The Impact of Coronavirus on VC Funding
Key Takeaways
Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Fintech Opinions
The Impact of Coronavirus on Funding Innovation
Crowdfund Insider | | Apr 22, 2020
The Impact of Coronavirus on VC Funding
It’s no secret that times of economic instability are the ones that create the greatest opportunity for innovation and innovators. When everyone is content, the incumbents tend to win – while when there is injury, the innovators happily fill the open wound. As Baron Rothschild once said:
“the time to buy is when there’s blood in the streets.”
It’s certainly no secret that the instability and need that was created by the last cataclysmic economic event – the stock market crash of 2008 – gave birth to the most groundbreaking companies and business models that we call Unicorns today, and a whole new breed of entrepreneurs with radical ideas were born. That chaos is what brought us Slack, Instagram, Pinterest, Cloudera, Airbnb, Venmo, Square, Uber, Yelp, WhatsApp, Groupon, and tons more.
See: How Regulation Crowdfunding Stood up to the First Weeks of Coronavirus – Almost Opposite of the Public Markets
The question is, what happens this time?
We’re at the height of the revolution; innovation is blowing up, the next breed of Unicorns is being hatched – all the while the old guard (the VC) are retreating. They should be diving in as this is the most fertile ground that startup investors will likely ever see. So how come according to a survey released April 9 by PitchBook, VCs “are riding out the coronavirus outbreak with a wait-and-see stance, but a significant portion of them already are expecting to scale back their bets this year”.
Or as Jonny Price, the Director of Fundraising at Wefunder (a leading Equity Crowdfunding platform) recently put it:
“March 2020 has been our best month ever already…..You can make a case that when the stock market is crashing, investors will seek alternative investment opportunities. And when conventional sources of capital dry up (e.g. VC), more founders might turn to their fans and customers for capital… High level — if there was ever a historical moment for a democratic and people-powered financial system, this would seem to be it.”
But what lays behind this drying up of VC funding? Well, it’s in large part due to the fact that most of the world has been ordered to avoid all gatherings. And for VCs, these measures mean there’s no opportunity to travel to events and have face-to-face interactions, which is still the predominant means by which they connect with startups and with their own investors. Then there’s the new risk environment we’re all now living in, with VCs managing this with the aforementioned “wait-and-see” stance. Whatsmore, the innovation coming out of this crisis will be truly new, not just iterative – meaning that VCs have no experts on hand to evaluate it – and if they can’t evaluate it, they can’t invest in it.
This is where Equity Crowdfunding (EC) steps in. Its online mechanism of matching investors with startups continues uninterrupted during this crisis. And the access afforded to any would-be investor means capital is easier to come by via this investment channel, while VCs remain sat on the sidelines waiting for the crisis to abate.
See:
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Canadian securities regulators propose new nationally harmonized crowdfunding rules for comment by May 27
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NCFA Open Letter: Government should collaborate with Fintechs
If more startups raise funding through EC during and after the crisis, then the effects on the ecosystem will undoubtedly be positive. We’ll start to see far greater diversity among founders and leadership teams, seeing that 44% of current EC funding goes to female founders or mixed-gender teams. Given that the startup space is routinely criticized for its male-dominated leadership, this will be an extremely positive force for change. And on the investor side, small and medium-sized investors will also find a far greater supply of promising startups to take a bet on, which will further democratise access to investments formerly reserved for the elites.
Impact of Coronavirus on Funding Innovation
The VC vs EC war has been building over the last few years and nowhere is it more prevalent than in the world of early-stage financing. Many VC and Angel Groups explicitly state that they do not invest in companies that have raised money from the crowd. Even those that have a mission of promoting diversity in the startup world often oppose Equity Crowdfunding.
This sounds counterintuitive – how can organizations that pride themselves on promoting diversity be opposed to the top mechanism that unlocks investment for female and minority founders? There are many reasons for this opposition that we won’t get into here, but the bottom line is that any funding innovation is profoundly disruptive to the VC business model and to how the VCs themselves make a living.
