As fintechs face their first funding drought in 3 years, we talked to 11 top investors about what young companies should do to survive the downturn

Clocktower Ventures

Notable investments: Chime, Sentieo, Tala

Advice: The most likely case in our view is that you’ll see a significant retrenchment in liquidity for primary capital from new sources. The most notable impact of that will be this fairly extraordinary bifurcation that we expect to happen where perceived high-quality assets, high-quality companies, will have a relatively easy fundraising environment and essentially everyone else will have a very challenging fundraising environment.

The VCs who are already on your cap table are now the most important investors in the world for you. That, I think, is going to prove true over the next nine months.

Unless you’re already profitable, breakeven or can get there very easily, which there’s just not that many venture-backed startups at Series B and under that qualify for that (that’s most of where we’re investing), you’re 100% reliant on continued capital infusions for the business to survive. It’s a very abrupt change from the environment that we had for a long time.

Make sure you really understand what your existing investors think about your business, about you and about the decisions you’re making. And that you have as much clarity as you can get about their reaction function for providing you capital.

Frankly, inside partnerships, inside venture firms, those people are not all equal. You can see some strange dynamics where if it’s a junior person who pushed a transaction inside a fund and maybe that company is not a meaningful percentage of that fund that’s a risk for you as a founder to have to think through.

Because you’re really not just dealing with one person, you’re dealing with an institution. And yet your relationship with that institution may actually be confined to one person. So we’re advising founders, do you really understand these dynamics?

We think in this environment it’s important to just go even faster because the operating environment has changed so much so quickly for businesses that in order to survive you’re going to have to find ways to make good decisions as quickly as possible. … This isn’t measure 10 times and cut once. This is just make the cut. Whatever you’re trying to do, do it.