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Fintechs turn to bootstrapping as external funding ebbs
Bootstrapping is the process of founding or running a company using one’s personal finances or the firm’s own operating revenue.
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A hand holds a smartphone with the word fintech (financial technology) on the screen. Indonesian fintech firms are increasingly relying on their own funding because of a lack of new funding sources. (Shutterstock/-)
H
omegrown fintech firms are increasingly relying on bootstrapping, as venture capital, once the lifeblood of the sector, has receded sharply, further dampening prospects for external investment.
Bootstrapping is the process of founding or running a company using one’s personal finances or the firm’s own operating revenue.
This trend has pushed almost half of the country’s fintech companies to rely on self-funding, according to the Indonesian Fintech Association (Aftech) on Thursday.
“About 60 percent of our members are actively seeking new funding, and many of them are now bootstrapping. This marks a major shift from the 2021 funding boom,” said Aftech secretary-general Aries Setiadi during a digital economy report launch by the Center of Economic and Law Studies (Celios).
Read also: Tech unicorns lost for direction amid funding drought, unclear exits
Funding challenges have led to what people call a tech winter, a prolonged trend that is now marked by slowed growth, reduced start-up funding and widespread layoffs.
A July survey by Aftech found that 46.6 percent of fintech firms had been relying on bootstrapping, followed by 16.8 percent relying on seed-stage funding and 6.1 percent on pre-seed funding.