What we have, in essence, is a battle between the VCs who use next to no technology to automate, market, evaluate or otherwise augment their offerings and make decisions based on personal connections and “gut feelings” – who’s fiduciary responsibility is to only represent the interests of millionaires (not startups). And, EC – a marketplace that bypasses the traditional “relationship building” (and its built-in biases and inefficiencies), fully use modern internet-based tools to reduce friction, reduce cost, attract, manage, and drive investors and startups online – whose sole responsibility is to connect all sort of startups with all sorts of regular folks and help them invest.
See: Facing disaster, corporate venture capital to undergo key stress test
While the coronavirus crisis by itself won’t spell the end for VC funding, it may find itself having to adapt when the dust settles. If they’re largely absent from the market throughout the crisis, there will be a whole cohort of startups that had to raise capital through alternative means. And if VCs want to invest in any of them, they’ll be forced to relax their approach around investing in startups that have raised capital through EC. What’s more, this could be the beginning of a larger culture shift within the startup ecosystem, with more and more entering EC funding channels and discovering first hand the benefits of this model.
Ultimately, the battle between VC and EC will continue raging. This is not unlike the battles that we’ve seen before in other industries over the last 20 years – between modern internet-based technology and the “old way of doing things.” It’s a battle that we’ve seen in Netflix vs. Blockbuster, Priceline vs. Travel Agents, Uber v Taxis, and on and on. While these battles are often long drawn out affairs, they have all ended decisively in the end.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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COVID-19: A Test Of The Stakeholder Approach
S&P Global Ratings | Bernard De Longevialle | April 21, 2020
Key Takeaways
- The coronavirus pandemic is highlighting why stakeholders matter, less than a year after moves by business and industry to shift from a focus on shareholders.
- Amid the pandemic, insufficient consideration paid to all stakeholders in decision-making is backfiring on a number of companies. In contrast, other companies are stepping up.
- While most of our rating actions since the beginning of the pandemic have been driven by the impact of the lockdown on revenue and cash flow, we expect that stakeholder management will become a factor in the future.
- Corporations that better embed stakeholder considerations in their decision-making and strategy will limit unintended consequences and be more resilient over time.
In August 2019, the U.S. Business Roundtable adopted a new standard for corporate responsibility. It changed its "Statement on the Purpose of a Corporation" to a broad commitment to all stakeholders--customers, employees, suppliers, communities, and shareholders--from shareholder primacy. In a similar vein, France in May 2019 enacted the PACTE law that obliges corporate management to take into consideration "social and environmental issues" alongside other objectives and encourages them to enshrine social objectives in their purpose ("raison d'être") in their bylaws.
See: In the Battle Against Coronavirus, Humanity Lacks Leadership | The World After Coronavirus
Such developments, while welcomed by many, were sometimes received with a degree of skepticism. Would companies really translate these principles into a fundamental change in the way they operate? Would these principles contribute to a more sustainable and prosperous future?
Less than a year later, the coronavirus pandemic is highlighting why stakeholders matter. Insufficient consideration paid to all stakeholders in decision-making is backfiring on a number of companies. In contrast, other businesses are taking actions that may ultimately strengthen employee engagement, brand, and reputation. While nearly all the rating actions we've taken during this time have been driven by the impact of the lockdown on revenue and cash flow, we believe that might change. We expect that differences in stakeholder management will ultimately play into a number of future rating actions, especially where companies differentiate themselves materially from their industry peers and this in turn has a bearing on creditworthiness that is observable over time. Corporations that better embed stakeholder considerations in their decision-making and strategy will likely limit unintended consequences and be more resilient over time.
Governments--and by extension taxpayers--have provided massive amounts of support to prevent economic collapse, which have raised expectations for corporations. At a time when our economies and our societies confront an unprecedented shock, there is a widespread expectation that companies must consider every stakeholder when responding to the challenge. By ignoring certain stakeholders, a company that chooses to act as if nothing has changed is likely to suffer the consequences—as it seems like everyone is watching.
- The attempt by the U.K. retailer, Sports Direct, to keep its shops open despite the country's lockdown, with the argument that it was an essential service, could have been considered a rational business decision under normal circumstances. However, after experiencing a backlash from staff and the media, the company had to back down.
- The appearance of unduly profiting from the pandemic or excessively bowing to shareholder interests could result in not only reputational damage but also extend to undermining a company's license to operate.
