As investments into Fintech, startups quadrupled and continue to grow, the top Trends in Fintech undergoing massive change and disruption: Fundraising, Payments, Deposits & Lending, and Cryptocurrency. Fundraising and the tremendous change and innovation happening within is disrupting access to fundraising and investing. Expect software and ambitious startups in the fundraising space to continue to develop new approaches to fundraising and investing as more alternative investment activity moves online.

Many of these approaches will likely be more quantitative in their approach, as online platforms help introduce more semi-automated, data-driven, and diversified approaches to early stage investing.

Fundraising in the high-tech era

Fundraising is critical for startup businesses, whether it be a high-tech startup or real estate project. And with the more traditional fundraising sources of venture capital investing heavily, along with new fundraising “alternatives” coming online, right now is arguably one of the best times in history to be fundraising as a startup entrepreneur. However, access to capital is not yet a level playing field, nor is it particularly merit-based or data-driven at the early stages. The explosion of interest in Fintech has combined with the new frontier of crowdfunding to launch thousands of new crowdfunding companies.

Entrepreneurs have access to emerging currencies to fund expansion. As the internet blossomed, Fintech disruptors like PayPal brought the world of commerce online, allowing companies to accept online payments for physical goods and services. Today, blockchain technology is creating a reality where individuals are free to engage in anonymous commerce, thanks to cryptocurrencies. Gone are many of the regulatory strangleholds that once constricted ventures to traditional IPO fundraising.

The Fundraising Paths Ahead

The explosion of interest in Fintech has combined with the new frontier of crowdfunding to launch thousands of new crowdfunding companies. And as with any new market, new niches continue to surface and become populated by multiple competitors. In time, each vertical will coalesce around one or two leaders, and several massive companies will emerge with a critical mass of scale and reach. The larger existing financial services institutions (banks) who already dominate each area of traditional investment and financial advisory work look to the online fundraising and investing platforms as ways to extend their reach and product offerings into what they would call “alternative investments.” And this is when things really start to get interesting. Alternative investments — that is, anything other than public stocks, bonds or cash — is an over $8 trillion dollar annual market that dwarfs the “non-alternative” market.

Fintech and alternative finance

The distinctive feature of FinTechs engaged in alternative finance, like P2P lenders, is that they employ digital platforms for connecting those in need of financing with investors and savers willing to take on the relevant risks. The success of Fintechs operating as alternative lenders after the great financial crisis. While capital requirements for banks and other opaque intermediaries have been tightened because of the crisis, alternative lenders are able to operate without similar constraints. Their clients are protected mainly through other means, such as the offer of diversified portfolios for investment and the creation of special guarantee funds. Moreover, the platforms specialise in assessing the credit risk of borrowers and producing scores to the benefit of investors. Banks perform similar tasks to their own benefit. However, digital technology allows firms to collect information, including big data, about recipients of funds in unprecedented ways, which FinTechs are fast to exploit often better than banks. Other reasons for the development of FinTechs in alternative finance obviously include speed of execution and convenience for firms and investors, together with the attractiveness of financial democracy particularly after the crisis.


FR-crowdfunding has attracted the attention of regulators due to its relevance and also to the fact that retail investors are involved. Its two forms – LB- and IB-crowdfunding – share some common features. First, they both have a clear investment component, i.e. the expectation of profits from the efforts of others. Second, FR-crowdfunding platforms are a manifestation of direct finance and therefore of disintermediation relative to traditional intermediaries. Nonetheless, platforms play an important role in reducing information asymmetries between recipients and lenders/investors. In fact, the latter either rely on the platform’s checks of recipients and other information conveyed through the platform, including rating or scoring of recipients, or on automatic diversification of investments by the platform. In the absence of traditional intermediaries such as banks and of the typical mechanisms of securities markets (including book-building and the aggregation of public information through secondary markets), crowd-lenders/investors would otherwise have difficulties in identifying the correct price.