THE FINNIES: Prospa founder reveals three secrets to get your fintech startup to the top

Business Insider Australia is the proud media partner for the 2017 Finnies, the annual Fintech Australia awards recognising leadership and innovation in the nation’s financial technology sector. Get your nominations in by April 21 as we count down to the gala awards night on May 24.

Prospa is on the top of the fintech world. The online lender in February received $25 million in a funding round dubbed the largest of its kind in Australia just months after it came in at number 31 on the global Fintech 100 honour list.

But the “overnight” success has come after five years of exhausting paranoia, says co-founder and executive officer Beau Bertoli.

“As an entrepreneur you’re always on edge and thinking about what comes next – where the next challenge is,” he told Business Insider. “I don’t think we’ve ever had a feeling of ‘it’ll all be okay’!”

“Entrepreneurs by nature are probably more paranoid than the typical person.”

The phenomenal capital raise this year was led by AirTree Ventures, with the VC’s managing partner Craig Blair calling it a “coming of age of the fintech sector in Australia” and praising Prospa for “achieving profitability from the very early days”.

The latest $25 million followed a $60 million series B funding round in September 2015, which was led by Carlyle Group and also involved Ironbridge Capital, Entrée Capital and private investor David Fite. Entrée Capital provided series A funds prior to that.

With such success, Prospa is sure to be in with a good chance of getting a mention at the first FinTech Australia awards night, to be held on May 24. Nominations close this Friday.

“We’re excited about what we’ve achieved in the last five years and we’ve really tried to be the leader in the Australian fintech scene,” said Bertoli.

With Prospa having now provided more than 10,000 loans worth over $250 million to small business customers, Bertoli laid out three pieces of advice for startup owners currently trying to build up their ventures.

1. Separate hype from reality

“Advice I can give starting entrepreneurs and people considering entering the fintech space is, first and foremost, you have to separate hype from reality,” he said.

“Whenever there’s a new industry born or a disruptive technology coming into play, there’s always a lot of hype and BS around it. But you need to sift through that and figure out what the real customer value is that can be created.”

Prospa’s Greg Moshal and Beau Bertoli. (Source: supplied)

2. Old habits die hard in Australia

“The second is that, in Australian finance, you shouldn’t underestimate how difficult and how long it can take to get customers to change,” Bertoli told Business Insider.

“Australian banks have such a stranglehold on customer relationship. Australians are very loyal to their banks, even though the banks don’t treat their customers that well necessarily. We find it really uncomfortable to switch to something that’s not a bank.”

This means that even for the tiniest fintech startups, success could require “a lot more patience, perseverance and capital, to support you through that lengthy period”.

“When we started up, for the first couple of years, we had to create a market for our product every single month.”

3. Keep an open mind

“Consider different business models. And don’t be wedded to one idea as to how the business should operate.”

As an example, Bertoli said that during the early period of Prospa, collaborative relationships with other companies was not at all on the strategic radar for he and his co-founder Greg Moshal.

“A year into our business, we realised there was an opportunity to create partnerships with different boutique partners. [At that time] we didn’t even think that was possible to do that with banks – and now we’ve started to do partnerships with banks,” he said.

“It’s not all about trying to be Uber – to disrupt and displace an industry. There are ways to work with existing businesses in the industry and solve their problems as well as your customers’.”