Why are there so many fintech startups when they all seem to do the exact same thing?

Question

I work in PR and have represented quite a few startup fintech companies. What puzzles me is that there are masses of these companies all around the world, yet they all seem to do the exact same thing (p2p payments, digital wallet stuff, transfer money to a business via an app etc.) They also market themselves in exactly the same way. Yet every day I see yet another utterly generic fintech company raise tens of millions of dollars in a funding round to do what every other app does.

I find this puzzling because surely fintech applications should work like a social network, ie it makes sense for everyone to be on the same application, in the same way Twitter works because lots of people are on Twitter.

I used to live in China and everyone there uses either WeChat Pay or AliPay and that’s it, and it works beautifully because everyone in the entire country is plugged into the same system (in China I could literally text money to my friends to pay them back for getting drinks, as well as pay my electric bills in the same manner). I actually had this conversation with a startup founder (although he works in agritech) and he basically said this to me, so I think I’m onto something.

Any insights you have are appreciated.

In: 1421

Answer 1

Speaking as someone who works in cyber security software, you see a lot of start ups who do the same thing pop up to fill a new niche, essentially with the hope they’ll get aqcuired by a major player for their technology. Im watching it happen right now. I assume the same applies to Fintech and most other software industries.

It’s much easier and cheaper to get a software startup off the ground. Very little overhead with the remote work world. All you need is a handful of engineers, a project manager or two, computers, and cloud infrastructure, and there you go.

Not like starting other traditional businesses that need physical machines or merchandise with a high startup cost.

Also, a lot of them are just living off of investors who have the hope they either make it big or get acquired – They’ll go under in two years and/or the IP will be sold off if it was half decent.