February 22, 2018 7 min read

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The world of entrepreneurship is blood-sport. A very small percentage of startups survive to see their fifth year of operation. There are three major reasons for this:

While everyone dreams, very few individuals are able to grind it out long enough to make a successful business. With years of long hours and minimal profitability, founding a startup is the kind of thing that tries men’s souls. VC funds want to back good bets, so they look to fund projects that have CEOs with a proven track-record. If this is your first startup, or yet another attempt by a serial CEO that has yet to find success, accessing startup capital can be brutally difficult and expensive. Many entrepreneurs are unwilling to innovate. It’s not that they want to fail, but the original business plan is their baby. They want to see the original plan from conception to profitability. Every successful startup aggressively challenges assumptions at every stage of growth -- allowing for innovation with the advantage of experience. The majority of startups that fail can’t stomach dramatic change.

But there’s hope! Market disruption -- from the likes of Uber, Airbnb and Amazon -- have become hallmarks of the 21st century. And fintech startups are jumping into action in 2018. The way we access capital, manage finances and invest in the future will change forever.

How? Let’s take a look at the fintech disruptions that are going to make life easier for startup founders struggling to access capital.

Related: Trends the Fintech Industry Should Adopt in 2018

Entrepreneurs have access to emerging currencies to fund expansion.

We’ve seen a constant evolution in how we handle money. Before the 1990s, transactions were completed on paper, either with physical currency or a paper check. Then, as the internet blossomed, fintech disruptors like PayPal brought the world of commerce online, allowing companies to accept online payments for physical goods and services.

Today, blockchain technology is creating a reality where individuals are free to engage in anonymous commerce, thanks to cryptocurrencies. Gone are many of the regulatory strangleholds that once constricted ventures to traditional IPO fundraising.

Bitcoin’s aggressive market movement has allowed bold entrepreneurs to turn a few dollars into bitcoins. Investors have seen a 532 percent return on investment over the past three years. Recent volatility and international regulatory talks have certainly dampened enthusiasm for bitcoin, but there are many digital currencies available to entrepreneurs. If they can stomach the risk, and afford a few losses, their winners could more than fund their next startup.

Improving innovations in cryptocurrency crowdfunding.

As the original blockchain crowdfunding innovation known as Initial Coin Offering (ICO) begins to encounter some resistance both for regulatory and functionality reasons, better ideas are coming up that offer improved assurance of investments. With the original ICO methods, investors are offered tokens, hence they become primarily detached from the parent businesses. This method has seen a lot of investors lose money due to tokens that eventually become overwhelmed by market forces.

Partnering with Agrello, Blockhive has introduced a more organized process which guarantees investor's funds as long as the parent business thrives. Blockhive’s Initial Loan Procurement (ILP) serves as a safer method of crowdfunding which allows businesses to still raise funds from a global audience using blockchain technology. The difference this time is that these funds are in form of loans, thereby eliminating the numerous legal hassles faced by ICOs. Also, participants in Blockhive’s ILP will earn 20 percent of its total annual operating profit as dividend in a long term contract.

Related: What Fintech Entrepreneurs Can Learn From Big Tech Companies

Independent startups that focus on value instead of short-term profits are viable.

And the longer the runway, the better the chance of success becomes for startups that are willing to innovate and challenge assertions. This is especially true for startups that are able to grow without the constraints of outside investors clamoring for quick returns. Jeff Bezos has proven, through Amazon, that long-term growth focused around user acquisition and revenue growth can trump short-term thinking on profitability.

Do-it-yourself kickstarter platforms.

Kickstarter has been another popular alternative to traditional IPOs. In a Kickstarter campaign, your most passionate customers fund your initial product run with fully funded preorders. This allows for innovators to both prove that the concept is potentially viable -- there’s a market desire for the solution they’re offering -- and avoid taking on expensive venture debt, or discounted equity positions.

But the Kickstarter platform can be restrictive. Startups have to be approved before launching their campaign, and there are tight limits placed on how long a campaign can run for.

In 2017, a SaaS alternative to Kickstarter launched; Thrinacia allows startups to create their own crowdfunding platform, with their creativity being the only limitations on how it works. By providing back-end support, the team behind Thrinacia wants to open-up the crowdfunding model to startups and organizations in every space. And instead of taking a percentage of the funds raised, they charge a flat monthly fee.

In 2018, I believe we’ll see many more entrepreneurs choose to fund their startups with the help of self-managed kickstarter-style campaigns. We might even see VC funds offer to jump in and help startups that prove they can raise funds in a pre-order campaign.

Large banks and traditional lenders are not asleep at the switch.

We’ve discussed a great deal about fintech startups. But large banks aren’t sitting on the sidelines. They see what’s happening and are proactively gobbling up successful startups and aggressively launching their own special projects teams.

USAA, for example, is famous for running a division of their financial and investment division like a real-life Shark Tank. They gained national attention when they invested additional venture capital into ID.me. This is just one example of many investment made by the financial services giant.

The reason that this additional investment by USAA is exciting is that this is just one more example of mobile banking being improved through partnerships between established players and industry disruptors. With the popularity of blockchain technology making mobile money management and transfer faster, proper identification of end-users is critical. That’s the problem ID.me is looking to solve -- enhancing online and mobile identification of financial customers.

Related: This Bank is Rooting For Financial Inclusion by Partnering with Fintech Start-ups

Their path from concept to capital infusion is an interesting one. They started as a Harvard Business School project. Students learning about business managements and entrepreneurship launched a project. They leveraged school resources to get them into the game -- successfully marketing identity verification software to companies that remotely serve veterans and members of the armed services.

With a proof of concept in hand, they ventured out into the fundraising market. Their technology make mobile banking safer, and industry players quickly paid attention, opting to purchase equity in the service, in addition to being a customer.

This model can help established entities avoid extinction due to disruption -- a lesson Blockbuster failed to learn in their dismissal of an opportunity to acquire Netflix. And entrepreneurs can leverage the resources of larger, established partners to take their project to the next level.

In conclusion, there are many paths available for entrepreneurs in need of startup capital. Whether they extend their runway by sticking to traditional funding sources -- probably the most expensive way to go -- or decide to be creative and leverage crowdfunding or university resources, the fintech space offers an exciting model for startups looking to launch and disrupt their industry.