Are You A Fintech That Is Going From Zero to One?

If you are a startup, that has zero revenue, this short video is a must watch. You are termed in the industry as “Zero-to-One” a company that is going to go from $0 revenue to $1 (pre-revenue to post-revenue). There is a wide difference between the two and why banks prefer “One” rather than “Zero” companies.

Transcript

Hello, my name is Faisal Khan. I am a banking and a payment consultant and today I want to talk to you regarding when you go to a bank or a financial institution, and you have a very good plan but they deny you banking. They deny you a chance to meet up. They don’t want to hear you. They don’t want to talk to you.

And you’re wondering why. What did you do wrong that they don’t want to talk to you?

Well the problem is zero to one. A bank is a solution provider and they will see many many many applications come their way, prospects come their way – they come through people like me who are brokers, they come through their own sales team. They come through the organic way of the Google and the Internet searches, they’ll come through their website. And all these opportunities are correlated, they’re looked at, they are classified and then they are prioritized. Zero to one companies are given zero preference – the lowest.

What does zero to one mean? Zero means zero revenue and they want to go to one revenue make one dollar a day. This company has not even made a dollar. And when you are a zero to one company or a company going from zero to one that means the bank or the financial institution or the licence holder will have to spend time with you; will have to educate you; will have to answer a plethora of questions that you will have and I’m sure you will have them; will have to look at your flow of funds; will have a look at your business plan; will have to correct it, amend it so that their compliance department okays it. They will be spending a lot of time with you in the hopes that you’ll make money. But here’s the thing in the hope: You could say hey you know what, we didn’t raise money so we’re shutting our service down. The bank goes but hey we’ve spent, you know, five weeks with you. Too bad bro. Or three months later your co-founder quits and he goes elsewhere; or four months later the industry just changes focus and company goes down or just plain you suck and the idea sucks and you can’t make money.

The bank loses out, not you – you are definitely losing out – but the bank loses out. When they don’t have a steady stream of income from your startup, they lose out. So this is why they give zero preference to zero to one companies. If you want to approach a bank, it is always a good idea that you are classified as an incumbent – someone that is post revenue, not pre-revenue, post revenue – someone who’s making money. You could be making a small amount of money. Twenty thousand thirty thousand dollars in sales a month. But you are making money. That automatically separates you in their CRM, in their sale system, in their rescreening as a post revenue client and they will talk to you. They would want to know more about you. Maybe you may not be on their right size day but you could definitely be in the right sizing tomorrow when you make 100 thousand dollars in sales or what have you. So try to approach banks that are looking…try to position yourself and approach bank – approach the banks so that you look like post revenue.

What do you do if you are pre-revenue… pre-revenue, if you are a zero to one company? Then your best thing is to look at partners who will accept and your second recommendation that I can give to you is go find someone in the industry who can be a bridge or a gateway so that all the lack of knowledge that you may have in as far as the nomenclature, taxonomy, contacts, procedures, flows, operational manuals etc. are all taken care of by this gateway person that you may hire. He or she can speed up things and then let the bank know that you know yes and to the bank you would look like someone will really knows their stuff and they might just classify you as someone that is on the borderline from 0 to 1 and would classify you as a one company and think they want to go from one to two.

So that’s my recommendation for you 0 to 1 companies are almost looked down upon because of the fact that they have no revenue, try to be post revenue, that’s the key over here.

If you have any more questions or comments feel free to ask in the comments section below. I’ll be happy to answer, Till next time, have a good one.