- It is yet uncertain how much the COVID-19 crisis will lead to lasting fundamental changes to the social contract between society and corporations, but it is likely that effective stakeholder management will become increasingly important for companies to successfully operate in a world of weakened public finances, social scars, and environmental degradation.
See: State of Financial Services Industry Report 2020 (Oliver Wyman): When Vision and Value Collide
Conflicting stakeholder priorities are sometimes difficult to manage
At a time when growing fragmentation threatens the stability and resilience of our societies, we think that corporations that are contributing to social cohesion might come out of this period stronger in the eyes of all stakeholders. Conversely, companies seen as having focused excessively on short-term shareholder interests at the expense of other stakeholders may undermine their licenses to operate. Many companies may need to slash costs and shed workers to stay in business, but even in these instances, stakeholder management will be important. The immediate positive or negative bottom-line effects of decisions they take today may unleash large, negative or positive second-round effects.
Besides helping to address the pandemic, stakeholder-focused corporations are creating new ties with stakeholders in civil society and therefore might avoid serious reputational and financial repercussions. One legacy of COVID-19, therefore, may be greater awareness of the benefits of the stakeholder approach.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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OpEd: IT’S TIME TO BUILD
Horowitz | Marc Andreessen | April 18, 2020
Every Western institution was unprepared for the coronavirus pandemic, despite many prior warnings. This monumental failure of institutional effectiveness will reverberate for the rest of the decade, but it’s not too early to ask why, and what we need to do about it.
Many of us would like to pin the cause on one political party or another, on one government or another. But the harsh reality is that it all failed — no Western country, or state, or city was prepared — and despite hard work and often extraordinary sacrifice by many people within these institutions. So the problem runs deeper than your favorite political opponent or your home nation.
Part of the problem is clearly foresight, a failure of imagination. But the other part of the problem is what we didn’t *do* in advance, and what we’re failing to do now. And that is a failure of action, and specifically our widespread inability to *build*.
See: What do the next ten years hold?
We see this today with the things we urgently need but don’t have. We don’t have enough coronavirus tests, or test materials — including, amazingly, cotton swabs and common reagents. We don’t have enough ventilators, negative pressure rooms, and ICU beds. And we don’t have enough surgical masks, eye shields, and medical gowns — as I write this, New York City has put out a desperate call for rain ponchos to be used as medical gowns. Rain ponchos! In 2020! In America!
We also don’t have therapies or a vaccine — despite, again, years of advance warning about bat-borne coronaviruses. Our scientists will hopefully invent therapies and a vaccine, but then we may not have the manufacturing factories required to scale their production. And even then, we’ll see if we can deploy therapies or a vaccine fast enough to matter — it took scientists 5 years to get regulatory testing approval for the new Ebola vaccine after that scourge’s 2014 outbreak, at the cost of many lives.
In the U.S., we don’t even have the ability to get federal bailout money to the people and businesses that need it. Tens of millions of laid off workers and their families, and many millions of small businesses, are in serious trouble *right now*, and we have no direct method to transfer them money without potentially disastrous delays. A government that collects money from all its citizens and businesses each year has never built a system to distribute money to us when it’s needed most.
Why do we not have these things? Medical equipment and financial conduits involve no rocket science whatsoever. At least therapies and vaccines are hard! Making masks and transferring money are not hard. We could have these things but we chose not to — specifically we chose not to have the mechanisms, the factories, the systems to make these things. We chose not to *build*.
You don’t just see this smug complacency, this satisfaction with the status quo and the unwillingness to build, in the pandemic, or in healthcare generally. You see it throughout Western life, and specifically throughout American life.
See: The Cash Crisis: Why America’s financial plumbing has seized up
You see it in housing and the physical footprint of our cities. We can’t build nearly enough housing in our cities with surging economic potential — which results in crazily skyrocketing housing prices in places like San Francisco, making it nearly impossible for regular people to move in and take the jobs of the future. We also can’t build the cities themselves anymore. When the producers of HBO’s “Westworld” wanted to portray the American city of the future, they didn’t film in Seattle or Los Angeles or Austin — they went to Singapore. We should have gleaming skyscrapers and spectacular living environments in all our best cities at levels way beyond what we have now; where are they?
