The biggest challenges to getting a fintech startup off the ground

Two startups looking to make a splash in the world of credit card lending and peer-to-peer lending agree on one thing: it's a challenging time in 2022 to get a startup off the ground.

The founders of credit card disruptor Yonder, founded in 2021, and JustLend, a smallish new-style peer-to-peer lender set up in 2017 but just coming out of beta, say the biggest challenge to getting a startup motoring today is talent.

Talent challenge

"Talent is the biggest challenge by far when it comes to launching a startup,” says Tim Chong, who set up Yonder along with fellow ClearScore alumni, Theso Jivajirajah and Harry Jell.

“To build a great company, you need the best team and it's super hard to compete for outstanding talent as an early-stage startup."

To date, Yonder, which aims to lure in 30-something professionals in the UK with a smart-looking card, eye-catching rewards perks and a pledge to axe hidden credit card fees, has a headcount of 12.

Although a small team, Chong says there is some significant fintech brainpower already on board.

He points out that Yonder’s head of marketing Tom Davies earnt his spurs at Monzo and Wise – and Chong extols the virtues of the business mantra of “grow slow to grow fast’ in all areas of growing Yonder.

Likewise, Craig Smith, the founder of JustLend, which aims to remove the stigma of borrowing money from family and friends with its new-style peer-to-peer lending platform, says recruitment is the biggest challenge for a startup today.

He said: “Finding people with the necessary skills and expertise is obviously essential, but even more important is their fit with the startup’s purpose and the mission it is on. 

“Strong teams with an aligned drive, positivity and team orientation can achieve amazing results, often way beyond what the sum of the parts might suggest. But you also need people who can call out when something needs changing or reconsidering." 

To date, JustLend has a headcount of just five but Smith has placed a great store in ensuring its recruits fit hand-in-glove with the startup.

As an example, an advisor to JustLend is a founder of Kiva, the US-based non-profit massively admired by the JustLend team which enables people to make small loans to entrepreneurs in developing countries.

Investor challenge

Another major challenge, cited by both founders, is dealing with investors and their investments.

Yonder has hitherto raised £20.85m, with its latest £20m round following a pre-seed rise of £850,000 last year. 

VC funds on board include Seedcamp, Northzone and LocalGlobe while it has also enticed financial and sporting luminaries to part with funds including Frank Strauss (Deutsche Postbank), Matt Robinson (GoCardless) and Rio Ferdinand.

Chong says the biggest investment challenge for Yonder is handling “totally different types of investors to secure both equity and debt funding".

JustLend is a smaller operation than Yonder and as yet has not attracted millions in capital but that could still come.

To date, it has lured in £125,000 but is now gearing up for a major funding round.

Smith says the Holy Grail is bagging the right amount of capital at the right time from the right people.

“The obvious challenge is can you raise the money you need to get started. But the reality is more subtle than that," he says.

“You need the right amounts at the right time, as having too much too soon will mean you have given too much equity in your business away too soon - and for too little."

Smith also says that having too much funding can kibosh disciplined spending.

“On the flip side, having too little at crucial build and growth stages can easily scupper longer-term success. Investors are crucial members of the startup team," he adds.

"People experienced in your area are hugely valuable, as are people who share the startup’s purpose beyond making a profit one day."

Pace challenge

Both founders also stress the importance of setting the right pace and momentum in startup life.

As an example of this, Yonder, which is initially focusing on the London market, has around 200 customers signed up to its platform- a figure which sounds small but Chong is content with.

Chong says: "We are just currently ramping up slowly initially, that is quite intentional as well. 

"We want to make sure we are really comfortable with the quality of the product, people are going to get the best service around they can possibly get, and also making sure we are really comfortable with our credit risk as well.

“We are being very particular about bringing in the right customers at the right time.”

But Chong has promised that Yonder will “open the gates” once the product is fully finessed.

Smith, meanwhile, says that establishing the right working tempo at JustLend, which to date has run over 100 campaigns on its platform, is crucial.

Smith stresses the importance of setting a pace that is “the right balance between the committed hard drive that most startups need to get going and establish momentum, and a sustainable pace that means people don’t burn out, but also gives time for proper consideration of key decisions".

He adds: “Running headlong into everything, without due thought, while screaming it’s good to break things, is macho nonsense."