Financial Planning: How the Big Picture + the Details Can Help Navigate an Everchanging Industry

Maulik Nagri, Senior Manager, FP&A 

In the fast-paced and competitive landscape of fintech, the notion of focusing solely on cash runway months can lead down a perilous road to failure: by looking at the gas gauge and not the road. Runway is undoubtedly important, but it should not be the sole determinant of your fintech business’s success, and it should not represent your plan. By neglecting comprehensive financial planning and failing to chart a clear course for the future, you run the risk of hitting the ultimate dead end in this challenging funding environment.

THE LANDSCAPE. The fintech industry is facing rapid evolution, technological progress, wide adoption, and regulatory changes. To be successful, a company needs a roadmap like a financial plan that amplifies strategic foresight and adaptability, assists in avoiding business failures, and charts its growth. Many statistics from the Small Business Administration (SBA) highlight the significance of financial planning in the highly competitive fintech landscape. SBA Data reveals that approximately 20% of small businesses fail within their first year, and around 50% fail within their fifth year. According to another survey, a staggering 83% of fintech CEOs who had a financial plan strongly recommended it to their peers. A solid financial plan is a suggested best practice but it’s also an instrument to increase the odds of business success. Investors in fintech companies are looking for more than just survival; they seek innovative solutions, scalability, and clear paths to profitability. Generally, companies with robust plans not only maintain healthy cash reserves but also attract greater funding opportunities and foster investor confidence.

TOOLS TO NAVIGATE THE LANDSCAPE. Would you travel in the Amazon jungle without a map? Would you drive through the mountains without a full tank of gas? Hopefully not. A well-laid out financial plan is a map for your business, and its runway is the gas. This comprehensive plan generally includes key elements such as a go-to-market strategy focusing on customer acquisition and profitable revenue growth, a deep understanding of unit economics, an accurate calculation of the cash required to reach crucial milestones, and a thorough analysis of sources and uses of funds. These components will not only provide a solid foundation for growth but also enable you to make informed decisions amidst the everchanging fintech landscape. What if you get lost in the jungle or the mountains – would you use your map or GPS for course correction? Absolutely. Like a map, a thoughtful plan lets you see the full picture and pivot to help ensure the achievement of planned outcomes.

THE BEAUTY OF THE LANDSCAPE. Contrary to common misconceptions, building a financial plan for your fintech company is not an expensive endeavor; rather, it is an investment in your business’s future. The true costs lay in the consequences of starting over from scratch when faced with unforeseen challenges. By dedicating time and effort to create a comprehensive financial plan, you equip your fintech venture with the tools necessary to navigate uncertainties, secure funding, and position yourself for sustainable growth.

Embrace the power of financial planning, and steer your fintech venture toward a bright horizon, and a future of innovation and prosperity. In the end, journeys are most pleasant when looking at the view rather than staring at the gas gauge.

Dan Rogers, CEO of FintechForce


Recommendations that are flexible, scalable, and stage agnostic.

Dan Rogers, CEO

I’m just back from New York FinTech Week, which was full of great energy, heady start-up speak, and lots of technology that will change the world and make financial services affordable for billions of people. Pretty amazing time. At the same time, it seems like the SVB collapse happened a year ago, and we’ve all moved on. But I haven’t. I’m still collecting ideas and learning from it, and want to share with you my synthesis and POV. Wherever your startup is, these recommendations are flexible, scalable, and stage agnostic.

WRITE AN INVESTMENT POLICY. It doesn’t have to be long or even mention the yield curve. Have your board approve it and execute it. Long before we had zero interest rates, this was common practice. I still have the investment policy from Bling Nation back in the day. A policy aligns the board, CEO, and financial leadership: it also shares accountability and leverages the smarts of everyone in the boardroom. Keep in mind, the current crop of startup finance leaders have never operated in a yield-bearing market, which means they’re not the experts in investment strategies. Investors are more likely to have smart treasury management strategies. Look to them, write the policy, get it approved, and implement it.

USE TWO BANKS. It’s so easy, why wouldn’t you? Put as much non-operating cash in the back-up bank as you can stomach. Ideally, 50%. Your current bank will give you lots of reasons to avoid this approach, but you should expect that from them. They make $$$ from your deposits. Keep in mind, your venture debt lender may have built your pricing on holding 100% of your deposits, but their own Chief Credit Officer would tell you to diversify and manage your risk. If you have venture debt, open another bank account, get a DACA (Deposit Account Control Agreement) and remember that you’re a customer – not a captive – of your bank. This is just smart business in 2023.

BUY SECURITIES. Hold at least 1.5x your last payroll in securities. U.S. Treasuries are a standard and safe option, but liquidating them in a crisis could prove challenging for a bank overwhelmed with web traffic. Holding a stable cryptocurrency in your company’s wallet is an alternative that can be moved quickly and spent globally if needed. That’s right: crypto. In a DeFi-enabled world, it will move a lot faster than the U.S. banking system in a crisis. If there is a real banking problem, your bank isn’t going to make it easy to remove your funds and make payroll. We all saw cases of founders funding payroll from their personal coffers and finance teams praying their payroll funds would arrive. If you’re in Treasuries or stable crypto, you’re one quick trade away from a stress-free payroll payment. P.S.: This is a great crypto use case.

Don’t wait for another bank failure to implement these safeguards. You’re working way too hard to experience that crisis again. Plus by implementing this approach, you’ll show your investors that you’re safeguarding their funds and their investment in your startup. Let’s do this!