Starting a business, especially one that is primarily digital-focused, such as a fintech or e-commerce company, can be daunting. Fortunately, financial leaders of start-up companies can rely on many partners to help run a growing company, including financial institutions.
Biswarup Chatterjee, head of innovation and partnerships at New York City-based Citi Services, talks about how startups can get the most out of their financial partners.
What is the role of a banking partner in guiding startup financial management, especially for organizations operating with lean finance teams?
Because no two startups are at the same stage of growth, and each is growing and evolving differently, the role of banking partners in guiding these organizations differs slightly depending on the segment. For example, if you're working with an early-stage startup, the founders may have a good idea, but it may take months to build the engagement model to a bank-ready state. They may not have the resources or funding to tackle this, so banks could act as advisors or investors if they believe in the idea.
When we work with early-stage startups, we often provide the support they need to get to a stage where they can deliver a product that can be integrated into our business or other financial institutions.
For more mature companies, the most important role a banking partner plays is to help steer the bank's business structure. Every bank is structured differently, and without the organizational knowledge that banking partners bring, it is impossible for businesses to navigate this complexity and find the right people and teams.
Even if a company already works with three or four major agencies, each has its own processes. Our role at Citi is to act as a steward to help these companies make the nuances of their banking models. Because banks operate within complex but necessary regulatory requirements, onboarding new employees to a bank can often feel like a difficult and time-consuming process, but we understand that banks operate within complex but necessary regulatory requirements. We provide critical expertise to businesses, from corporate to mature.
What capabilities should startup finance leaders look for in their banking partners?
Finance leaders need to view their banking partners as strategic partners as they look for ways to improve their business. For example, we spend a lot of time working with her CFO at a startup to validate ideas and products and strengthen business plans. We often see ideas from startups that are innovative and ground-breaking, but not easily scalable. So we help CFOs and founders build scalability and strength into their models.
Another big-ticket item that banking partners can offer startups is customers, networks, and relationships, which create opportunities and growth routes with other potential strategic partners. We would like to point out that not all banks regularly sponsor innovation and invest in startups such as fintech. It is important to work with senior decision makers who evaluate the bank's performance and support and nurture startups every step of the way.
How have financial management priorities for startups changed over the past few months?
If you look at companies that were founded 20 years ago, they would have gone to their local community bank, started selling and collecting cash in their local area, and depositing their proceeds into that community bank. Businesses were very physical, brick-and-mortar operations tied to specific locations.
Many startups, especially fintech and e-commerce companies, are now starting their operations digitally and directly entering a global market where money is processed 24/7 and suppliers are paid 24/7 in multiple currencies. Masu. In this space, we have seen many fintech and e-commerce companies need our help to meet the complex financial demands of modern business models.
Another major shift in priorities that we have seen is the need for fintech companies to provide solutions for e-commerce businesses that handle large transaction volumes. For example, if you open a brick-and-mortar store, you process a certain number of transactions each day, but online it's even more unpredictable. The complexity of financial management is impacting companies much earlier in the lifecycle than it was 20 years ago, so a functioning CFO or treasurer needs to be in place much earlier.
You also need to understand that venture investing is cyclical. Investment appetite can dry up quickly even in favorable environments, so it is important for fintech companies to have an experienced treasury team in place to manage liquidity availability from the start. It is important.
What strategies should startups consider in today's macro environment?
When a startup introduces a new product or service, the most important strategic consideration is what the differentiator is. What is new about your product or service? How is it different from what already exists? What new delivery methods are available?
This thinking is often quite natural, and the evolution of products and services reflects trends in society, such as the growth of mobile and banking usage for the unbanked. Where we have seen our clients be most successful is where there is a natural demand for scale, like e-commerce companies experienced during the pandemic.
But the challenge companies face is that when they have a great idea, they must simultaneously create a product, create demand, and scale it to fit the market. What we always recommend is tackling one of these pillars at a time: product, demand and scale. Since most consumers are satisfied with only one variable at a time, it is better to introduce changes gradually so that at any time he can only change one variable.
