I want to start a payments bank in India but it requires a 13M+ USD initial capital just to get the licensing fee.
Wondering if people have any examples of how one might cross this barrier to entry.
Ask HN: How to start a startup that requires a high amount of initial capital?
1–10 of 91 posts
Re: Ask HN: How to start a startup that requires a high amount of initial capital?
#2the barrier is there to stop instances like this.
Re: Ask HN: How to start a startup that requires a high amount of initial capital?
#3A team with multiple big exits could possibly raise the money from VCs or self-fund.
More likely, something like this would start inside another company or it would partner with a license holder at first.
Re: Ask HN: How to start a startup that requires a high amount of initial capital?
#4Disruption. 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.
Re: Ask HN: How to start a startup that requires a high amount of initial capital?
#5You just do it
Re: Ask HN: How to start a startup that requires a high amount of initial capital?
#6the barrier is there to stop instances like this.
That's uncharitable.
Here in Australia there is a team building a new bank and having good success doing so. In order to overcome the institutional barriers like the one the OP raised, the team consists both of highly experienced corporate "grey hairs" and talented young hackers/designers.
This way, they have the industry experience and network to ensure the company is run competently and prudently, whilst also being able to leverage the energy and creativity of younger hacker-types who can bring new ideas to the market.
I'd suggest to the OP that this kind of approach may work for them.
Re: Ask HN: How to start a startup that requires a high amount of initial capital?
#7Start smaller. Most of the disrupter banks started as something else with the view to eventually obtaining a banking license. That way you can actually prove that you have a product worth investing in. Usually banking startups start with a Stored Value Facility license (or the local equivalent) and work up from there.
Re: Ask HN: How to start a startup that requires a high amount of initial capital?
#8the barrier is there to stop instances like this.
That's uncharitable. Here in Australia there is a team building a new bank and having good success doing so. In order to overcome the institutional barriers like the one the OP raised, the team consists both of highly experienced corporate "grey hairs" and talented young hackers/designers. This way, they have the industry experience and network to ensure the company is run competently and prudently, whilst also being…
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Re: Ask HN: How to start a startup that requires a high amount of initial capital?
#9Partner 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 interest rate.
So you could find a fund with 13M, draw up the paperwork such that they put that in your company, but it can't be spent, and the 13M is effectively it's own collateral. Then pay the investors interest, plus some small coupon payment, or give them some equity for their risk free investment.
So long as the paid up capital isn't used for anything, it's a 'non transaction', i.e. it has no financial meaning.
That said, the 13M may be designated as collateral or some kind of requirement for the payments system.
Re: Ask HN: How to start a startup that requires a high amount of initial capital?
#10Disruption. 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.
No.
There is no way around this kind of regulation, and they definitely are not going to 'change their minds' once they see someone has broken it. They're going to put someone in jail.