Every 18 months, the Accion Venture Lab team partners with our friends at Quona Capital to host a global forum of startup leaders and industry experts to discuss the future of fintech. Aside from the hard-hitting and productive sessions these forums typically entail, reconnecting with fellow compatriots in the effort to create a more inclusive and just world feels like a reunion among old friends.

We entered 2020 excited to get together in the summer. But when the COVID-19 pandemic struck, the Accion Venture Lab and Quona teams stayed abreast of global travel advisories and quickly determined that our plans would need to be adjusted — much to everyone’s disappointment. Yet despite the challenges of the pandemic, our portfolio companies still had an appetite for growth, learning, and connection.

One founder stated their interest in what a “return to normal” would look like: “I’d like to cover how portfolio companies are getting back to ’normal’ after the COVID-19 crisis. It would include discussions around new credit policies, collections, and new origination strategies.”

Another mentioned that they would appreciate insights on how to build and scale remote teams: “In an increasingly remote work environment, I would appreciate sessions that focus on the difference in managing in-person vs. remote. Also, some practical tools to support remote management.”

With these suggestions in mind, we organized and hosted four virtual sessions covering a variety of topics our portfolio leaders wanted to hear about, and we assembled a team of experts in multiple fields to share their perspectives and words of wisdom. Here are a few highlights:

Building and managing remote teams

Jason Warner, CTO of GitHub, and Aditya Narula, head of operations at Stripe, joined us to share their experiences across their years of building and leading remote-friendly teams of various disciplines, shapes, and sizes.

• Even for an organization with remote set-ups prior to the pandemic, this is not a normal remote time for a variety of reasons. Many leaders were accustomed to working more closely with their teams in person. They’ve had to adapt their approach to leading, building teams, and hiring in unprecedented ways.
• However, there are also some unique advantages to this current time. Remote working provides a few distinct advantages:
  • Greater access to talent — Since remote work doesn’t require employees to live near an office, employers have more flexibility in hiring. For Jason and Adi, whose companies are both headquartered in San Francisco, this enables them to find great talent without needing to convince prospective employees to uproot themselves from their current place of living and relocate.
  • Maximize productivity — If leveraged properly, remote work can lead to increased productivity. Teams can be more distributed across time zones, giving developer teams more available time to work on products, and enabling sales and customer support organizations to sync with their customers’ timezones.
• To work effectively, remote teams require:
  • Hiring well – Jason/Adi suggests taking a long-term view when hiring, and hiring for empathy: As Jason stated succinctly, “We look for people who seek to understand someone, not for someone who seeks to be understood.” Asking questions around someone’s situational awareness (e.g., understanding a previous customer’s needs and priorities outside of the business transaction) can help a hiring manager understand a candidate’s relationship-building skills.
  • Overcommunicating and establishing clear lines of responsibility — Remote teams require effective communication, especially from leadership, but teams should take care not to abuse communication channels. 
  • Showing vulnerability from leadership — The worst habits of leaders can be amplified in remote settings. Awareness + transparency goes a long way.
• Finally, Jason and Adi provided their perspective on how remote work differs for earlier-stage companies. They emphasized the need for flexibility: what a company needs tomorrow differs substantially from what they’ll need in a year. Just as it’s important to pivot product and customer needs in response to change, leaders must be prepared to do the same when it comes to building and scaling an efficient organization.

Deepening vs. broadening product offerings

Ken Lin, founder and CEO of Credit Karma, and Matt Harris, partner at Bain Capital Ventures, joined us to share some perspectives on how leaders should explore the next frontier of product offerings.

Financial services are now the cake, not the frosting — no longer a nice-to-have.

• There’s been a fundamental shift in fintech. With Fintech 1.0 came a wave of founders digitizing and streamlining traditional financial services, but not fundamentally changing them (ex: Chime, Robinhood, LendingClub, OnDeck, etc.). Founders executed on Fintech 1.0 by either competing with or enabling incumbents. Now, software companies are becoming financial services companies, offering a deep, data-rich product to their customers that enables them to leverage that connectivity to cross-sell financial services in a way that’s hugely value-added and disruptive to the incumbents. Financial services are now the cake, not the frosting — no longer a nice-to-have.

• The 2008 recession hit just one quarter after CreditKarma’s launch. This crisis profoundly shaped CreditKarma, and the coronavirus pandemic reminds Ken of that recession to some extent. Ken’s main focus during the recession was staying in the game: “If you run out of money, the game is over.” Ken shared his takeaways from weathering that crisis, including:
  • Run lean — Ken focused on running CreditKarma efficiently by keeping his team to five staff for about three years, and contracting out the rest. 
  • Focus on unit economics and the product — Unit economics are a key driver for getting through recessions, and Ken views his team’s focus on getting qualitative feedback from CreditKarma users as crucial.
  • Caution is key in fundraising — Despite being pressed for cash and struggling to fundraise, Ken and his team refused the only term sheet they had at the time because it had egregious terms. “One of the toughest decisions was saying no,” said Ken. After more than 100 “no’s” from investors, CreditKarma acquired funding from fintech investor QED with good terms that were “fundamentally transformative.” 
• And Ken and Matt shared some tips on approaching diversification:
  • Building trust takes time — Ken advised going deep in one vertical to build something that’s unique and defensible before moving into other verticals.
  • Focus on your north star — What is your purpose? Diversification should be a deliberate step towards this goal.
  • Diversification requires a deep, software-enabled connection to your customer — You need defensible, durable relationships to diversify. Companies that have harnessed profit pools of financial services to augment the need for software revenue are going to be the winners.
  • Recognize your recency bias — Remember that the large ubiquitous companies out there (Google, Amazon, etc.) started one thing and leveraged data to expand.

