Navigating Startup Challenges: Lessons from Top London FinTechs

The UK startup space is thriving, and despite the difficulties often associated with running a startup, London is thriving. It's quickly become the land of opportunity, with both potential and already successful entrepreneurs who only need a good idea, a sound business plan, and a hardworking mindset.

To help you scale up, we take a close-up look at three FinTech companies in London, tracking their humble beginnings to their successful funding stories. We ask how they started, who helped fund them and why they are so successful.

The Surge of FinTech in the UK: Key Statistics

Despite the challenges of a startup business, they're increasingly popular here in the UK. London is becoming a key location for startup success, largely a result of its exciting business landscape – one that includes office space devoted to startup growth. In London alone, 216,000 new businesses registered in 2018, equating to a year-on-year growth of 6.45%.

London is highly attractive to startup founders, largely due to its proximity to key financial players, making startup growth easier to achieve. City AM reported that, in 2018, VC and private equity investment in British FinTech businesses "rose to an all-time high of $3.3 billion (£2.6 billion), up 18% compared to 2017’s levels."

Startup Lessons from London’s FinTech Leaders

From finding affordable startup offices to the logistics involved in running a startup, there's a lot we can learn from those who've been there and done it successfully. While most successful startups will owe their success to a variety of reasons, hard work is often at their core. Anyone who works for or owns a small business can attest to this.

It's also important for innovative small businesses to have a product or service that makes a difference. Most successful startups will have a USP that sets them apart from the market, and while this doesn't make running a startup any easier, this innovative spirit can open doors that could have otherwise remained shut.

Soldo: A Revolution in Expense Management

Soldo helps businesses across Europe spend smarter with its prepaid card that does your expenses for you. Soldo’s London office is in Marylebone – here’s everything you need to know about office spaces in Marylebone.

According to TechCrunch, most companies are using "reimbursable expenses, spreadsheets and manual processes to manage the expense management cycle." So naturally, Soldo’s main competition is the antiquated and traditional way of managing company expenses.

In July 2019, Soldo closed $61 million in Series B funding, bringing the total amount raised to $82 million. The round’s VC backers included Battery Ventures and Dawn Capital, but previous backers like Accel and Connect Ventures also participated.

According to Soldo’s website, it’s also supported by InReach Ventures, U-Start and Connect Ventures. It’s proud to join portfolios that include Facebook, Spotify, Monzo, Slack and Citymapper.

Soldo’s granular spending controls give each employee, contractor or spending department the chance to have different expense criteria. All spending is also internally trackable. Plus, it’s easy to integrate Soldo with frequently used company accounting packages like QuickBooks and Xero.

Transferwise: Disrupting the Currency Exchange Realm

Transferwise is a fast, cheap way to send money abroad for a set fee of 0.5% at the mid-market rate. Transferwise’s London office is in Shoreditch – here’s everything you need to know about Shoreditch.

The Guardian reported in 2017 that some banks make 10% of their global profits from international money transfers, which is why new competitors like Transferwise are eating up market share.

Transferwise's origins came from a simple mistake. When co-founder Kristo Käärmann transferred his £10,000 Christmas bonus from London to Estonia, he paid a £15 fee but then lost an additional £500 because the bank used a poor exchange rate. Likewise, his friend (and now co-founder), Taavet Hinrikus, was the first employee at Skype and was struggling to find an economical way to pay for his London bills with his euros. They wanted to change things for the better.

After relying on their savings for a year, the pair were turned down by 15 investors in Europe, so they ventured west and received funding from IA Ventures in New York. Because the company grew so quickly, other investors started catching on – including Richard Branson, who invested in 2014.

According to Crunchbase, it’s had 10 funding rounds in total. In May 2019, Forbes reported that: "With its shiny new $3.5 billion price tag, TransferWise has become the most valuable FinTech firm in Europe."

Chris Skinner, one of the most authoritative voices in FinTech, says Transferwise’s growth comes down to no hidden fees and a cheap, easy-to-use product. He continued: "Add to this some major heavyweights investing in and backing the business, and you have a potential success on your hands."

Wagestream: Innovating Employee Payment Systems

When around half of all employees worry about money at work, Wagestream tackles the anxious world of financial well-being. To end the “payday poverty cycle”, the company offers a get-paid-as-you-earn income stream to employees for a flat fee of £1.75.

On the Wagestream website, the service is said to boost staff retention by 40%, job applications by 100% and hours worked by 22% because around half of employees worry about money at work. Wagestream’s London office is in Holborn – here’s everything you need to know about Holborn.

According to an article in TechCrunch, it was the disaster of the ‘payday loan’ provider Wonga, and an article in the Wall Street Journal about every day becoming payday, that inspired Wagestream’s founder Peter Briffett to innovate the market.

City AM reported in May 2019 that Wagestream closed a £15 million series A round, co-led by VC investors Northzone and Balderton Capital. Including its additional credit facility of up to £25m from Shawbrook Bank, Wagestream has received the "UK’s largest pool of social impact investment."

VC backer Balderton Capital praised Wagestream’s product-market fit and positive product feedback. Rob Moffat, Partner, Balderton Capital, explained: "We fell in love with the strong product-market fit of Wagestream. We very rarely hear such universal positive feedback from all who have tried a product".

Why Most Startups Fail and How to Avoid Common Mistakes

Running a startup isn't easy. If you ask any business owner, they'll likely tell you that running a startup and getting it to a viable level takes time, skill, and money. Cashflow can be a real killer and for startup growth to be sustainable, capital is essential, even if you aren't currently bringing in huge amounts of revenue. Instead, look for investors who specialise in early-stage startup ventures, as well as trying to keep expenses to a minimum.

Having a great business idea is one thing, but being able to implement it is a whole other story. Many startup failures come about because the founders don't have access to people who have been there before and achieved success, which is why networking is such a powerful activity. By mingling with others and seeking expert advice, you can achieve more sustainable startup growth that'll give your early-stage startup a fighting chance. 

The Power of Workspace: How Flexible Office Spaces Can Boost Your Startup

A 2019 study by The Harvard Business Review (HBR) found that "coworking spaces help new businesses make a positive impression on potential clientele" and "coworking spaces give some members a sense of professionalism and credibility that traditional remote working does not."

This is invaluable for startup founders looking to overcome the challenges of a start-up business. To attract the right talent, and help give them everything they need to work productively, finding flexible office space in London is key, adding a sense of professionalism that's needed if you're looking to challenge the status quo.

The workplace is considered a token of legitimacy, which is especially important for startup founders. By having an office that brushes shoulders with more established players, startups can add credibility to their profile and gain access to a wide range of opportunities that may have otherwise been out of reach. Reputation is important and having a physical presence goes a long way in helping bridge that gap for startups.

Knight Frank's Role in Propelling Startups

If you're looking for flexible office space in London offices that give you the freedom you need to give your early-stage startup the perfect opportunity to grow sustainably, get in touch with a member of the Knight Frank team. We have a wide range of locations to choose from, so you won't be short of options when it comes to housing your small but growing business.

We take the weight off your shoulders when you’re looking for office space to rent in London, and our service doesn’t cost you a penny. We’ll advise you on your best options, arrange your viewings and get you the best deal. For businesses wanting to thrive in a more dynamic age of working, we have a wide range of startup offices and workplaces that are perfect for hybrid and flexible working, so your team can work most productively.