Startup companies are occupying headlines in many different industry verticals. In industries like financial services, telecommunications, technology and energy, startups are at the forefront in disrupting their given industries and/or adjacent industries. There are myriad reasons for this: small and nimble organizations, quick decision making, ability to test and fail, capability to initiate activities with small-size financing options, and the ability to test uncharted waters much better than large companies are willing to do. They are the product of an age where ‘the fast fish eats the slow fish’ rather than ‘the big fish eats the small fish’.
Looking from this perspective, it is also important to note that these attributes make startup companies a special group of customers in banking industry. The reason we are using the term ‘special group’ is that although the basic needs of startup companies are similar to other companies, the format of these needs are different. When we look at the structure of startup companies, whether they are early-stage or late-stage, they are young companies with a very limited financial history and in many cases, they do not have physical collateral to be used in different financial instruments. Despite their potential, this lack of historical view makes the financing decisions and options difficult from the banking perspective. In addition, it is harder to predict the future performance of the startup compared to conventional businesses, which operate in well-defined industry boundaries including hundreds or thousands of similar companies.
Want to keep reading?
Create a web account to get access to more insights
