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Disruption. Begging for forgiveness instead of asking for permission. You can see it in many major players that got their start by going around regulations. Once you are onto something, the regulations can be satisfied by backers who see a business plan, cashflow from the side of the business, or perhaps new regulations will form around the new company's business model.
You can likely do what you want by partnering.
I have learned a couple things about being the little guy trying to partner with bigger folks:
- Josh Elman (from Greylock) suggested that when (I think) when LinkedIn (or Twitter, I forget) was small, they didn't go out to look for partnerships with big companies, because they knew those wouldn't pan out because no one in a big company would care. They mostly sought relationships with smaller companies with some audience, but who were more receptive to talk to team up to crush the big guys and offer better value. Smaller competitors in crowded markets like banking are always trying to find ways to become more dominant, so they are more open than the folks at the top of the market.
- Just make your offering really really compelling - the "offer you cannot refuse" kind. This is not easy. This goes against traditional business sense, because you might have to offer value at less than cost. But if this is what the existence or growth of your business hinges on, you have to bend over backwards. Goes to the good old Dale Carnegie stuff; focus on their value in the conversation over yours. They need to feel like working with you is a steal of a deal. There are plenty of ways and business models to do this, but offering human capital, co-branding, offering equity or some rev share, customer insights, etc. are all fair game.
So do you need a license from the start? Impossible to tell from your comment.
Partner with a bank. Or get a hedge fund to buy a bank shell, have it as an asset, and use that bank. If your startup fails, they still have the asset. Or you may just need to have access to 13M, it's probably not the fee. So - you can just borrow 13M and use the 13M as collatoral. If you structure the deal right, it's 100% risk free. Moreover, you may be able to invest the 13M in which case you can still return an i…
> So - you can just borrow 13M and use the 13M as collatoral wouldn't OP need equivalent collateral to borrow 13M even?
Partner with a bank. Or get a hedge fund to buy a bank shell, have it as an asset, and use that bank. If your startup fails, they still have the asset. Or you may just need to have access to 13M, it's probably not the fee. So - you can just borrow 13M and use the 13M as collatoral. If you structure the deal right, it's 100% risk free. Moreover, you may be able to invest the 13M in which case you can still return an i…
> So - you can just borrow 13M and use the 13M as collatoral wouldn't OP need equivalent collateral to borrow 13M even?
Earlier quoted context omitted.
> So - you can just borrow 13M and use the 13M as collatoral wouldn't OP need equivalent collateral to borrow 13M even?
No you get an asset worth x and use it as collateral against the loan valued as x. You'd have to pay interest on the loan, presumably from making a basic investment. It depends on what the requirements of that 13M are. But if it's just plain 'paid up capital' ... then the company could take the loan, 'owe' 13M, but then 'invest' the money back in the entity they borrowed it from! The regulators may not like this thou…
Earlier quoted context omitted.
> So - you can just borrow 13M and use the 13M as collatoral wouldn't OP need equivalent collateral to borrow 13M even?
No, because he isn't spending the money. He borrows 13M, and then the 13M just sits in an account, doing nothing, or earning say, the risk-free rate. There's no risk for the lender, because the money isn't going anywhere.
Check out Monzo in the UK. They started as a top up payment card with great technology. This meant they didn't need a banking license. They are now moving into the current/checking account space with a license. So do you need a license from the start? Impossible to tell from your comment.