An interview with the co-founders of VC agency Fiat Ventures and sister arm Fiat Growth
Of all of the enterprise capital funding invested in 2021, round one in each 5 {dollars} went to fintech. But this growth now appears behind us, as world fintech funding exercise returned to pre-2021 ranges.
Worse, fintech didn’t escape the current waves of tech layoffs, with high-profile corporations like Brex, Chime and Stripe making headlines for this disheartening motive over the previous couple of weeks.
And but, fintech startups are nonetheless getting based and funded this yr. Of the 223 corporations in Y Combinator’s summer time 2022 batch, 79 fell roughly into the fintech class.
Why are founders and traders nonetheless inserting bets in fintech, and the place? To discover out extra, we reached out to fintech-focused VC agency Fiat Ventures.
Fiat co-founders Alex Harris, Drew Glover, and Marcos Fernandez additionally run its sister arm, Fiat Growth, a progress consultancy working with fintech and insurtech purchasers. This allows them to remark not solely on sector traits from an investor perspective, but in addition to share sensible recommendation.
One of their key suggestions is for fintech startups to lean into buyer acquisition channels whose value is much less variable or seasonal than others, however our trade coated a wider vary of matters, from monetary inclusion to offline channels and extra. Read on:
Editor’s observe: This interview has been edited for size and readability. Many of the linked corporations are portfolio corporations of Fiat Ventures or purchasers of Fiat Growth.
TC: What makes you say that “fintech acquisition funnels are too complicated”?
Alex Harris: Fintech merchandise by nature have sophisticated acquisition funnels and enrollment flows. Some issues are unavoidable in a extremely regulated surroundings, however superfluous issues can come up when rigorous testing just isn’t utilized and funnels embrace pointless bloat.
Even the smallest element can generate friction. For instance, within the know-your-customer (KYC) course of, many fintechs will ask a buyer for his or her total Social Security Number. In most circumstances, for non-credit merchandise, solely the final 4 digits of the SSN are wanted for identification functions. While solely a five-digit distinction, this may have a significant affect on conversion charges that may save massive sums of cash at scale.
Data is actually king, however there’s a time and place for knowledge assortment and personalization. Too usually, a well-intentioned knowledge crew will ask personalization and demographics questions instantly in an enrollment course of. However, these questions can most frequently are available a post-enrollment survey or periodically all through the lifecycle of a buyer. Even post-enrollment, these questions must be thought out. We commonly see knowledge collected for the sake of accumulating it, with out actionable insights derived from them.