7 Point Checklist To See If You Have A Fintech Unicorn

This is a “bonus chapterette” from my book Mindshare to Marketshare.

This is deliberately simplistic. It is a 7-point checklist. If you really have all these 7 items, you should aim to raise a lot of money and create a Unicorn. If you don’t, somebody else will. An honest evaluation is critical. If you have all 7, dilution matters way less than having the right investors and being properly capitalized; your end result maybe a small % but it will be a small % of a huge exit. However don’t fool yourself. You might be able to persuade investors that you have all 7, but unless you really have all 7, it would be smarter to raise less, dilute less and have a bigger % of a smaller exit.

I will illustrate this formula using Klarna as an example:

  1. A List Need of Buyer (faster checkout). A List means it is a the pain point that users will refer to all the time.
  2. A List Need of Seller (less abandoned shopping carts). In Fintech, you are always an intermediary (e.g. between buyer and seller or lender and borrower). You must make both parties happy. The same A List rule applies; the Seller must see this is as top priority.
  3. A big wave driving the need (the move to mobile). Before the move to mobile, faster checkout was not a huge concern, neither was abandoned shopping carts. The move to mobile made these into A List needs. Note, this is not saying “we are a mobile e-commerce company” which is meaningless. It is saying “this is the problem we are solving and the problem has become acute because of the move to mobile”.
  4. A massive market (e-commerce). If you have 1,2 and 3, you have the potential for a small but still highly valuable company. To create a company worth $ billions, the market must be massive.
  5. Timing. You do have to be early. You might spend a long time waiting for the market to recognize the need, but you must be 100% ready when the market comes around. This explains the trend to raising very small amounts of capital (while waiting for the market) and then raising a “monster round” when the demand suddenly kicks in. Klarna spent a long time in a market (Sweden) that was not on most people’s radar screen.
  6. Secret Sauce (minimize fraud by only shipping to a user’s confirmed physical address on a national ID system). This should be simple enough that it seems obvious once you see it in action.
  7. Execution.

Mindshare to Marketshare focuses on the Execution part, because this is where the hard work lies and the devil or God resides in the details. With huge markets and obvious waves and secret sauce insights that are easy to copy, speed of execution is the key.

In Mindshare to Marketshare, I call the execution part “Combining”, because this is “art of the chef”. You go to a great restaurant because the chef cooks great meals. The chef may have a secret sauce that is a differentiator, but the chef would never serve that alone.

The art of the chef – Combining – is using ingredients that anybody can use such as:

  • Capital. Klarna has raised $282m. They could probably have raised a lot more if they wanted. Money is a commodity and there is a lot of it looking for a return.
  • Talent. Each human is unique, but there is a lot of talent in this world waiting to be paid and led, wanting to join great teams.
  • Acquisitions. Anybody could have bought Sofort. All they needed was Capital, which is a commodity. Most companies are for sale at the right price. Acquisitions are key to speed of execution but are a waste of money if that 7 point check-list is missing.

Rome was not built in a day. Nor are Unicorns. For context, read this post about the 4 Pivot Gates that Unicorns Pass Through. This is the context for understanding timing. Gates 1 and 2 require very little capital and maybe done before the demand becomes massive.

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