Becoming Crypto Winter Proof
Introduction:
As Forbes reports, the Bitcoin ETF approval window is fast approaching, and the market, by most accounts, has significantly defrosted from the crypto winter of 2022 and Q1 of 2023. But the cryptocurrency market is no stranger to volatility, and if you’re a crypto platform looking to grow, you need to know how to be crypto winter-proof!
In Becoming Crypto Winter Proof, our Finance Director, Dave McKenzie, brought together Raphael Fettaya, Co-Founder & CEO of Nilos, and Mary-Anne Moffatt, CFO of Ramp Network, to unpack how crypto platforms can winter-proof themselves. Here are some highlights.
Financial Vigilance and Cash Flow Management:
Mary-Anne emphasizes the significance of understanding and managing finances, especially during tough times.” Understanding what your spending is… and why you are spending it, understanding your profitability, your unit economics… is critical.” This reflects her belief in the power of knowledge in financial management.
Raphael, discussing the importance of keeping a close eye on financial metrics, shares, “how much we burn every month… and the forecast of the revenue… is an exercise that we work on a lot.” In other words, one must always maintain a clear view of the company’s financial runway.
Raphael also emphasizes how a vigilant approach can benefit businesses that the startup model currently burdens. “I feel like we need [an] innovative way of financing companies … I am myself, like a big believer in revenue based financial [investment].…that will be like a great innovation with [any] company to leverage the money that they make every month to extend the runway and avoid dilution.”
Adapting to Market Changes for Long-term Growth:
The conversation then pivots to strategies for balancing short-term needs with long-term growth. Mary-Anne talks about making clear investment decisions and seizing opportunities quickly, highlighting the need for adaptability in decision-making.
Raphael contributes by discussing the need for pivots in product direction due to fast market changes, stating, “adaptability means…the ability to make pivots in your product direction.” Notably, he recommends a balance of things. He generally suggests keeping a runway “that’s big enough… to adapt and [make] the right changes.” However, he also points out that platforms “need to have small goals sometimes,” changing the product directions to optimize revenue in the short term.
Strategies for Effective Treasury Management:
In light of recent banking uncertainties, both discuss the importance of diversifying banking relationships. Mary-Anne notes the need for multiple bank accounts as a risk mitigation strategy, “two years ago, even a year ago, you might have been prepared just to have one bank account because there was no risk,” in contrast, with “everything that’s happened this year in the US … Silvergate, Signature, etc. I think that has touched most people in crypto in some shape or form. And suddenly, you realize that actually, you know, we need to have better resilience, and we can’t trust the banks to survive like we used to be able to, and therefore we need more of those bank accounts.”
Building a Resilient Company Culture:
Discussing company culture, both guests emphasize the importance of transparency and focus. Talking again about startup growth models, Raphael emphasizes how important it is to be transparent about the company’s direction and challenges to all employees. “I think everyone joining your startup eventually wants to see it grow very quickly, wants to see [themselves], I think, quickly leading a team and growing in his career paths,” he said, which is why they need to be in sync with the company’s contemporary challenges, such as fundraising and market conditions. The team stays informed by regularly updating the team on these aspects, including financials and market trends. This approach helps manage expectations and fosters a sense of involvement and belief in the company’s mission.
Conclusion:
Becoming Crypto Winter Proof sheds light on the nuances of navigating the current challenges in the crypto world. Importantly, if you’re a crypto platform looking to grow when times are good and survive when times are bad, the insights from Raphael Fettaya and Mary-Anne Moffatt offer valuable strategies for resilience and adaptability, emphasizing the importance of financial management, strategic adaptability, and the power of innovative thinking in weathering the crypto winter.
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