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.


Based on FintechMeetup Las Vegas Panel: How to Raise Capital in a Challenging Environment

Dan Rogers, CEO

I had the honor of moderating a panel in Las Vegas last week on this topic with world-class investors.  It was great to spend time with the pros who shared many of the insights that I’ve incorporated into this post.

Fundraising is hard in normal times.  Founders need exceptional plans, teams, and progress at every stage to compete with thousands of companies.  In today’s challenging environment, it’s even harder.  Valuations are down, investors are protecting their existing assets, and the exuberance of 2021 and 2022 has subsided.  Founders need to be deliberate in their preparations – because exceptional fundraising execution is just as important as your idea, your brilliant code, and your capable finance team.  Here’s the secret sauce.

LEVERAGE YOUR EXISTING BOARD AND NETWORK.  I can’t say this enough.  It’s their job and role to make connections and help you fundraise.  It’s good for them to protect their investment in your business, and also show their colleagues how smart they were to invest in your business last year.  Your Board will send you to like-minded investors, so you’re saving time on diligence.  Introductions from investors derisk you and your company in the eyes of the receiving investor and give you instant credibility above the crowd.  If you’re a seed-stage company and have no Board, use your network and financial advisors: they can achieve the same effect.  Relying on your Board and network will accelerate the process, save you time, and have compounding benefits.  

REFRESH YOUR DATA ROOM CONSTANTLY.  Every week you should be refreshing your Docsend account with slides, a model, incorporation documents, a cap table, pipeline reports, and sales materials.  The average VC looks at 2,000 deals a year.  They have no time to wait for founders to update materials in the data room.  Companies need to share their best selves in real time. When you leave the Zoom meeting, send the link to your data room so they can look at the materials that night.  Keep the momentum.  If it takes you two weeks to update your model and cap table, you’re not going to get another meeting.  Be ready to move as fast as your investors.

POSITION YOUR BUSINESS TO SUCCEED IN THIS EXERCISE.  If you have no momentum, a skinny pipeline, and two months of runway, investors will conclude that you don’t know how to run your own business.  From your own perspective, you bring no leverage to the term sheet conversation.   It’s a losing proposition.  Make sure you have at least 6 months of runway and can stretch to 9 months if needed.  Build a pipeline of clients: a lot of SMBs or some well recognized whales in your target vertical.  Unless you’ve done this five times and have the magic touch, you should run a smart, sound business based on the fundamentals.  90% of start-ups fail because they run out of money, and this simple idea will help you outlast the competition and be confident in the asset you’re selling to investors.

In the current environment, you need extra time, extra friends, and extra luck.  You can manage this challenging space if you follow the steps above.  Beneath each of these steps is a project plan of To Dos, so they should all be taken seriously.  If executed effectively, you will fundraise faster than your peers, build on your existing relationships, and get back to the business of building faster.