A fintech founder’s guide to surviving the downturn

economic downturn fintech founder

When it comes to economic downturns, I’ve been around the block a few times. Railsr, formerly Railsbank, is my third successful startup and with each of my companies, I have faced a downturn including the bubble, the crash of 2008 and now a post-pandemic crisis.

So, from what’s often a painful experience, these are my top tips for founders and their leadership teams on how to survive the current downturn and period of economic uncertainty.

Cash burn

Number one, stay super focused on cash burn. Make sure you have 12 to 18 months of cash in the bank. Cash burn has to be the number one priority, as companies with a short runway will have very few options when the crunch comes.

Track with metrics like months to profitability, months of runway, business as usual cash burn, exception items cash burn and revenue required for 18 months runway.

Capital efficiency

The second is capital efficiency. Dive down into where the money is being spent and why. A penny should not be wasted on doubtful, superfluous, or ego projects. Direct the cash to the projects and activities which will deliver revenue and efficiency.

Track with capital efficiency metrics such as $ burn per new $ ARR; and $ARR per head.

Existing customers

Third, stay laser-focused on existing customers and relationships, as they’ll see you through this downturn. Your customers are central to your survival plans, so don’t be tempted to put them on the back-burner, hoping they’ll look after themselves.

Now is the time you need to stay very close to those that buy your services and products.  Track with metrics like transaction/support NPS and relationship NPS.


Fourth, its product, product and product. Make your product operationally excellent. And remove any vanity features, they gobble cash and won´t help the bottom line.

Track with metrics like feature usage, $ARR per feature, platform uptime and support tickets per feature.

Forget growth

As for growth, forget that for the moment. Investors used to love talking about growth, lots of blue sky and big ambitions. In this environment, that´s a luxury. Conversations are now focused on three things: efficiency, profitability and survivability; growth is not a multiplier of equity valuation in the markets at the moment.

Growth is currently massively depreciated as a value attribute, because they’d rather have the efficiency, profitability and survivability, and better cash burn. And you’re going to have to get better at how to compete if you haven’t done that already.

As for M&A activity, it’s going to increase. It’s almost an inevitable consequence of tough times that companies are put together to create a stronger single entity and the survivors look to cherry-pick the better bits of companies that are on the way out.

A bump in the road for fintech

As for how the fintech industry will shape up in 2022, I’m confident this is just a bump in the road. We have only just started, we are at the beginning of a journey which is literally reshaping the financial services industry from top to bottom.

This particular crisis will, I’m sure, and hope, be relatively short-term and a distraction from a roadmap which started with open banking only a handful of years ago.

Unfortunately, some will fail, as this crisis will have exposed their weaknesses. But I’m confident the majority will emerge stronger than ever.

And I’ll finish with a couple of last thoughts on how to cope in the current macro environment.

Firstly, being able to focus on the key issues at hand is going to be a founder’s key attribute at the moment. Don’t let yourself become distracted, either by your investors, your own team, or your own doubts. You have to be resolute and determined, and fall back on the principles of why you chose to be a founder.

Also, remember that the fintech industry is closely connected and made up of a network of people who know each other well and are prepared to help. Don’t be afraid to reach out and seek advice when it’s needed. I have worked in quite a few industries and this one has a strong sense of togetherness – use it to your advantage.


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