Navigating the tough terrain of startup funding: the MVP dilemma
At Nexus(our startup), we're passionate about revolutionizing the way people invest in Stocks and crypto. But as any startup founder can attest, the path to success is often filled with obstacles.
Recently, we encountered a significant roadblock in our quest for funding. A potential investor turned us down, citing that hit us hard: we didn't have a fully functioning MVP.
Now, you might be wondering, what exactly our MVP was showing? Well it wasn't the flashy trading platform we dream of. Instead it considered a basic interface with stock prices displayed here and there. The cold reality is that users couldn't buy or sell any assets, nor could they access other advanced features. Why, you ask ?
The answer lies in the complex regulatory landscape of the financial industry. To facilitate the trading functionality, a platform must obtain a SEBI license. This license requires rigorous compliance with financial regulations, and crucially proof of "financial backing".
Investors won't understand that we need a significant amount of funding to take off. Without it, we'd be swimming in the shallow waters.
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If you’re operating in the fintech sector it is your responsibility to figure out the legals and licenses before hand.
Most fintech founders don’t prioritise their legal work and get stuck.
For example in your case if you go for a broker license that will take 1 year. I always advise startups to preempt licenses required and apply before hand.
License and legal are one of the most important parts of a fintech business. You can whine about it but these regulations exist for a reason.
I would advise you do a smallcase integration or something similar or integrate some other broker in your app till you get your license, which also is a burdensome process because who wants to partner with a young startup, it is difficult to sell them on the potential . I think smallcase has a solution they sell so should be straightforward and you can atkeast have a functioning MVP the commercials will be poor till you have your own license.
Also all fintech founders please prioritise licenses it is very difficult to get these licenses and more importantly they take time which cannot be accelerated if you are suddenly desperate. You can’t even just outright buy a licensed entity because that also requires regulator approval see Cred NBFC issue.
Don’t underestimate the value of bringing a lawyer early on as a strategic advisor or early employee if you can’t afford the legal fees for these SRL, Ikigai and the lot.
Hmm yep I get it it's a hassle to get our hands on license. But they also do check the background to ensure that we are entitled to receive one !. Our team is trying to reach out to a subroker who already has a license and is trying to team up with them. :)
Please DM me I will connect you to actual lawyers please be wary of anon lawyers and don’t take free anon legal advice that’s worse than taking no advice.
I can also help startups in heaviliy regulated (space tech,insurtech, fintech, rmg) help with a legal hire. Corporate Lawyers are very Founder Office/Chief of Staff type roles but not very popular due to the small number of good corporate lawyers in India.
I’m @corporatedaroga on Twitter.
If you can't get an MVP built that's usually two things
- You're a deep tech company ( think OpenAI ) - I'm sure you're not, no company in India is.
- You can't execute.
Yeah I agree with you that we aren't a deep tech company but we can't execute because of certain regulations from SEBI. This is not some SAAS which you can just build in weeks and just launch it.Requires significant effort and support mate. By taking an example of a major fintech company GROWW back then they were just an idea when they got funded lol. It's just that some things require funding to continue. It's fintech finance + technology itself describes dealing with finance.
The same conundrum was faced by fintech startups like Cashfree etc. They used PG API initially of the banks and then started building their own APIs and Infra. I guess you need to piggyback on an existing platform to make it functional and also reach out to other investors . Once you get funds, you can start building the core infra.
But I read in internet that Razorpay's way of kickstarting the PG Business might help you. You can reach out to the founders as they seem to be active .
Is it just one more trading app ? If no, what's the X factor
Haha no. it's not if it was just another trading app why would I even enter amongst major ones. Yeah so basically we are implementing unified features so umm trying to go with a super app which nobody has implemented yet which includes investing and spending and a vibrant community. And the other ones are proprietary so can't disclose everything mate.
buddy you're describing the idea and if you're so worried about the proprietary tech being copied so easily, then you better plan smg else.
Also, by super app of you mean, crypto + stocks in a single app, there are already many doing this, one finance.ai etc etc
Would like to know your thought process around this
I've seen your pitch.
Long story short -
you aren't a founder-fit for the market.
I suggest Move on.
Early stage startups are brutal. It takes a lot of guts to startup and one needs every help possible to get the momentum going. Please dont discourage the person by comments like these.
If you need encouragement then don't startup.
Momentum in wrong direction is suicide.
This is a tough one. Here is how to frame it. Imagine you were an investor and were asked to invest in a. Product which has not been built. Consider the amount of pain it gets for sebi licenses. Why would you invest on something that needs licenses to even get started? They are still coming to terms with shit like 28% gst on gaming.
What you need to do then, is to find investors who understand Indian fintech. They will get the issues and help you navigate if the story is right
How much funding are you looking for? What other then finding do you need from the investors?
Message me, I’ll see if I can help.
@Safe Can I get your email address. We can discuss further over there
If your tech is legit you should look to partner with an existing broker. There are many small old school brokers as well in cities like Kolkata and Mumbai. You can also try to build a custom trading system for a PMS firm if you want to show traction or proof that you can build.
You should save some money, build the product, get some traction and then ask investors for money. Nobody is giving money on just idea anymore.
Hmm yeah I get I did spend around 30k on the frontend and other things to implement for the web services. Will try to take baby steps.
Your crypto is not going anywhere, calm down !