You see it in education. We have top-end universities, yes, but with the capacity to teach only a microscopic percentage of the 4 million new 18 year olds in the U.S. each year, or the 120 million new 18 year olds in the world each year. Why not educate every 18 year old? Isn’t that the most important thing we can possibly do? Why not build a far larger number of universities, or scale the ones we have way up? The last major innovation in K-12 education was Montessori, which traces back to the 1960s; we’ve been doing education research that’s never reached practical deployment for 50 years since; why not build a lot more great K-12 schools using everything we now know? We know one-to-one tutoring can reliably increase education outcomes by two standard deviations (the Bloom two-sigma effect); we have the internet; why haven’t we built systems to match every young learner with an older tutor to dramatically improve student success?
You see it in manufacturing. Contrary to conventional wisdom, American manufacturing output is higher than ever, but why has so much manufacturing been offshored to places with cheaper manual labor? We know how to build highly automated factories. We know the enormous number of higher paying jobs we would create to design and build and operate those factories. We know — and we’re experiencing right now! — the strategic problem of relying on offshore manufacturing of key goods. Why aren’t we building Elon Musk’s “alien dreadnoughts” — giant, gleaming, state of the art factories producing every conceivable kind of product, at the highest possible quality and lowest possible cost — all throughout our country?
See: The future of Asia: Asian flows and networks are defining the next phase of globalization
Is the problem money? That seems hard to believe when we have the money to wage endless wars in the Middle East and repeatedly bail out incumbent banks, airlines, and carmakers. The federal government just passed a $2 trillion coronavirus rescue package in two weeks! Is the problem capitalism? I’m with Nicholas Stern when he says that capitalism is how we take care of people we don’t know — all of these fields are highly lucrative already and should be prime stomping grounds for capitalist investment, good both for the investor and the customers who are served. Is the problem technical competence? Clearly not, or we wouldn’t have the homes and skyscrapers, schools and hospitals, cars and trains, computers and smartphones, that we already have.
The problem is desire. We need to *want* these things.
The problem is inertia. We need to want these things more than we want to prevent these things.
The problem is regulatory capture. We need to want new companies to build these things, even if incumbents don’t like it, even if only to force the incumbents to build these things. And the problem is will. We need to build these things.
And we need to separate the imperative to build these things from ideology and politics. Both sides need to contribute to building.
The right starts out in a more natural, albeit compromised, place. The right is generally pro production, but is too often corrupted by forces that hold back market-based competition and the building of things. The right must fight hard against crony capitalism, regulatory capture, ossified oligopolies, risk-inducing offshoring, and investor-friendly buybacks in lieu of customer-friendly (and, over a longer period of time, even more investor-friendly) innovation.
It’s time for full-throated, unapologetic, uncompromised political support from the right for aggressive investment in new products, in new industries, in new factories, in new science, in big leaps forward.
The left starts out with a stronger bias toward the public sector in many of these areas. To which I say, prove the superior model! Demonstrate that the public sector can build better hospitals, better schools, better transportation, better cities, better housing. Stop trying to protect the old, the entrenched, the irrelevant; commit the public sector fully to the future. Milton Friedman once said the great public sector mistake is to judge policies and programs by their intentions rather than their results. Instead of taking that as an insult, take it as a challenge — build new things and show the results!
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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What do the next ten years hold?
Expoential View | Azeem Azhar | Jan 2020
I’m Azeem Azhar. I’m exploring how our societies and political economy will change under the force of rapidly accelerating technologies and other trends. I convene Exponential View to help us explore these topics.
Making predictions is complicated once we understand that the system we are trying to predict is a complex one, of interwoven forces that affect each other, each layering one atop the next. And that we don’t have clarity of when certain technical breakthroughs will occur or how political forces will shape the implementation of technologies (or vice versa).
Then presenting predictions as a list, a set of steps, in this case one to ten, is necessarily a shallow representation of this dynamic system built up of feedback loops of uncertain gait.
