COVID-19 is having a terrible impact on society and is reframing our way of life on a daily basis. Never before have we seen such a drastic and immediate impact on business across multiple sectors. FINCH Capital is an investor with a track record of investments in European and South-East Asian fintech businesses, AI and IoT companies including Digital Insurance Group, Goodlord, Grab, Twisto, Brickblock, Trussle and Hiber. Here we share insight from their recent report.
The uncertainty of the current situation puts pressure on fundraising, cash management, marketing and staff management. In the short-term, we may see many hurdles that startups need to live with to survive and
limited opportunities. However, post-crisis, the lasting impact on society may create conditions which favour increased momentum, growth, and the unleashing of a virtuous cycle for fintech companies.
Despite the government’s commitment to injecting trillions of dollars to help enterprises, SME’s and employees, the need for cash management has never been more important. Overall, startups in the earlier stages of their life cycle are particularly vulnerable if growth stagnates or even drops for a period of three to six months.
Unfortunately, this crisis will accelerate fundamental shifts in how we work and interact in both private and business contexts. Actually, it may result in rethinking how investors and potential buyers perceive value in this new normal, with some verticals expected to have a rude awakening, while others are embracing opportunities created by this difficult time.
Here are FINCH Capital key predictions on how the fintech landscape is and will be impacted.
At this stage, the economy will be in a crisis mode until the third quarter of this year, followed by a 12-18 month period of recovery. Here are some essential observations:
This is the advice for startup founders to ride through these major economic difficulties.