Money20/20: How to build a bootstrapped fintech business

The alternative to fundraising is bootstrapping. Here's how a fintech should do it

Startups tend to be judged by the amount of funds they raise and the names behind that funding. Based on the last year, fintechs are underperforming, with funding falling.

The alternative to fundraising is bootstrapping. A session at Money20/20 Europe this morning, How to Build a Bootstrapped Fintech Business, discussed if there is space and opportunities for building a fintech company with minimal or zero funding.

Lucy Rout, founder of Tabuu, and Daria Dubinina, chief executive officer of Crassula, a company that has been bootstrapped since day one, explored the different components.

One of the main early challenges is gaining traction while striking a balance between fundraising and revenue generation and growing the business.

Dubinina said: “When you are bootstrapped your core concern is that it makes money as fast as possible. The pressure is high compared to a funded company. There is pressure to do it fast.

“When you are fund raising you are trying to raise money, then you have to know how to pitch, and raise money and still run business.”

On how to differentiate, Dubinina said: “You can be the same as your competitors but cheaper, faster or more reliable. Or easier to use or have better marketing.”

They also said it’s important to get as much stuff for free as possible, such as using Amazon Cloud, or going through a startup programme with a bank. And fintechs should sell any services they can, even if it’s consulting.

As remote working has taken off in fintech, a distributed workforce can bring added pressure for businesses attempting to establish themselves. To deal with this issue, Dubinina said: “We control the work that our employees do. We control the result of the work if not the time. This will control the performance.”

The use of AI, including ChatGPT, can save time and money, as fintechs can employ fewer people.

But for the people a fintech does hire, how does it grow a team and get them to stay? “Remote work can be a benefit,” Dubinina said. “We found that people don’t work just for money. They want interesting work. And something to help them grow professionally and personally.”

As for a good example of a bootstrapped business, look to Wise, which was bootstrapped for two years and now processes billions of transactions every month.

And how does a fintech go from bootstrapped to profitable? Dubinina said: “The pressure is high. There is a lot of work at first and you won’t have a life.

“When everything starts to work and you start to make a profit you can delegate and get rid of some pressure and have more time.”

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Image: Ridofranz via Canva

Josh Poyser Josh Poyser is an editor at FinTech Intel. He has written about fintech for several years and appeared at FinTech Connect 2023 on the 'Unlocking Success: The Art of Fintech PR' panel.