And then the prediction-maker is faced with the next challenge. At what level of abstraction should one make predictions? At the atomic level of technological progress (that chips will get faster, the cost of genome sequencing will decline), or at a highly macro level that describes population aggregates. I think the mezzanine layer that sits between the micro- and macro- is most relevant for understanding how our lives will change. This is where things get complicated and where our social institutions (like cities, firms, industries, communities) exist: where, in short, we spend most of our time.
Today, in the shadow of the climate threat, there is no guarantee of a naïve direction of aggregate progress, the sort of simple analysis which merely tracks longer lifespans, larger populations, wealthier societies. Wealth and health are undisputable markers. In the last century we did pretty well on that basis; we increased global GDP per capita on a purchasing-power-parity basis 5.7 times while increasing human population 4.1 times.
A climate catastrophe could unpick that simple teleology and reverse it sharply.
See: Can Fintech Make the World More Inclusive?
And, of course, values and beliefs change. The wealthiest societies in the world now have fewer children, absolute population levels are no longer a marker of bounty and power. The richest nations have lower birth rates, many with declining populations.
One of the largest collective fictions we’ve engaged in, the nature and operation of the economy itself, is ripe to be unpicked. It will be clarified by new methods from science and social science that better help us understand the processes that underpin economic behaviour and outcomes. This rethinking of economics will happen, given urgency by our collective experience at the sharp end of neoliberal, financialised economic thinking.
Many of these dynamics will result in the transfer of power from one group to another, some equitably, some less so. I can’t gauge accurately how willingly those transfers of power will occur.
We do have some clear choices, forks in the road, up ahead.
My suggestions for the shape of the next decade are based on what I consider a roughly optimistic reading of those choices. I’d welcome your comments, particularly from members, below.
- Climate change will be the dominant narrative. We will achieve global peak emissions this decade, as Michael Liebreich argues. I believe we can go further than. Renewables are cheaper than most forms of new fossil fuels and are getting progressively so, even when you add the costs of storage. Founders I meet are bringing the same entrepreneurial skill set that brought us Facebook, Google and Amazon to the climate change problem, including those hard-to-decarbonise sectors (like steel or chemicals). Governments, like the EU and the UK, have announced net zero targets to be enshrined in law. And the financial markets are under pressure to better price in carbon risks, which will increase the financing costs of climate-deleterious investments relative to clean ones. What we can’t be certain of is how rapidly our climate is changing (something we discuss in this briefing call with one of the lead authors of the IPCC 1.5 degrees report, Professor Myles Allen). The speed of this change will determine how we shape our investments into urgent mitigations and disaster relief against sustained investing in shifting our energy mix. We’ll probably need to do both. Addressing climate change will require a concerted effort of World War II scale, but a genuinely global one. During 2019, I had dozens of conversations in boardrooms, with public market investors, entrepreneurs and venture capitalists which lasered in on the imperative to achieve net zero. So perhaps we have a chance to launch a modern-day Manhattan Project to tackle climate breakdown.
- Our geopolitics will continue to fragment and this will result in more conflict. This is not merely a story about China’s growing economic power and global influence, exporting its political capitalism and authoritarian capabilities through its technologies and across the One Belt, One Road initiative. Global geopolitics will need to factor a broader rise of Asia, India becoming the world’s 3rd largest economy by 2030, closing in on a $10 trillion GDP. The world will comprise of three major blocs. The EU promotes a citizen-centric model, China a state-centred one. The US lacks an up-to-date cri de l’esprit: the American dream has got mired into the tar of social immobility & profit-at-all-costs companies, which puts off the young, the environmentally-minded, and even many financiers (see trend three.) An inconsistent and unilateral foreign policy chafes capitals around the globe. America’s status as the home of opportunity and world’s moral guardian is weaker than it was twenty years ago.
