How to Survive as a Fintech Startup In a Recession

By Rachel Carpenter
July 29, 2022

For all of our fintech clients, innovators, and enthusiasts - things are getting a little rough out there right now. That’s why I put this blog together to give my take on how to survive as a fintech startup in a recession.

We’ve barely recovered from the thick of the COVID pandemic only to be faced with inflation, rising rates, tanking tech stocks, a potential recession, and a unique environment for private, tech-oriented startups.

Follow these five steps to prepare yourself, your team, and your company to survive and thrive through whatever comes next.

Humble yourself with a reality check  

First and foremost, as a leader, you need to come face to face with reality so that you can be an effective anchor point for your team, stakeholders and customers.

Here’s what you need to face:

Public tech company performance is often an indicator of what’s happening, or about to happen in the private tech company space. Investors know that your company faces the same challenges as the tech giants. Inflation, supply chain nightmares, geopolitical conflicts, war, commodity price squeeze, and talent issues are striking technology companies of all sizes. They know that this will create input cost and sustainability problems for startups like yours.

These challenges have raised the cost of capital drastically. And It’s having a compressing effect on valuations as well as fundraising flow. So, any money you planned to fundraise won’t come easy, and if it does, it’s going to be painful and expensive to acquire. Right now, investors are not going to grant you a robust valuation or an endless stream of cash.

As Sequoia pointed out in some of their guidance to portfolio companies: startups are no longer being rewarded for consuming large amounts of capital, high burn rates, and short runways to achieve “growth at all costs”. In this environment, startups will be rewarded for building strong, profitable, sustainable businesses with healthy underlying unit economics. Just like every other business on the planet.  

The TLDR of this reality check? Things are different now. And unless you are in your 50’s and on your second startup, you have probably never experienced an environment like this before. Let this all sink in, it’s the foundation for the rest of this guide to surviving as a fintech startup during a recession.

Don’t panic

After coming to terms with the “new” tech startup environment, the next most important thing for you as a leader is - don’t panic. Many of the downstream effects of the changing macroeconomic environment are uncertain. We don’t know exactly how much (and when) the economy will slow. Now would be the time to prepare, but there’s no need to panic. You’re a leader for a reason, and as long as you remain calm, plan, effectively communicate, and follow this guide, you’ll be fine.

Take a breath, if you don’t feel like it’s going to be ok, no one at your company will!

Assess and prepare your leadership team

Now that you’ve faced reality and achieved calmness, you’ve got to focus on your leadership team, you are going to need them.

First, assess your team. How adaptable are they? Are they comfortable with change? You’re about to be operating in a completely new way, and everything will change.

Can they handle it?  

Your job is to communicate reality, check to them and make sure they stay calm, so they can help you plan. Pull out your best motivation and inspirational skills and get your leaders ready to go. Remind them of your mission and focus on what is going right- ask them how they can use what your company does well to get to a stable financial position.  

Memorize your mantra

Now it’s time to set the theme for everyone and memorize your mantra.

The mantra is: Conserve cash, extend runway, build a real business.  

Say it with me - conserve cash, extend runway, build a real business.

Conserve cash and extend runway

Ok, let’s break the mantra into two parts so we can dive in. First, conserve cash and extend the runway.

When capital was flowing like crazy, companies that spent tons of capital did well. Now the spigot has been turned off, so those companies are tanking, and capital efficient companies will survive.

Unfortunately, this is simply a bad time for fundraising and M&A, so you’re going to have to be patient and put yourself in a position to not be capital dependent.

Figure out what this means for you:

  • Do you need to cut staff, marketing budget, or travel expenses?
  • Or, do you just need to hold off on heavy R&D for new products and major new hires?
  • Is now the time to take risks on new experiments or stick with what you know works?
  • Where can you be more conservative than you have been historically?

If this conversation, has you on the brink of a heart attack due to your current cash flow situation, you still have options for extending your runway.

Those in a precarious condition should consider debt, it’s not going to be a great deal and will probably be painfully expensive, but it’s sure better than going out of business. Don’t be afraid to do this if you need it.

Don’t worry, this doesn’t mean you can’t dream or shoot for the moon, that’s the heart of entrepreneurship and why you got here in the first place. Don’t lose the risk-taking drive, just channel it into creating magic from pressure. Get creative.

Build a real business

Super high growth startups boasting massive user counts consuming massive amounts of capital are no longer heralded or desirable, the tech boom unicorn dream days of massive valuations are coming to an end.

What is becoming popular? Profitability, real businesses, sustainable growth - generating cash. So, you’re going to have to start doing more with less. You’re going to have to start earning from your clients on a holistic basis rather than burning to grow user counts. Figure out your individual company’s path of least resistance to sustainable, healthy growth numbers. Also, make sure you set expectations for these growth numbers with your stakeholders.  

Make sure they understand the mantra and the reason behind it. You’re sacrificing steep growth for business health. For example, where can you trim the fat and clean up the bottom line? How can you bolster the top line, enhancing products, focusing on upsell or cross sell, or new products?

If you are a fintech in the capital markets space, there are plenty of options for you to save money on your data integrations. Our team at Intrinio would be happy to get you on a free trial and save you thousands on things like real time stock prices, options pricing, fundamentals, ESG, estimates, ETF data and more.

Cutting costs doesn’t necessarily mean eliminating new projects, it might mean finding cheaper solutions that allow you to keep growing your company.

Get disciplined and plan

Now that your leadership team and stakeholders have faced reality and are on board with the mantra, it’s time to get disciplined and plan.

Work with your leadership team, especially the finance experts, to prepare plans A, B, C & D - what will you cut, when, and in what order, depending on how tough the environment gets? Nobody likes to think about this, but it’s your responsibility to plan for it, then put it aside and give all of your energy to enabling the best possible scenario.


Lastly, and most importantly, you need to communicate this strategy to your entire team and all your stakeholders. Be confident, positive, and strong.  

Ok, we now know the steps for surviving as a fintech during a recessionary environment:

#1: Humble Yourself With a Reality Check

#2: Don’t Panic

#3: Assess & Prepare Your Leadership Team

#4: Memorize Your Mantra

#5: Get Disciplined & Plan

#6: Communicate!

This is going to be different, and new, but I’d challenge you to also look at it as a positive. Opportunity abounds for the tough when things get tough. Your competitors are floundering and may have a worse cash position than you. Recruiting is about to get much easier. The pressure will make your team creative.

Follow the steps in this blog, and your fintech startup will emerge even stronger on the other end of this.

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