Raising capital is a critical yet often daunting task for fintech founders, as the industry’s unique demands require strategic foresight and resilience. The Rare Founders: Navigating Fundraising Challenges event brought together seasoned experts to address these hurdles. Moderated by Kyle from Shift, the panel featured Daniel Doshi (Founder, Gamified Financial Education), Stella Bowdrey (VC Partner, Lauter or Nauta), Jonny Martin (VC, Augmentum), and Jim Wilson (Founder, Credit Canary). Together, they shared their insights on overcoming the challenges of securing funding in the fast-paced and highly regulated fintech space.
This event served as a platform to explore topics ranging from growth versus profitability to navigating investor relationships and regulatory landscapes, offering founders actionable advice to thrive in the competitive fundraising arena.
Growth vs Profitability: A Balancing Act
For fintech founders, balancing growth and profitability is a constant struggle. Daniel Doshi, founder of Gamified Financial Education, highlighted the challenges of gaining customer traction without immediate monetization. Jim Wilson, founder of Credit Canary, emphasized the importance of a compelling narrative to illustrate the business’s long-term value.
Stella Bowdrey, a partner at Lauter or Nauta, provided a VC perspective: “We have five years to deploy cash and another five to see returns. For VCs, growth takes precedence, but sustainability is equally critical.” Jonny Martin, a VC with Augmentum, elaborated on this by noting the expectations at Series A funding. Founders need sustainable unit economics, he said, with profitability near enough that pursuing aggressive growth is a strategic choice, not a necessity.
Building the Right Cap Table
Investor composition plays a significant role in a startup’s trajectory. Daniel Doshi emphasized the importance of selecting investors who align with the company’s vision. “Who’s on your cap table can make or break future fundraising rounds,” he said.
Jim Wilson and Jonny Martin encouraged founders to build genuine relationships with investors. “The right investor isn’t just about capital,” Jim noted. “They should open doors, expedite progress, and provide honest support.” Jonny added that founders should look at an investor’s portfolio to gauge their value beyond funding.
Fundraising Strategy: Timing is Everything
The timing of a fundraising round can significantly impact its success. Daniel Doshi and Jim Wilson stressed that founders should balance running the business with raising funds. Jonny Martin suggested identifying an inflection point—a moment when additional capital can accelerate growth.
To stay on the radar of potential investors, Jonny Martin recommended sending quarterly newsletters to a curated list of five ideal VCs. These updates should include clear KPIs and milestones to demonstrate the business’s progress and future potential.
Navigating Regulated Financial Services
The fintech landscape is heavily influenced by regulation, making it a significant concern during fundraising. Jim Wilson explained that meeting the requirements of regulators like the FCA demands both capital and skilled compliance teams.
Jonny Martin shared that Augmentum has actively supported portfolio companies in overcoming regulatory hurdles, even writing letters to regulators on their behalf. Stella Bowdrey warned founders to budget at least six extra months for approvals when entering regulated markets.
Traits of Successful Founders
A recurring theme was the importance of resilience and preparation in fundraising. Daniel Doshi underscored the need for a strong mindset, while Stella Bowdrey advised founders to stay emotionally detached. “Fundraising will come with rejections—don’t let it derail your focus,” she said.
Jonny Martin added that being organized and showing a clear vision are key traits investors look for. “Founders should demonstrate execution ability, not just fundraising prowess,” he explained.
Headline Tips for Fundraising
The panelists concluded with their top tips for fundraising success:
- Daniel Doshi (Gamified Financial Education): Cultivate a resilient mindset.
- Stella Bowdrey (Lauter or Nauta): Be well-prepared and maintain emotional composure.
- Jonny Martin (Augmentum): Anticipate rejection and stay organized.
- Jim Wilson (Credit Canary): Build genuine, trust-based relationships with investors.
Final Thoughts
The Rare Founders panel offered invaluable insights for fintech entrepreneurs navigating the high-stakes world of fundraising. From the nuances of investor relationships to the challenges of regulatory compliance, the session underscored the need for strategic thinking, resilience, and clear communication.
For founders looking to thrive in this competitive landscape, these lessons provide a roadmap to not only secure funding but also build lasting, impactful businesses.