Outside of those major blocs, there will be significant players whose alignment will be somewhat unclear, including hypersonic Russia, brexit Britain, the major African and Pacific economies. Lurking, demanding a seat at the table, are the major technology platforms—how will they play their cards? Critically, we’ll need to ask where the forums for co-operation and mutual benefit will reside. Much of the benefit of the Internet derived from its widely available standards and global interoperability, as it starts to fragment into four, or more, Internets, will we lose those benefits associated with openness and the democratisation of technology? - In what we have generally thought of as the West, we’ll rethink the shape and purpose of our economies. We’ll ask hard questions about ‘rentier capitalism’, which is the end-state of the Fordist mass production model, the Friedman doctrine coupled with corporate capture, particularly of antitrust. Yes, neoliberalism will be put to bed. We may go as far as rethinking the purpose of our economies to sustainably deliver on the needs of its population, as some have suggested. We might break the simple linear division society encouraged by neoliberalism: markets which work and states which do the rest, each measured solely by their efficiency. Rather, we’ll recognise the value that responsive states provide in creating a secure, kind, purposive substrate in which we can live our lives. Many states will rethink the ‘social contract’ for a new world of work. They will also realise they need to take a more active role in directing investments in technology and shaping our societies. This will take the form of DARPA-like basic research, what economist Marianna Mazzucato calls the mission-driven state. Smart nations will figure out how to do this while facilitating basic science and accelerating the entrepreneurial urge.
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See:
Three Big Things: The Most Important Forces Shaping the World
Davos 2020: How to Survive the 21st Century by Yuval Noah Harari
The future of Asia: Asian flows and networks are defining the next phase of globalization
What to expect from social fundraising world in 2020
The research frontier: where next for AI and collective intelligence?
MOF: Consumer-directed finance: the future of financial services
Not cashless, but less cash: Economic justice and the future of UK payments
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Microsoft And Plaid Should Target Small Businesses (Not Consumers) With Money In Excel
Forbes | | April 6, 2020
Microsoft and data aggregator Plaid announced a partnership to offer a service they’re calling Money in Excel. According to Plaid:
“Money in Excel essentially turns the spreadsheet into a fintech app. It allows users to securely connect their financial accounts, import the data within them, sync balances and transactions over time, and, ultimately, gain greater insights into their financial health.”
See: With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech World
Here’s how it’ll work: Plaid will provide a permissioned connection to financial accounts from within Excel. After linking their account(s), users will have access to their balance and transaction history. The tool will provide charts and graphs analyzing users’ spending in a “Monthly Snapshot” tab.
According to Microsoft, the tool will also feature proactive alerts about price changes for recurring payments, bank fees, and overdraft warnings.
Although there was no mention of fees by either Microsoft or Plaid, American Banker reported that Money in Excel will will cost $7 a month for individuals and $10 a month for families.
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The Good News: Competition in the PFM Space is Weak (For Now)
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The Bad News: Few People Use PFM Tools
Microsoft and Plaid Should Focus on the Small Business Market
There’s a better market for Microsoft and Plaid to go after with Money in Excel: Small businesses.
That sentiment is shared by Bryan Clagett, Director, Strategic Initiatives at StrategyCorps, who knows a thing or two about this: He’s a former banker, was the Chief Marketing Officer of PFM provider Geezeo, and is a small business owner.
According to Clagett, “An Excel ‘add-in’ makes more sense for small businesses than for consumers. Consumers don’t care about tracking their spending behaviors—small businesses do. In addition, small businesses are already closely tied into the Microsoft ecosystem.”
A survey of small businesses from Cornerstone Advisors confirms this. Roughly three in ten small businesses use spreadsheets to do their accounting, about a quarter use them for invoicing and bill payment, and a little more than a fifth rely on spreadsheets to do payment acceptance.
See: The mindsets and practices of excellent CEOs
And that doesn’t include the number that throw data into spreadsheets to analyze their cash flow and spending trends. A study from Aite Group estimated that about 70% of small businesses are more dependent on spreadsheets than they need to be.
Microsoft and Plaid Missed a Big Opportunity
By not focusing on the small business market, Microsoft and Plaid missed an opportunity to jump start their new service.
According to Derik Sutton, VP of Marketing for Autobooks, a fintech that integrates small business financial management tools into digital banking channels:
“Small businesses owners spend too much time cobbling together data from multiple platforms, or offline record keeping, in order to apply for a loan from a bank. We are seeing this play out with the recent PPP and SBA programs.”
Sutton adds, “Microsoft and Plaid would have been inundated with Money in Excel customers had they recognized the small business need. If they had templates for historical and projected cash flows, income statements, and balance sheets, every bank in the country would be telling small businesses to sign up for the service and add their accounts before applying for loans.”
