Why do Investors Invest in Early-Stage Fintech Startups?

Africa’s fintech industry is relatively untapped. Aspiring entrepreneurs struggle to venture into the industry and certain untapped markets because of the difficulty accessing funding to start or expand their businesses. Although the fintech industry attracts significant investments, often these investments go to a small proportion of the market. So we wanted to find out why investors invest in fintech startups to determine how founders can increase the likelihood of securing investments for their startups. We looked at the top 10 fintechs in our Seed Watch database that secured pre-seed or seed funding so far in 2025 and analysed the reasons why their investors backed them. Based on the analysis, here are the 5 key themes that can be categorized as the primary reasons investors are backing these startups:

Theme One: Innovation and Technology-Driven Solutions

• Many of these startups offer innovative, tech-driven solutions that address longstanding challenges in their respective industries. Investors are attracted to businesses that leverage cutting-edge technology like AI, blockchain, and embedded finance to disrupt traditional markets.

• Case Studies: Datalign Advisory (AI in wealth management), CredibleX (embedded lending model), Surus (tokenized asset management).

• When pitching your idea or startup to potential investors, you should focus on the key technologies your solution is powered by and how these technologies create and deliver value to your target audience.

Theme Two: Scalability and Growth Potential

• Investors are keen on startups that exhibit the potential for rapid scalability, whether in terms of geographical expansion, customer base, or product offerings. Startups that have shown early traction, such as rapid user adoption or significant revenue growth, are especially attractive.

• Examples: Neofin (AI for SME AR management), Fifteenth (AI-powered tax platform with broad appeal), Klearly (payment solution with European expansion plans).

• Have a clear growth plan that you can show to your potential funders. You can highlight the key partnerships you will form to enable growth. You can also highlight other target consumers you can serve with the funding. What new products, services or integrations will the funding fuel?

Theme Three: Solving Real-World, Industry-Specific Problems

• Startups that address pain points in critical sectors, such as SMEs, fintech, or wealth management, stand out to investors. The focus on solving real-world problems resonates well with investors looking for high-impact ventures.

• Examples: Cedar Money (cross-border payments for emerging markets), Foyer (down payments for first-time homebuyers), Link Ventures (SME debt collection challenges).

• This is key: what problem are you solving? As you seek funding, you must be clear and articulate the problem you are solving.

Theme Four: Strong Leadership and Experienced Founding Teams

• Investors are heavily influenced by the experience and track record of founding teams. Strong leadership with deep industry expertise can increase investor confidence in a startup’s ability to execute and scale effectively.

• Examples: Fifteenth (led by a second-time founder with expertise in tax strategy), Datalign Advisory (leadership with deep experience in wealth management).

• Building an experienced team should be a top priority. Having an experienced team assures investors that your startup will have a good chance of executing the strategy and using funds wisely.

Theme Five: Alignment with Regulatory and Market Trends

• Startups that align with regulatory trends and emerging market needs, such as financial compliance, digital asset management, and cross-border solutions, tend to be more attractive to investors. These trends ensure long-term sustainability and lower risk for investors.

• Examples: Surus (compliance-driven crypto solutions), Cedar Money (regulatory alignment for stablecoin payments).

• You must ensure that your startup meets regulatory standards and is aligned to where the industry is going. Clearly communicate this to investors during the funding application process.

These themes—technology innovation, scalability, real-world problem solving, strong leadership, and regulatory alignment—highlight the core factors that are driving investor confidence in these startups. By addressing these key themes, startups are positioning themselves as not just viable business ventures, but also as high-growth, high-impact opportunities.

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