November 16, 2020 in Entrepreneur Advice, Fintech

Scaling Fintech Beyond Borders: Wisdom from Founders

More than forty fintech founders from 14 countries came together to discuss barriers and opportunities to scale

One of the most common questions our team is asked by entrepreneurs is: “How can I scale my business to another country?”

We have a unique perspective at Village Capital: our team works with startups around the world, with alumni in more than 30 countries.

Finance Forward, our initiative with MetLife Foundation and PayPal to support financial health startups, operates in five distinct regions (South Asia, Latin America, MENA, Europe and the United States), and focuses on startups outside major tech hubs. Many of these founders have big ideas for financial health innovation that have the potential to scale globally, but need help accessing the financial and social capital (investment and networks) to scale across borders.

Last month we brought together 48 Finance Forward alumni, representing fourteen countries, for a “global session” to share wisdom across borders: learnings about markets outside their own, and ideas for scale, collaboration and partnerships. We heard some useful advice about scaling that can apply to any fintech founder, including advice that echoed what we heard in our 2019 report Beyond Borders.

Here are a few tips for any fintech founder looking to scale to another country:

Don’t just “plug and play” your model – you may need to adapt to local market conditions

In 2013 Uber launched an office in Dubai, and sought to compete with several homegrown rideshare startups. After six years of trying to gain significant market share in the region, Uber announced in March 2019 that it was instead acquiring its locally-founded rival Careem. Careem had achieved market dominance in a way that Uber could not: its founders understood the nuances of operating in the region, and with their deep local knowledge of the region and its customers, Careem implemented several features like cash payments that gave them a leg up on foreign competitors. 

As this story shows, every market has its own quirks and nuances as well as regulatory complications -- particularly in highly regulated sectors such as fintech, financial services and related sectors. Companies aiming to scale to new regions will likely  need to adapt or modify portions of their business model as they scale to new countries. As you approach that decision, successful startups find ways to understand the local needs and desires of the new market and adapt business strategy accordingly. Several founders at the global summit pointed out that companies aiming to scale will likely need to adapt their models to account for different cultural, social, regulatory and economic forces in new markets.

Make local connections to find top talent

In our 2019 playbook Beyond Borders, we highlighted the challenge of hiring local talent when scaling to a new country. As one founder told us, “Entrepreneurs that scale to other countries have usually never scaled before. All of a sudden the founder goes from managing a small business to managing a medium-sized business with command tiers and middle management. That’s another skillset altogether.”

Leo Elduayen, founder of Koibanx in Argentina, stressed the importance of making local connections, perhaps with intermediary organizations like incubators and accelerators: “Understanding the country you’re trying to scale to means travelling, and meeting and hiring people that know the country, preferably people who have lived there for some time. Often, the easiest thing to do is to create alliances that allow you to hire in that country.”

Seek out governments working to champion startups 

While investors and accelerators are key to the growth of any startup ecosystem, there’s another important player: government. Regulation can make or break a startup ecosystem, and entrepreneurs from across India, MENA, Europe and Latin America collectively cite regulation as a roadblock and source of confusion for operating. However, some countries have gained a head start by passing “startup acts” – legislation specifically designed to support startups, clarify regulatory barriers and provide a legal framework for entrepreneurship. As Adedana Ashebir, Regional Manager of Africa at Village Capital has written, startup acts are needed more than ever to support innovation.

In order to plan for a successful expansion into a new country or region, entrepreneurs should look deeply into the regulatory environment they are heading into and work with local regulating bodies. Ioanna Stanegloudi, Co-Founder and Chief Risk Officer of Finclude, advised her peers to reach out directly to country-level central banks. “Central Banks at the country level are more open to discussion,” she said, “And you are able to talk one-on-one with them to better understand unclear regulation.” 

Look for investors who share your vision for impact

Scaling requires resources, which often means the need to raise “scaling capital”. That often means finding an investor in the country that you’re entering.

Several entrepreneurs at the global session emphasized the importance of finding investors who are aligned with your company’s impact goals and vision. Nikhil Banerjee, Co-Founder of Supermoney, emphasized that founders should “...look for smart money versus any funding.” Des Mathewmen, Co-Founder and CTO of Portabl agreed, noting that it is important to “...find the right people and the right partnership. Go with the better partner who you have more confidence with.” Kevin Kilty, Founder of HubPay said, “Founders in regions outside of the US look towards global impact investors such as Village Capital to be the voice of impact, and guide us towards investors who share our vision”.

If you’re an investor who’s interested in learning more about any of these founders, or a founder who wants to learn more about Finance Forward, reach out – or sign up for our regional newsletters to learn more about programs, mentorship opportunities, and upcoming reports.

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