In part 1 of this post, I talked about pivoting, using my own fintech startup as an example.
Setting out to boil the ocean of small business lending, we’d built a working capital platform that combined a borrower/lender marketplace; invoicing; and basic collections CRM. Market timing, borrower behaviour, public policy all shaped the months that followed and we had to react and adapt. With a multi-pronged product, we had to choose what to concentrate on: develop our tools (or ‘little sheds’ as I called them earlier) separately or as part of the current product.
Initially, we decided to develop them as part of the current offering. Then, the reality of multiple assets comes into play: which one gets attention from me today? Having taken the decision to bootstrap, the prospect of taking months off to fundraise instead of focusing on customer development was not enticing.
We had to make a choice and real pivot was upon us – we examined the information at hand:
- insufficient behaviour improvement by the banks and commercial lenders (for whom our lending modules would make life easier, and hopefully unlock loans);
- the ‘banker-bashing’ alternative finance media attention;
- borrower inertia;
- poor cashflow information; and
- high cost of customer acquisition.
The lending module still had users, all with education and support needs. But, it made sense at the time to exit the marketplace and repurpose some of what we had built into a software product for the cloud accounting channel. I saw marketplace lending as less attractive (in hindsight, to me personally) than tackling the fundamental issue of managing cashflow. I’d been in the financing business in different markets and segments for years and was confident that further opportunities in lending would present themselves down the line. Even with a dramatic increase in supply of finance, there would still be a financial management (and information) gap.
It was more interesting to figure out how we could get better business cashflow information, and that meant building something that would be used weekly if not daily. The opportunity presented itself in the add-on eco-system in cloud accounting. Building something that extended the capabilities available to the business would give me the opportunity to learn and simplify a fundamental, core problem.
As I suggested in the first part of this post, personal lives intertwine with business. Within a few months of the move away from lending, our personal lives took centre stage and another variable entered the equation. The team had reached another turning point.
Obsessed with building a daily cashflow proposition, I discussed the options with Reshma of Seedcamp and my cofounder Cenk, both of whom felt it was time to close the chapter. A clean start would be better.
I had to decide.
More in part 3.