“The biggest issue we see when dealing with clients in the fintech startup space is that, put simply, they’re cash poor.
“The regulatory requirements that fintech startups are forced to comply with, just to get their product to market, ends up sucking up seed funding. This is a significant barrier to entry into the fintech space and makes it harder for founders to concentrate on the process of bringing their product to market.
“A regulatory sandbox scheme could provide a regulated, shrunken marketplace that could allow fintech startups an ability to test their model and product in a controlled yet realistic environment.
“It’s a model that has been put forward by industry and we’re pleased to see that the Treasurer may embrace the scheme.
“Many investors are reluctant to invest in a startup until you have a ‘proven concept’ – it’s been to market, it’s been tested.
“Unfortunately this can stifle innovation, as fintech startups continue to struggle with funding. We want to make sure government is doing everything in its power to ease the regulatory burden on our innovators, who will ultimately drive economic growth in Australia.”
Alexis Kokkinos again reiterated the necessity of ensuring any future sandbox regulatory provisions would be simple from a compliance perspective.
“Government would need to ensure that sandbox provisions are straightforward and easy to comply with. Startups are driven by smart, innovative people, but they usually lack the regulatory knowledge and access to be able to navigate and apply all the relevant ASIC and Corporations Act requirements.
“The last thing you would want is to make a regulatory sandbox that is complicated, as it would defeat the purpose of having such a regime.
“We would also urge government to consider ensuring that sandbox proposals can be used by any fintech operator and that it not be limited to ‘companies’. For example, many fintech startups are operate managed investment trusts and should equally qualify for any regulatory relief in a controlled environment.”
For further comment please contact:
Alexis Kokkinos, Partner, Pitcher Partners, 03 8610 5170
Sabine Wolff, Media and Communications Advisor, 0419 529 577