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CCI tells feds emergency wage subsidy must be expanded to support Canadian tech
Betakit | | April 2, 2020
The Council of Canadian Innovators (CCI) and its members are calling on the federal government to make adjustments to the 75 percent emergency wage subsidy, arguing that it does little to support Canada’s tech sector.
The CCI is recommending that the government expand the eligibility criteria for the subsidy, which currently requires businesses to have seen a 30 percent year-over-year decline in gross revenue directly related to COVID-19.
In a copy of the CCI’s latest submission to the federal government, obtained by BetaKit, the lobby group states, “this measurement is only appropriate for a small number of static, traditional businesses, and is not appropriate for high growth firms in Canada’s technology sector, or SMEs that experience monthly recurring revenue.”
“The intention of the wage subsidy program is to save Canadian businesses from making drastic job cuts or going bankrupt so that we can reignite the Canadian economy,” CCI vice-chairman and OMERS founder John Ruffolo said in a statement to BetaKit. “The program as currently outlined seems aimed to make it difficult to apply for, to receive funds, and to attest to the criteria in a timely manner.”
See: How Governments Should Use Crowdfunding to Battle the Economic Impact of #Socialdistancing
Similar sentiments have been shared by the Canadian innovation and tech sector, which was quick to respond to Finance Minister Bill Morneau’s Wednesday announcement outlining the details of the program. CEOs and venture capitalists alike took to social media arguing that the subsidy does not support startups.
Matt Roberts, partner at ScaleUp Ventures, told BetaKit that the revenue clause “might be a killer for the tech ecosystem.” Alistair Croll, founding partner of Montreal’s Startupfest, shared a similar sentiment on Twitter, noting that the revenue criteria “basically eliminates huge swathes of the startup sector (where revenue growth is the whole point) from support.”
“Absolutely needs to be fixed,” Croll added.
“We appreciate this is highly complicated,” Ruffolo told BetaKit. “But we need a second kick at the can in designing this program for success.”
In a copy of the CCI’s latest submission to the federal government, obtained by BetaKit, the lobby group states, “this measurement is only appropriate for a small number of static, traditional businesses, and is not appropriate for high growth firms in Canada’s technology sector, or SMEs that experience monthly recurring revenue.”
“The intention of the wage subsidy program is to save Canadian businesses from making drastic job cuts or going bankrupt so that we can reignite the Canadian economy,” CCI vice-chairman and OMERS founder John Ruffolo said in a statement to BetaKit. “The program as currently outlined seems aimed to make it difficult to apply for, to receive funds, and to attest to the criteria in a timely manner.”
Similar sentiments have been shared by the Canadian innovation and tech sector, which was quick to respond to Finance Minister Bill Morneau’s Wednesday announcement outlining the details of the program. CEOs and venture capitalists alike took to social media arguing that the subsidy does not support startups.
See: 4 Important strategies to help your business recover from coronavirus
Matt Roberts, partner at ScaleUp Ventures, told BetaKit that the revenue clause “might be a killer for the tech ecosystem.” Alistair Croll, founding partner of Montreal’s Startupfest, shared a similar sentiment on Twitter, noting that the revenue criteria “basically eliminates huge swathes of the startup sector (where revenue growth is the whole point) from support.”
“Absolutely needs to be fixed,” Croll added.
“We appreciate this is highly complicated,” Ruffolo told BetaKit. “But we need a second kick at the can in designing this program for success.”
The CCI letter states that in order for the Canada Emergency Wage Subsidy (CEWS) program to have its intended impact, the eligibility needs to reflect the operating metrics and structures of Canada’s fastest-growing businesses.
The lobby group notes that it is not necessarily reasonable to expect small-and-medium-sized enterprises (SMEs) to have monthly income statements that report sales. In most cases, sales is not the right metric to determine a business’ growth or activity, said CCI.
“From the CEOs we’ve heard from, most SMEs do not generate monthly income statements; instead they track key quantifiable activities (such as bookings, net new subscribers, units shipped or billable hours) that vary from business to business and sector to sector.”
