in the market. The human mind solves this problem in the best possible way: it almost totally ignores it. Only a few things, the most useful or interesting, are labelled and stored in mental boxes. Barriers to the competition are no longer controlled by companies but by consumers. The boxes that people build in their minds represent brand boundaries. A brand exists as long as it can be relevant in people’s minds. You may be the best in the world but it’s not enough. If people don’t think of you and don’t talk about you, you are irrelevant, you don’t exist. This means that before thinking of “market share” you have to think of “share of mind” you want to conquer for your brand.

Three main actions to take in order to position yourself well?

1. People 1st: identify first of all who the people are we want to attract, what are their needs, their disappointments, their strong motivations, what they really want, their behaviours and their attitude regarding change. The world is driven by people’s needs, not by technology.
2. Purpose drives people: to define the underlying deep reason of why the brand exists and the values in which it believes, a reason that “frames” emotionally what we do and how we do it, creating difference and relevance in the minds of the people we want to attract.
3. Create content people want to share: create content that attracts people’s attention, content that is so relevant and engaging that people will want to share with their friends and colleagues. “Contagious” content that turns into conversations (customer becomes ambassador). Contents that require the same care and attention we devote to product innovation.

Is there any special attention to be paid to the fintech sector?

Yuval Noah Harari reminds us that “money is the most universal and efficient mutual trust system ever conceived. Money is the only system of trust created by humans that have been able to override almost any cultural gap, and that does not discriminate in terms of religion, gender, race, age, sexual orientation. Thanks to money, even people who do not know each other and who have no other reason to trust each other can still cooperate concretely”. But trust is built with behaviour (not simple declarations) day after day, it is an infinite process made of micro attentions, listening, caring, a process the traditional banking system, in general, has forgotten becoming thus a commodity.

How aware are young fintech companies of the importance of promoting their brand right from the start?

Generally unaware. Too often the focus is almost exclusively on product innovation, thinking this is enough to differentiate your brand. They are forgetting what Marty Neumeyer reminds us: “Your brand is not what you say it is. It’s what they say it is”.

The world of communication and marketing is also evolving rapidly and continuously. What do you think are the trends to keep an eye on in the next few months?

Data-Driven Creativity will become a strategic differentiator in building effective Customer Experiences. Creating engaging CX requires an integrated mix of creativity and intelligence. A recent study found that companies integrate data and creativity into their daily practices benefit from twice as much growth versus companies that have these resources but manage them separately.

An example of good management promotion of a fintech brand?

N26 “The first bank you’ll love” has conquered in a few years a large part of those people tired of the traditional banking system that is both distant and self-referential. It has succeeded in doing this by focusing on their needs and requirements. “Marketers sell products. Customers want relationships”.

For more information about our mentorship program and to find out who our mentors are, click here