Why Startups Should Avoid Buying Off-the-Shelf Financial Service Licenses

In the financial industry, obtaining a service license is an essential step that not only enhances a company's legitimacy but also boosts trust among consumers and investors. However, for startups, purchasing an off-the-shelf financial service license is not always the best option. This article explores why startups should consider building their own licenses from scratch rather than buying pre-existing ones.

1. Differing Resource Allocations

Startups have unique needs and limitations in terms of resource allocation. Off-the-shelf licenses often come with high costs, including the purchase and maintenance fees, which can be a significant burden for resource-constrained startups. Moreover, the requirements of the license may not match the actual operational capabilities of the business, leading to a wastage of resources. In contrast, applying for a license from scratch, although tedious, can be staged according to the actual conditions and development phases of the business, more closely matching their resource allocation needs.

2. Different Operational Structures

Each startup has a specific operational structure, including its business model, technology platform, and management style. Off-the-shelf licenses may be based on a standardized business model and operational structure, which might not fully suit startups with specific needs. Building a license from the ground up allows a company to ensure all compliance requirements and regulatory frameworks are tailored to its particular operational structure, thereby optimizing operational efficiency and compliance.

3. Targeted Market Focus

Startups often have a clear market positioning and target customer base, whereas an off-the-shelf financial service license might be designed for a broader or different market. Constructing your own license allows the business to better focus on its core market and customer needs rather than trying to adapt to potentially irrelevant license requirements. This not only improves service specificity but also enhances market competitiveness.

4. Cost-Effectiveness

While the process of building a license from scratch may seem lengthy and complex, it can be more cost-effective in the long run than purchasing an off-the-shelf license. This is because the business can avoid paying high purchase fees and possible subsequent adjustment costs due to license mismatches. Moreover, by gradually building and adjusting their own license, startups can more effectively utilize limited funds, focusing on essential aspects of the business such as product development and market promotion.


For most startups, building a financial service license from scratch offers greater flexibility and cost-effectiveness, better aligning with their unique business needs and market positioning. Although this process requires significant time investment and compliance efforts, it ultimately enables businesses to better control their operational models and market strategies, thus securing an advantage in the competitive financial market. For startups, building a compliance system that evolves in sync with their business development is a long-term strategic investment worth making.

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