In this episode of the “Talking Success” podcast, “Ready, Set, Exit! Aman Behzad on Gearing Up African Fintechs for Success”, we chat with Aman Behzad, Partner at Royal Park Partners in London. He discusses the role of empowerment agents in FinTech companies as well as FinTech services and growth strategies.
Ideal Stage for Engagement:
- Involvement typically begins from Series B and onwards.
- Focus on the first significant professional funding round, usually $25 million or more.
- Importance of demonstrating persistence, resourcefulness, and funding ability before Series B.
Key Considerations for Early-Stage FinTechs:
- Demonstrating product-market fit and solid traction.
- Emphasis on financial traction, revenue generation, and unit economics.
- Understanding unit economics and achieving a 4-5X customer lifetime value (CLTV) to customer acquisition cost (CAC) ratio.
- Maintaining payback periods below 15 months for customer acquisition.
Acquisition Trends and Strategic Growth:
- Banks’ challenges in acquiring tech companies due to accounting practices.
- The expectation is that FinTechs may make more acquisitions within the industry.
- Strategic acquisitions of tech talent and capabilities for scaling.
- Timing window for acquiring tech talent companies in the next 12 months.
- Challenges faced by Series B and C funding rounds during the past 18-24 months.
- Signs of recovery and increased activity in private capital deployment.
- Valuation stability and public market performance as key factors for IPO readiness.
Valuation Strategy:
- The importance of understanding what a FinTech wants to optimize for.
- Factors influencing valuation include previous post-money valuation, required markup, and funding amount.
- Consideration of market conditions and business performance in valuation decisions.
Just as the ever-evolving world of FinTech changes, so does the landscape of FinTech funding and growth strategies. It is important for businesses to find ways of adapting to changing market dynamics and investor expectations.
