The product must have appeal. What it does, rather than how it does it, is a primary concern for investors. Successful products will target, and excel at, frictionless delivery, particularly around products which solve a previously undescribed problem or simplify the consumer’s life. This means the emphasis need not be on the underlying intellectual property. Consumer fintech products do not need to have highly-sophisticated intellectual property at their core in the same way that big data products need advanced algorithms. Readers will be aware of product aggregators allowing consumers to compare financial products. These are simple ideas with clean execution.
With that in mind, companies need not focus on creating bespoke intellectual property. Opensource technology, for example, provides a time and cost-saving tool in building the product. However, the use of opensource technology needs to be carefully considered; the terms of opensource licences may mean that bespoke technology built on opensource code must be offered for free. Even if the intellectual property, as a whole, is not to be monetised by licensing, giving away your innovation and hard work cedes some advantage to would-be competitors.
The right platform will have a large influence on the attention the product attracts and the key platform for retail products is mobile applications. Consumers are mobile and an internet-only offering will struggle to gain the visibility that it needs to become a compelling investment opportunity. A mobile product will help achieve the proof of concept that investors look for.
Early companies have to strike a balance when considering where to spend their cash and legal services are not high up the list. This is understandable; it is more important to spend money building the product and gaining visibility. That does not mean that companies should ignore legal issues. Instead, companies should be seeking pragmatic, timely advice that will keep competitors and regulators from the door. Companies need to weigh up the business decision and acceptable levels of risk against being legally watertight. Any time and money to gold-plate the business can be spent once investment has been secured.