A 2018 report by Medici provides anecdotal evidence of a 10% survival rate for bootstrapped fintech startups. Fortunately, by their Series A round, the survival rate of US startups generally gets to about 40%, to approximately ~25% by Series B, and by Series D it drops to about 5%. The need for resources among early-stage startups is crucial to their success.

Data is one of the most important resources for early-stage fintechs. Unlike in other industries, fintech startups need this data on the back end to stand up, test and get their products market-ready. While the costs of starting a technology business have fallen significantly in almost every category, financial services data has gotten more expensive – if it can be accessed at all. We know from our own experiences that many fintech entrepreneurs struggle to find and afford the data they need, which holds back innovation in important categories.

FinTech Sandbox promotes innovation in fintech and financial services globally by providing fintech entrepreneurs and startups with access to critical data and resources. We recently surveyed our current residents and alumni to determine the lasting impact of data access at critical, early stages of many startups' development.

Here are three key benefits of participating in FinTech Sandbox’s data access program:

#1 – Free access to data and resources allows startups to focus on human capital development
By giving free access to data, FinTech Sandbox has proven to deliver on its mission to drive job growth and economic development. While most startups enter the program with small teams, participation and data access serve as an accelerant. Rather than paying for expensive data sets, startups seem to be able to hire additional employees either during or after completing the program. The vast majority of both current (73%) and alumni participants (61%) have added to staff, while one quarter of alumni had between 10-20 new hires. 12% of alumni now have more than 50 employees.

#2 - FinTech Sandbox can set you on a path to fundraising success
According to the study, 57% of current participants, 70% of alumni participants have received funding since joining FinTech Sandbox. Its startups have many advantages that can lead them to success with fundraising. The first is that its vetting process favors firms that are more likely to be successful, as market opportunity, team, unique technology, and other important factors are considered. A second is that these startups make material progress using data, which is made available during their residencies and can ultimately make them more attractive to investors. A third reason is that FinTech Sandbox raises its residents' visibility among investors and potential customers through demo days and other efforts to give the startups more exposure. Finally, the fact that startups do not need to buy data or host it simply lengthens the runway for investment while they are trying to complete their products and reach their next round of fundraising.

#3 - Data access benefits a fintech’s financial performance
Most alumni participants were able to increase their revenue and customer bases since graduating FinTech Sandbox’s program, further attesting to the program’s positive impact on company performance. A strong majority of current participants — 72% – report acquiring customers since joining FinTech Sandbox. Over 20% of both current and alumni participants acquired between 11 and 50 customers. While 37% of current participants are pre-revenue, only 14% of alumni participants are still in this stage. Furthermore, over 40% of alumni generated more than $100,000 in revenue.

David Jegen, who co-founded FinTech Sandbox alongside Sarah Biller, explains: “When we launched FinTech Sandbox in Boston over six years ago, we were determined to support the global fintech community and help promising fintechs accelerate product development by providing free access to data when it would be most impactful.

Today, we have not only expanded our geographical reach and worked with startups from all over the United States, Canada, the United Kingdom, and continental Europe, but built a program which puts startups on the path for success. Looking ahead, we remain steadfast in our commitment to the startup ecosystem and will identify ways to further improve on our offerings, such as through expanded data sets and additional networking opportunities.”

For more information on joining as a startup, community member, or as a data or infrastructure partner, please contact info@fintechsandbox.org, or visit fintechsandbox.org.

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