Wirex is a 1.5-year old company that has weathered many challenges to get to where we are today: a hybrid personal finance platform combining cryptocurrency and fiat currencies with hundreds of thousands of users.
Navigating yourself in uncharted territories is not easy. This is true for many things - from the literal, geographical sense, to the world of Bitcoin and blockchain startups.
Some of our challenges are predictable, experienced by every other startup out there. Others are wholly unique to this industry. In this piece, we would like to talk about the problems and challenges we face as a Bitcoin and blockchain startup.
Our business model
Before we dive into the challenges we face, we have to share a little bit about what we do for some background context. Basically, we offer cloud-based banking accounts that anyone can open with just internet connectivity. Our hybrid banking is a combination of one secure Bitcoin wallet and up to three stable fiat accounts - one each in US Dollar, British Pounds, and Euro.
This is in fact quite a big deal, and we are very proud that we are able to offer not one, but up to four currency accounts. The hybrid system of cryptocurrency and fiat currencies works amazingly well together. Think of it like a great marriage, where each party becomes the better versions of themselves. The Bitcoin wallet allows instant peer-to-peer funds transfers (or in other words, remittances without third parties) while the fiat accounts are also debit cards with payment processor giants Visa and Mastercard.
We imagined the possibilities early on and what this meant for some of our customers - including the 2 billion people who are underbanked and unbanked. We imagined their happiness at finally being catered for after being neglected by traditional financial institutions for so long. We imagined greater financial freedom afforded to people who are constrained by the limitations of existing financial services. We imagined millions of dollars saved in banking-related expenses, directly and indirectly bettering the lives of people everywhere. With this ideal in mind, our goal is to make the accounts as easy as possible to open.
Tough task: opening our own bank account
Ironically, this was our first problem. Before we can offer banking to the masses, we had to have our own bank account to begin with, for legitimate business reasons. It was tough for Wirex to open one as not many banks were keen to have Bitcoin-related businesses as their customers. As a startup in an industry riddled with uncertainty (regulatory-wise), it was hard to convince a bank to take us on. There is too much grey area in Bitcoin regulations (or lack thereof), which is off-putting for banks, where clearly defined black and white is preferred.
Challenges in getting funding
Almost every startup will face funding issues - we expected the usual hustle to attract and convince investors on our business model. However, the investors (in Europe, at least) are more interested in other well-known and understandable sectors, not a new sector built from a new digital currency that is barely 8 years old. Investors also prefer straightforward business models with higher entrance barriers with lower competition, that are fully scalable and with protected IP.
Startup teams should have experts in different sectors, who also have relevant experiences and sound track records with successful exits. Obviously, there is a very limited number of startups that would meet all these requirements. Therefore, for all others, funding largely depends on luck, connections and presentation skills.
The perfect team
As any startup will know, the team composition is crucial during the early stages. A new startup often does not have enough resources to employ many people for the different roles required, so every team member should be able to fill each others’ gaps when needed. That said, there are specific roles which are indispensable.
For example, as a startup in a technology-centric industry that is still shaping itself, we need a tech guru among our founders. This is a non-negotiable element in Bitcoin and blockchain startups. Lacking one will be absolutely disastrous and shows an absence of a long-term sustainability plan.
Another role that is an important component is people with entrepreneurial experience. If no one has such experience, it might be difficult to execute the idea into a business. For us, getting the right people with a combination of both entrepreneurial and financial experience was a great advantage.
Resilience in Bitcoin and blockchain startups
Like other businesses, the first two years are usually very tough. It is always better to be patient and prepared - the slow and steady win the race. Being resilient means that one can take on bumps as they come along and react to it quickly, whether it is in the form of new regulations or outdated applications of the technology.
Resilience also means being prepared to react to new opportunities as they present themselves. Bitcoin and blockchain is a very competitive industry with a great number of tech geniuses constantly trying to outdo one another. The fast-paced nature of this sector means that Bitcoin and blockchain startups cannot afford to be left behind, technologically speaking. If they do, customers are more than willing to move on to the next startup. In the span of Wirex’s (and E-Coin’s) operations, we have seen a number of Bitcoin and blockchain startups fold due to this very reason.
The bottom line
We believe there will be more challenges set in the future for us beyond what we highlighted above, because this road is currently facing a lot of resistance from traditional financial sectors. Nonetheless, our high growth proves that there is a huge demand for our services, and the basics of any business is to provide a supply for the demand.
For us, being in the Bitcoin and blockchain industry is exhilarating. In thousands of instances, we are our customers’ first taste and introduction to Bitcoin. How do we make our core products - highly technical as they are - easy to use and operate for a non-Bitcoin user? How do we get more people to use Bitcoin debit cards, which act as rails towards wider Bitcoin adoption? How do we play our part in the prophesied future where global (not local) currency will become the norm?
Exciting times lie ahead.
Wirex is a fintech blockchain startup founded by experienced financial experts and technology entrepreneurs. Wirex is based in London, UK and serves more than 130 countries worldwide.
Co-founder Pavel Matveev has been a solutions architect for international IT companies. He has worked on high level IT projects with Barclays Capital, Morgan Stanley, BNP Paribas, Societe Generale, Credit Suisse and others. A FinTech expert, Pavel has been a blockchain consultant for some of the world’s largest investment banks.
Co-Founder Dmitry Lazarichev is an experienced professional in finance, company valuation, consulting and is also a serial entrepreneur who has set up many international companies.
- Pavel Matveev and Dmitry Lazarichev
Article By Tim Frost