I am often asked what the key attributes are that we look for in Fintech businesses. Picking a future “unicorn” is far from an exact science, and the earlier you invest the greater the risk you are taking on.
If we were to invest in 20 “Series A” companies in our next fund, statistically, we would expect 6-7 of them to generate the return required to deliver our investors a great outcome. They would have to compensate for those that have not fulfilled their potential. Assuming we pick the right cohort, we will have engaged with over 2000 companies to get to that point.
Our future is contingent on ensuring we filter our pipeline effectively, but also to make sure that those we work with are businesses we can truly add value to. It is inevitable that we will reject businesses that will become great successes, and one only needs to look at Bessemer Ventures’ “anti-portfolio” to emphasise that point.
We are looking for disruptive Fintech businesses with great potential, that can truly scale to become leaders in their space. It is often not the idea that we reject, but the approach that the start-up is taking, or more likely that the team seemingly lacks the right blend of experience to deliver an incredibly ambitious idea that requires seamless execution.