Balancing costs, profitability and growth – where to start?

Running a fintech start-up can be a daunting experience, especially during the global COVID-19 pandemic. However, this doesn’t mean we can’t enjoy the journey. The fulfilment I feel every day when running SEON makes everything worthwhile.

Still, the genesis of a business marks a crucial period where founders are branching out into the market and establishing how to best scale and remain profitable. With that said, here is some practical advice on how to balance costs, profitability and growth.

Location, location, location (and talent)

Once the foundations are laid and a start-up is scaling, a business must be able to balance costs, profitability, and growth. Two aspects that go together, and have been of particular importance to us, are location and the talent pool in that area. 

Establishing yourself in an area where the talent pool meets the needs of your business can promote huge cost savings when it comes to operational expenses. This has been true for SEON; the talent pool is naturally abundant in mathematics, computer science and AI-based skills in Eastern Europe, which has provided us with the human capital necessary without having to set up an office elsewhere. 

What’s more, with our product being digital, we can service businesses all over the world from our location. Not only did this mean that we didn’t have to invest in new staff and new offices straight away, but it also meant that we were able to generate revenue on a global scale, which has helped us manage costs.

My co-founder, Bence Jendruszak, and I completed remote Zoom demonstrations from day one to build to where we are today. In this way, we differentiate from the rest of the fraud tech industry who instead rely on having boots on the ground as the focus for their expansion plans.

Monitor changes to product usage – and adapt 

COVID-19 has caused some dramatic changes across many industries, with companies having to adapt to serve customers in new and unique ways. During this period, I would advise fintech start-ups to keep a close eye on their short-term usage data to establish who is using their solutions and how that is changing. 

For example, in March 2020, a high percentage of our portfolio consisted of online lenders. However, this was one of the first sectors to begin slowing down as a result of COVID-19. 

Spotting this early on helped us to redirect our marketing efforts to iGaming and eSports, which experienced growth throughout lockdowns, as customers took to iGaming websites while physical premises such as casinos were closed, and players had little to do. 

Seek the right investment partner

Searching for investment is a great place to start for a fintech start-up and will give it the resources needed to expand. However, when doing this, it is important to find investors who have a strong portfolio in the fintech space. 

It may be handy to compare companies within that portfolio with the services you provide to ensure the investor has the right experience to help you grow, as well as having a complementary portfolio that can be ready for its other customers too.

Be ready to sacrifice

My final piece of advice is that running and scaling up a fintech business requires a lot of dedication and sacrifice, but if you put in the effort, the rewards and fulfilment is well worth the work!

Tamas Kadar is the founder and CEO of SEON.

The views and opinions expressed in this Viewpoint article are solely those of the author(s) and do not reflect the views and opinions of Fintech Bulletin.