Van Court ultimately secured funding from Pipeline Angels, a network of female angel investors across the U.S. committed to backing entrepreneurial women, along with other angel groups and accelerator programs. Still, she said, a competitor raised more in seed funding than she had in four years of operation.
Capital Needed
The implications can be wide-reaching, with fintechs requiring capital to partner with financial institutions and set up compliance systems. Van Court said that Goalsetter customers wanted access to a debit card, but the bank she approached wouldn’t partner with her firm until she secured at least $5 million in funding. Two years later, and still without the $5 million, she was able to add the option after hiring a head of banking operations who came from the payments industry and was able to capitalize on past relationships.
Tess Michaels, founder of Stride Funding Inc., which raises money from investors to provide education funding to students, said her company invested heavily in compliance up front. Stride issues income-share agreements — contracts requiring students to repay tuition costs from their future salaries — so the company needed to ensure it set up proper frameworks for its contracts and pricing, Michaels said.
“For a company that’s not able to raise funding in this space, it is very challenging to be able to even set up the right frameworks,” she said. “That is not the case for a lot of other industries that are clearly a bit lower on the barriers to entry.”
Serving Customers
Supporting female-led fintechs could also help the industry better serve consumers — both men and women.
Van Court said she designed her app to help parents teach their children to be financially responsible from the perspective of being a mother herself. Rhian Horgan, founder of Silvur, a retirement-planning app, said she wanted to make sure she included women as part of her customer base since they have a harder time saving for retirement. Because women typically live longer than men, the app emphasizes health-care costs as part of decision-making, Horgan said.
“Part of what fintech is focused on is bringing financial services to markets that traditionally don’t have access to financial services,” said Carole Crawford, managing partner at Fincap360, a consulting firm that advises founders and family offices. “If you’re trying to have a diverse client base, you naturally need to have founders or key executives working for the company that understand that space.”
This article was provided by Bloomberg News.