Step 1: Map your regulatory route
Work out which regulated activities your product involves — payments, e-money, lending, investments, advice, open banking — and whether you need your own authorisation or can operate under a partner's. Taking legal advice early is usually cheaper than rebuilding later. Investors will size the round around this timeline.
Step 2: Budget for compliance as a core cost
Fintechs need people and systems for anti-money laundering checks, fraud controls, complaints handling and reporting. Include these in the financial model with realistic salaries and software costs, and name who owns compliance in the team.
Step 3: Reduce partner risk
Many fintechs depend on a bank, e-money institution or card programme manager. Investors will ask what happens if that partner exits. Show contract terms, notice periods and a backup option where possible.
Step 4: Explain how your AI is governed
AI in credit decisions, fraud detection or advice raises questions about fairness, explainability and the FCA's Consumer Duty. Be ready to show how decisions are tested, monitored and explained to customers, and how humans can step in.
- Model testing for bias and performance drift.
- Clear explanations for decisions that affect customers.
- Human review for edge cases and complaints.
Step 5: Present economics per customer
Show how you earn — interchange, fees, interest margin, subscriptions — and the cost to acquire and serve a customer, including fraud losses and credit losses where relevant. Lending businesses should separate the equity they need to build the company from the debt facilities that fund loans.
Fintech regulatory routes compared
| Route | Speed to launch | Trade-off |
|---|---|---|
| Own FCA authorisation | Slowest | Full control, highest cost and capital |
| Agent or appointed representative | Faster | Dependent on principal firm |
| Partner or embedded model | Fastest | Partner risk and shared economics |
| Unregulated tooling for regulated firms | Fast | Must stay outside regulated activity |
Questions to prepare before you pitch
- Which regulated activities does your product involve, and what is your route?
- What happens if your banking or payments partner ends the relationship?
- Who is responsible for compliance, and how is it resourced?
- How are AI-driven decisions tested, explained and challenged?
- What are your fraud and credit loss assumptions?
How KJ Enterprises evaluates fintech businesses
KJ Enterprises considers fintech businesses with a clear regulatory route, sensible partner arrangements and AI that improves decisions or reduces cost without creating unmanaged risk. Our KJ Capital business applies AI to financial markets, so we look closely at governance.
If that describes your company, you can apply for investment. Related reading: the complete fintech funding guide and how to raise for an applied AI startup.
Frequently asked questions
Do investors expect FCA authorisation before they invest?
Not always. Many invest before authorisation, but they expect a credible plan, budget and timeline, and often stage funding around it.