BUSINESS IDEA | VENTURE STARTUP

Bug Bounties for Fintechs 🪲 

Credit where credit’s due

Available Domain: Credithack.io

1. Problem/Opportunity❓

The Problem/Opportunity: As long as the internet has been around, so too have bug bounties. And no, bug bounties don’t have anything to do with killing bugs…

Bug bounties are rewards that are offered by companies to people who can find and report vulnerabilities in their software systems. For example in 2022, Google paid out $4 million in bounties for 470 security bug reports from users in Chrome. Which got us thinking. Could you apply this model to other verticals? Like what about trying to find vulnerabilities in fintech companies’ credit evaluation models? Businesses like Affirm, Klarna, Ramp and Stripe all have credit models to decide who they should and shouldn’t lend money to. So let’s create a platform to try and break their models.

Market Size: The global fintech market was valued at $295 billion in 2023

2. Solution ✅

The Idea: A platform where fintech companies post bounties for people to find weaknesses in their credit evaluation models

How it Works:

• A fintech signs up to the platform and provides anonymized datasets and specific challenge parameters (e.g. improve default prediction by 5%) for people to follow

• Participants then compete to beat the existing models by running simulations or experiments in a sandbox environment on the platform

• Winners then receive bounty payments once the challenge has been completed

Go-to-market: Target mid-sized fintech lenders in the US market, partner with them for a pilot program and expand from there

Business Model: Take a platform fee of 15-20% of bounty amounts

Startup Costs: Building the platform will definitely require some investment, so try and find some people who work in this space, team up and raise a round to get going

3. How You’ll Get Rich 💰

Exit Strategy: The goal here is to get acquired by a major credit bureau like Experian or Equifax

Exit Multiple: Expected exit multiple here would be in the 8-12x revenue, similar to high-growth fintech platforms

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DRUNK BUSINESS IDEA

Giant Pocket Jeans

Ever thought to yourself “my jeans are great, but I wish the pockets were big enough to hold more than my phone and my wallet.”

Well fear no longer. With these giant pocket jeans you have enough room to carry your laptop, some books or even a lunchbox.

Admit it, you know you want one.

JUST THE TIP

Trend 📈: Green Burials

Today, more than ever before, people are trying to be more environmentally friendly in their lives. And now people are looking to be eco-friendly after they pass away too. This has led to the emergence of so-called “green burials”, where people are looking to purchase eco-friendly caskets or even get cremated to minimize their environmental impact. This is a trend that’s not dying any time soon (get it) and we think you could build some big businesses in this space.

Business Ideas

• Eco-Friendly Funeral Products: Create biodegradable caskets and urns made from bamboo/willow

• End of Life Carbon Offsetting Business: Create a business which calculates someone’s carbon footprint and after they pass away a payment is made to offset the carbon footprint from their whole life

THE MONEYSHOT

Raising $2.7m to Build a $5bn Business

You might think that building a billion dollar business requires hundreds of millions of dollars of investment.

But these three college friends managed to raise just $2.7m and build a $5bn business.

This is their story.

Wade Foster (right) has always loved music.

During high school, Wade played saxophone in school and community jazz bands and went on to play jazz at the University of Missouri (Mizzou). But despite his love of music Wade decided to study industrial engineering in college. But it was a friend he made playing Jazz in college that would have the greatest impact on his life.

Wade graduated in 2008 but struggled to land a traditional manufacturing internship, mainly due to a little financial crisis that was unfolding at the time. Instead Wade decided to intern at Idea Works, an early-stage software company, and fell in love with startups.

After a few years at Idea Works, Wade went to work as an email marketing manager at Veterans United Home Loans where he had to manage over 1 million email accounts and painstakingly sync those email addresses with customer’s loan statuses.

Luckily for Wade a friend he made playing jazz at Mizzou also worked at Veterans United Home Loans…Bryan Helmig (middle). They were both highly ambitious and started freelancing together to improve their technical skills, in between pitching each other different business ideas. But it turns out their big business idea was staring them right in the face.

After spending eight months manually forcing emails, databases, and customer loans to sync, Wade and Bryan came up with the idea of making it easier to get web apps to “talk to each other”. The duo then recruited Mike Knoop, another friend from college, to work with them to start the business.

They entered a two day Startup Weekend event in Columbia, Missouri with their idea and managed to build the first prototype of their product in just 48 hours. They were encouraged by the feedback they got at the event, so they decided to move forward with the idea.

It was 2011 and they had just founded Zapier.

After the startup weekend Zapier’s co-founders decided to apply to Y Combinator. But despite the progress they had made it wasn’t enough for YC to be interested. But rather than throwing in the towel after the YC rejection they decided to get to work.

For the next six months, the three co-founders balanced their day jobs and stayed up late coding almost every night, often as late as 3am. And after a year their hard work had paid off.

By 2012 they had a working beta that a thousand people had paid to get access to, and they had another 10,000 people waiting on their launch list. The team had managed to build their list by scouring product support forums for users who wanted specific integrations between apps, then building them.

That year they were accepted into YC and in October 2012, Zapier received a $1.3 million seed round led by Bessemer Venture Partners to add to the $120k from YC. By the end of that year Zapier hit 100,000 users, remarkable growth for such a short period of time.

From there the team needed to keep the platform growing, so they devised a genius strategy to do so. They set up landing pages for every combination of app-to-app that you could possible connect to using Zapier which drove huge organic traffic to the site.

The strategy paid off and by 2014 Zapier had 500k users. That year the team raised another $1.3m, but that was the last capital the business would ever raise.

A year later they hit 1m users and by 2017 Zapier was turning over $14.4m in revenue.

From there growth stayed strong until COVID came along and supercharged their growth, with the business growing from $50m in revenue in 2019 to $100m in 2020.

In 2021 the business was valued at $5bn in a secondary transaction where Sequoia Capital and Steadfast Financial bought some of the founder’s shares in a secondary market transaction. Quite an incredible return for the founders and the early investors in the business too

All of which goes to prove that you don’t need to raise millions to build a huge business. If you build a great product and you’re smart around distribution and growth you don’t need to raise crazy amounts of money to grow.

Sometimes…less is more.

INFLUENCER IDEAS

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