Fintech incubators are invaluable tools for putting developing regions on the world map. Digital Financial Services Lab, which is backed by the Bill and Melinda Gates Foundation, has been throwing cash at startups during their intensive boot camp. But is throwing so much money at these companies the right path to success, or are there other options available as well?
Fintech Attracts Big Money Spenders
Looking over the evolution of fintech in recent years, it is apparent that a lot of money is circulating this innovative industry. Startups are raising funds like there is no tomorrow, and investors are more than happy to back incumbent startups. Moreover, there have never been so many incubators and boot camps related to finance than right now.
One of those incubators goes by the name of Digital Financial Services Lab, which is located in Tanzania. Very few media headlines originate from this region, but that situation may very well change in the coming years. The local boot camp is backed by the Bill and Melinda Gates Foundation, and they are showering startups with money as we speak.
In fact, twenty entrepreneurs from ten different countries have been invited to partake in the week-long boot camp. During this time, they received invaluable hands-on advice before presenting ideas to a panel. Four companies have been selected as “impressive”, in areas ranging from remittances to credit scores, and financial inclusion.
While that is not impressive by any means, DFS Lab has also awarded over US$400,000 to these four startups. Part of the money comes in the form of an investment, whereas the rest relates to a six-month long mentorship program. In doing so, the incubator puts a lot of pressure on these four companies to strike it big once their incubation period ends, which may not be the best course of action.
While it is understandable that any incubator is looking for the next fintech unicorn, showering startups with money is not the smartest idea. Moreover, the pressure-rich environment in which they will need to operate over the next six months can cause entrepreneurs to get burnt out. If that were to happen, all of the money is spent on a lost cause.
On the other hand, the fintech revolution is in full effect, and startups need to be properly guided. A six-month long mentorship initiative can help these entrepreneurs grow into the successful businesspeople that they aspire to become. Digital Financial Services Lab wants to put Tanzania on the fintech map, but their approach may leave much to be desired. Only time will tell if their concept will play out in a positive or a negative manner.
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