Why are VCs (Venture Capitalists) investing in Fintech Startups

What are VCs looking for

Within the last couple of years, you must have possibly come across the term “fintech,” especially if you’ve been watching or reading any business news. The term which is virtually everywhere these days is a combination of two separate words “finance” and “technology.”

Now that startup mindset has finally spread to finance, you can easily notice how fintech is changing the way people invest, manage money and get loans as it tends to permeate into all nooks and crannies of the industry. Obviously, there are no visible indications to prove that this trend is going to stop anytime soon.

International and CB Insights recently released a report on the total global investment in fintech companies. As at last year, over $19.1 billion were reached. The reports also stated that fintech startups backed by venture capitalists received about $13.8 billion of the money. No doubt, fintech is poised to explode.

Since 2014, the number of VCs investing in Fintech startups has experienced tremendous increase with about 106 percent growth. In only its second year, over 200 companies submitted applications to invest in Fintech startups.

Fintech is not just bringing about the much desired and anticipated change in the industry alone, it is also making life easier for regular investors and improving businesses. These alone are some of the major factors that make fintech so fascinating.

Fintech companies are rapidly closing up the gap that has been in existence between big institutions and average investors for quite some time now. Unlike Wall Street, where the average investor and trader doesn’t seem to have the same research tools as big institutions, this has been a common complaint against the New York street of Stock Exchange.

Obviously, fintech has gone far beyond just investing. One particularly fascinating feature is how the alternative lending and investment space is bringing about significant innovations that have never been experienced in the industry before.

Several companies are now coming in to help small businesses rise and stand on their feet without the red tape of banks. Even those seeking to have personal loans have found them to be the best lenders and a more reliable source of financial help. For these and many other reasons, fintech is rapidly expanding as more and more Venture Capitalists come to invest.

What makes fintech great is that it is changing all the time. What was once new and exciting one year could be just old and common news the next year. No doubt this will only bring about better improvements for investors as traditional brokerages and banks are going to strive to keep up with the new competition.

Like never before, Venture Capitalists International and CB are beginning to realize that investing in Fintech startups is not only providing an easy means to invest money but it’s also getting easier to manage just as the traditional banks and brokerages continue to adapt to all this new competition.

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