Leadership in challenging times

Jerry Colonna, founder and CEO of Reboot, led our company leaders in a session designed to create an environment of transparency. All of our CEOs have a shared experience of being a founder during a global pandemic, which allowed for a safe place to open up with each other and share common challenges and sacrifices. This session produced some valuable conversations and a few important highlights:

Real learning and strength emerge when leaders can let go of needing to be the strongest, most faultless person in the room

• The session started by asking CEOs about their biggest challenges and sacrifices.they’ve faced as leaders. The most common answers: work-life balance; team dynamics; delegating; health; financial stability.
• There’s a common belief system that leaders are expected to be strong and perfect, and vulnerability connotes weakness. But real learning and strength emerge when leaders can let go of needing to be the strongest, most faultless person in the room.
• A key tool for successful leaders is radical self-inquiry. It’s important to ask questions like: Who do I want to be as a leader? How am I complicit in creating the conditions I say I don’t want? How are my actions (and inactions) shaping my company?
• Jerry suggested that leaders do regular check-ins with their teams. A framework he uses is “red/yellow/green,” asking people to categorize their current state of mind based on those three levels. He knows that if he’s seeing a lot of red, or even yellow, within his team, there are underlying individual issues that need to be addressed before the team can work effectively.
• After breaking the participants up into small groups, we found similar themes that come out of every in-person CEO Forum: The shared experience of emerging markets fintech founders, especially this year during a pandemic, means that Quona and Venture Lab CEOs are consistently facing similar personal and professional challenges, opportunities, and decisions. Connecting with peers in this group brings tangible value to the portfolio.

Fundraising during a pandemic

The final session of the series featured two Quona portfolio company leaders, Sergio Furio, founder and CEO of Creditas, and Lizzie Chapman, co-founder and CEO of ZestMoney. They shared their perspectives on the current state of fundraising:

• Fundraising is a two-way street — Based on early interactions with investors, founders should categorize investors as high-touch, low-touch, and no-touch, and engage with them accordingly. “You can save yourselves a lot of time and heartache by applying common sense to fundraising,” says Lizzie.
• Approach fundraising in a structured way — Fundraising is time-consuming and arduous. After a long Series B fundraise, Lizzie advised participating companies to put together a proper fundraising process and timeline to ease the burden. Sergio noted that, as your company grows, you both have more progress and data to share with investors, and you will have identified how you can improve the fundraising process based on your previous experience. 
• Take advantage of due diligence learnings, and prepare differently for virtual due diligence — As investors continue to run virtual due diligence due to travel restrictions, founders should be authentic and prepared with higher quality slides. Many investors are also relying more on references as part of their diligence efforts. Sergio acknowledged that though due diligence can be stressful, the conversations he had with investors, particularly during the business diligence process, helped shape Creditas’ strategy. “Those questions from investors are the ones that make you grow faster and better,” says Sergio. Sergio and Lizzie added that one of the often overlooked keys to getting value out of these conversations is just listening and shutting down the urge to respond and defend your business. 
• There is an appropriate time for bringing in strategic investors, with caution  — They can come with great benefits, but hard to manage if you’re too early.

Finally, Amee Parbhoo from Accion Venture Lab shared some highlights from our recent experiences with remote due diligence. Some of the suggestions Accion Venture Lab provided included:

• Build a data room as soon as possible and lean on your team to help construct it — Often, fundraising is centralized around two or three key members of an early-stage company, but given the nature of more comprehensive due diligence efforts, having one team member take a large volume of investor calls can lead to burnout.
• Set aside dedicated time for fundraising — Amee recommended blocking 2-3 hours every few days to focus on investor calls and diligence efforts, as letting these activities “bleed” into other parts of the day can distract from company operations. Encourage others on the team to be available for impromptu calls and questions during this time block as well.
• Expect the process to take longer than in-person diligence — Accion Venture Lab’s typical diligence efforts would include a 1-2 day visit to the company to meet with founders, team members, and customers. Having these sessions remotely — and in the prescribed time blocks mentioned above — means the process may take a little longer than normal. Be kind to yourself in those moments, and take care of yourself and your team as the process moves forward!

You can read, Accion Venture Lab’s extensive look into effective remote due diligence processes, downloadable here.

After a year like no other, we hope that sharing these learnings from our industry and portfolio helps fintech leaders navigate this challenging time and be prepared for a dynamic year ahead.

A version of this blog is also posted on Quona Capital’s blog.