Fintech funding proves resilient

MANAMA: Fintech start-ups that cater to businesses are faring better than their personal consumer serving counterparts during the current Covid-19 crisis, an expert from a global start-up accelerator said last week.

During a Bahrain FinTech Bay webinar discussing how large institutions are collaborating with fintech companies to respond to Covid-19, viewers also heard how these start-up companies are enabling other businesses to venture into the fintech space by leveraging their existing user bases.

According to Shyam Mohan, the Middle-East Africa (MEA) lead of Mastercard’s Start Path programme, the clear path to profitability that these business-to-business (B2B) firms provide is a safer bet during uncertain times, while business-to-consumer (B2C) products overwhelmingly rely on large capital investments to fund user acquisition, which may end up being more of a gamble.

As a result, the level of scrutiny from venture capital (VC) firms has also risen and algorithms that follow and predict market trends have had to be adapted to focus on the strength of a company’s overall balance sheet, instead of “pumping money into user acquisition without a clear strategy for profit.”

The GDN had previously reported that global seed investments in start-ups have dropped by nearly 50 per cent. However, fintech companies, especially payment providers, challenger banks and B2B fintech, have seen over $10 billion being invested.

Mastercard’s Start Path programme, that works to build partnerships between banks, merchants and start-ups is part of the global company’s $250 million commitment to support start-ups around the world during the Covid-19 pandemic.

According to Mr Mohan, the current crisis has changed the narrative of technology adoption from one targeted at early adopters to a necessity-based model.

As a result, large institutions that may have chosen to build applications and fintech capabilities in-house with a longer technology rollout period, are now partnering with start-ups that already have solutions built.

B2B start-ups that already have an Application Programming Interace (API) that allows their solution to be easily integrated into a company’s existing software infrastructure are especially at an advantage in this market, which can help them scale easily with global partners.




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