By Tamas Kadar, Co-Founder and CEO of SEON, the fraud fighters
Starting a new business at any time can be daunting, and in the current climate, even more so. That shouldn’t put entrepreneurs off, and it won’t make the process any less exciting or enjoyable. And whether you decide to go ahead and establish a start-up in the midst of a global pandemic or not, there will be problems and roadblocks that you’ll have to overcome.
That’s something I found when setting up SEON with my co-founder, Bence Jendruszak, in 2017. We started the company in Budapest and in our early days had to fight through venture capital preconceptions about central European start-ups. But by doing so, we won seed funding from well-known PortfoLion (OTP Group), and are now using that investment to buck the trend of other fraud businesses by making our tools self-service, a first of its kind.
We are proud to be one of the few start-ups to be profitable just two years after launch, and recently opened a new London HQ.
SEON is testament to the fact that new businesses and start-ups can prosper during difficult circumstances. But with that said, business owners must be aware of tactics and best practices that will enable them to scale while remaining profitable. Here I share some practical tips for new businesses about getting started.
Securing funding early on
Raising €1.6M in seed funding in SEON’s early days allowed us to rapidly expand and enter new target markets. This gave us solid foundations that meant we were profitable just two years after the company’s inception. In turn, it also gave us the ability to take a holistic view of our business and assess our mission and growth strategy.
Securing investment is a great place to start for any business, as it will provide the resources needed to get well established, along with the room to expand. However, it’s important to find investors who have a strong portfolio in relation to the type of business you are running. Determining which companies they have worked with in the past will ensure they have the right experience to offer you, and the correct advice to enable you to grow.
Overcoming outdated biases
Various biases can often hamper the growth of start-ups, particularly in the fintech sector. And with their business’s credibility under question, it can be difficult for entrepreneurs and business owners to secure the investment needed to get off to a good start.
We found ways of getting past the location biases that stood in our way and now we see launching SEON in Hungary as a real advantage. We created a unique product that is breathing new life into the fraud prevention industry and being outside a typical start-up hub has resulted in the company being more creative, agile and resilient.
Business owners therefore shouldn’t hold on to preconceived limitations, especially when it comes to their locale. Look at what resources are available in your environment and think outside the box. If your business proposition is creative and solves long standing issues in your industry, securing investment will be much easier.
Remaining profitable while scaling
With that being said, choosing the right location for your business should still be carefully considered.
Balancing costs, profitability, and growth is a must and when it comes to ensuring your new company remains profitable, consider both the proposed location and the talent pool in that area. Setting up shop where the candidates meet the needs of your business will not only allow you to provide the best services possible, but will also help to reduce operational costs.
For example, in Eastern Europe, the talent pool is abundant in mathematics, computer science and AI-based skills. This provided us with employees with the right abilities needed to run our fraud solution in our early days. And, as our solution is digital, we were able to service businesses all over the world using the same human capital. Not only did this mean that we didn’t have to invest in new staff and offices to be able to cope with the global demand, it also meant that we were able to generate revenue on a global scale. This has helped us manage costs, and in turn, invest in staff in new locations as the company grew. Once a business has established a solid foothold in the industry in this way, it can also then think about expanding its horizons and setting up base in other localities that would be beneficial to the company’s growth.
Be adaptable to respond to change
2020 has been a transformative for many industries and businesses around the world have had to respond by targeting new audiences and operating in ways they aren’t used to. Data can be harnessed to provide bespoke insights into how your customers’ needs are evolving and, therefore, how your company should respond to these changes.
For example, in March 2020, a high percentage of SEON’s portfolio consisted of online lenders, but this was one of the first sectors to slow down in response to the pandemic. Using data insights, we spotted this early on, and redirected our efforts towards digital services such as iGaming and eSports, while physical premises were closed for business during lockdowns.
It’s important that new businesses are adaptable in this way. They should keep a close eye on their short-term usage data to establish who is using their services and how that is changing.
Stick at it!
The amount of uncertainty we are facing today could easily make entrepreneurs shy away from setting up a new business. My advice is to take the plunge and persist, no matter what life throws at you. Running a business requires a lot of hard work, dedication and sacrifice, but the rewards are well worth it. Knowing where to be adaptable and how to utilise the resources around you will be key as we head into the new normal and with these ingredients your business can prosper and be successful.