One founder and CEO who spoke to BetaKit on condition of anonymity echoed this statement, noting that the subsidy may be helpful for well-capitalized businesses where operations are more focused on revenue, but not useful for a majority of startups.
The CCI’s submission outlines four recommendations for expanding the criteria on an and/or basis:
- Billable hours/receivables;
- Units shipped;
- Gross Bookings and;
- Subscription Revenue.
The group also notes that measuring declines by billable hours will support services companies, non-point of sale companies, companies that have delayed billing processes, and deferred revenue companies. Using units shipped as a metric opens up the door to medical or wearable device companies, with CCI noting that a reduction in units shipped is also an indication of a decline in business activity.
See: How payments can adjust to the coronavirus pandemic—and help the world adapt
The lobby group adds that for some tech companies a decline in gross bookings is a significant indicator, while subscription revenue for software-as-a-service (SaaS) companies translates to revenues lost.
The current revenue criteria do not necessarily reflect the activity in tech businesses, CCI says in the submission. “Few innovative companies prepare monthly GAAP revenue financials; criteria must reflect the type of business. A demonstration in material drop in one of the aforementioned should be considered,” the group says.
The CCI has been coordinating calls with various federal ministers and providing the government offering numerous recommendations to help support the tech sector. This latest submission also asks the government to backdate the 75 percent wage subsidy program to February, noting that COVID-19 began to impact global supply chains much earlier than March 2020.
Currently, the program is retroactive until March 15, which emergency measures to help curb COVID-19 were initially put in place in Canada.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Coronavirus Is Widening the Corporate Digital Divide
Harvard Business Review | Marco Iansiti and Greg Richards | March 26, 2020
As workplaces mandate that employees work from home, universities shift fully to online teaching, restaurants transition to online ordering and delivery, and automakers shut down their plants, we’re seeing the most rapid organizational transformation in the history of the modern firm.
Yes, companies have dealt with financial crises like the 2008 Great Recession or the dot-com bust of the early 2000s. And many have endured wars and terrorist attacks, election surprises, and previous health crises. But never before have established and evolved economies faced this kind of shock. And nothing quite compares to the physical-digital divide Covid-19 is revealing and how it affects the nature of work.
In some ways, you can trace what’s happening today to a huge digital transformation that’s already well underway. Firms have been moving to an increasingly digital core based on software, data, and digital networks for years, requiring a fundamentally new operating architecture. From Ant Financial to Facebook, the new digital firm gains its competitive advantage in three ways: by producing more at a lower unit cost (scale), by achieving a greater production variety (scope), and by pushing for improvement and innovation (learning).
See:
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Designing a data transformation that delivers value right from the start
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Podcast hosted by Tristram Waye: Special guest, Richard Turrin, Author of Innovation Lab Excellence
This digital scale, scope, and learning paradigm is already difficult for even established organizations to adopt. The pandemic is only making this more challenging by adding an increasingly important fourth dimension to digital operating models: virtual work. Today, rather than digitizing the relationship between firm and customer alone, the virtual model digitizes the relationship between firm and employee. As a result, offices are less important; working from home is not only possible, but often even preferable.
This need to virtualize work due to Covid-19 is driving digital transformation and deepening differences across people and across firms at an incredible rate. In a period of days, almost any process that could be rapidly digitized has been virtualized — think of video conferencing enabling a case discussion and telemedicine enabling remote diagnosis and treatment. We are seeing the digitization of many ancient bastions of traditional business; the New York Stock Exchange just closed its trading floor and has moved to electronic trading.
But some businesses and processes still intrinsically require physical closeness — think of hotels, big-box stores, car dealerships, and grocery stores, and traditional retail. In addition, not all businesses with a digital operating core can be virtualized to the same extent. Despite having a largely software- and data-centric operating core, Uber and Lyft leverage huge communities performing traditional work to fulfill operating needs. Similarly, Amazon employs tens of thousands of manual workers working in warehouses and driving delivery trucks.
The stakes for digital transformation have increased dramatically. Now, digitizing the operating architecture of the firm is not simply a recipe for higher performance, but much more fundamental for worker employment and public health. This is creating a new digital divide that will deepen fractures in our society. The firms that cannot change overnight will be left way behind, exposing their employees to increasing risk of financial and physical distress.
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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