We expect fintech businesses to take longer than some traditional startups to reach profitability. They prioritise reinvestment in order to scale as their business models often rely on volume in order to achieve profitability. Financial services is a heavily regulated industry with a large legacy technology and transactional infrastructure. Both these challenges need to be addressed for a fintech business to be successful.
Only a few companies in our sample have been able to move on from operating at a loss, with many companies reporting losses for at least the first five years while others take longer to achieve revenue growth to counter outgoings. Critically for investors, however, this does not appear to be resulting in business failures: Only two companies in our sample have failed or gone into administration, or have begun restricting investment from a diversifying set of funding sources.