VC and fundraising. Tips for fintech by Paolo Gesess
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.
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