ITL #573 The fintech VC winter is here to stay: three crisis management lessons

4 weeks, 1 day ago

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In an unstable and brittle world, being prepared for shocks and crises is crucial. By Mary Poliakova.



In today’s world marked by high inflation, geopolitical uncertainties, and environmental disruptions, the financial market finds itself entrenched in a BANI reality—brittle, anxious, nonlinear, and incomprehensible. The prolonged venture capital (VC) winter serves as a stark reminder that the finance sector isn’t impervious to this turmoil.

Amidst these challenges, finance companies are learning that a robust media presence and media footprint aren’t just advantageous but often crucial for survival and success in a competitive landscape. Drawing from my experiences as a financial PR consultant managing various crisis communication scenarios, I can share three key lessons that have emerged as invaluable in navigating this volatile terrain.

Lesson 1: Spotlight on leader’s reputation

The enduring VC winter, extending over a year and possibly projecting into the next, has witnessed a shift from FOMO (fear of missing out) to JOMO (joy of missing out) sentiments among investors. The caution and risk aversion that followed the COVID-19 and geopolitical challenges of 2020-2021 prompted investors to become more discerning, particularly in the realm of financial technologies.

Venture funds and builders (or studios) are redirecting their focus toward early-stage companies, emphasizing the pivotal role played by CEOs and founders. Investors scrutinize their backgrounds and previous business endeavors, recognizing that, at this stage, a strong founder is as crucial as a robust product.

In this context, the personal PR of C-level executives becomes instrumental during the early stages of business development. In a world where every detail is Googled, a founder's media footprint significantly influences perceptions and can tip the scales in favor of the company.

As the financial landscape navigates uncertainty, managing and enhancing the reputation of leaders becomes paramount for companies seeking to thrive amid prolonged venture capital challenges. Not only that, the company has to show proactiveness in mitigating risks.

Lesson 2: Be one step ahead

Last year hacks became one of the biggest corporate shocks for crypto companies, resulting in a staggering $1.34 billion in losses to scammers. As a PR consultant who worked closely with FinTech companies that survived a major cyber attack this year, I’d like to highlight the importance of proactivity during financial and reputational turmoil.

In an unstable BANI world, being prepared for shocks and crises is crucial. This involves developing a well-thought-out public communication plan and being immediately ready to inform stakeholders about ongoing events during a crisis.

Every day of silence deals a strong blow to the brand’s reputation. It’s up to you to decide on the style and format of your messaging amidst emergency situations—some prefer to show a human side and publish a personal founder’s letter; others stay factual and on-point with their announcements.

However, even if the specific steps to solving the problem aren’t yet clear, timely communicating to stakeholders—customers, investors, and the general public—that the cause is being identified and the next steps are being examined reassures them that the situation is under control. The ability to have and demonstrate control during a crisis is paramount.

Lesson 3: Prepare for any adverse scenario

I’d say that the main lesson of proactive anti-crisis communications is the need to be prepared for anything and to have anti-crisis actions planned under different scenarios. And this lesson comes in handy not only for companies in finance.

Having a detailed roadmap allows companies to act swiftly in the event of unforeseen crises. Collaboration with in-house public relations specialists or external agencies is crucial in developing and discussing potential scenarios in advance. This ensures that the PR team can respond rapidly, mitigating the impact of crises on your brand and its performance.

A good practice is to involve a company leader with a strong media presence. As we’ve previously mentioned, a strong founder and CEO immediately engaging in conversation with the audience and promptly informing stakeholders about possible crisis situations adds an extra layer of credibility.

Utilizing every nut and bolt, the interconnectedness of these lessons emphasizes the importance of investing not only in the product PR of your financial business but also in the personal brand of its leadership team. As the VC world is paying more attention to early-stage companies, this proves to be an effective strategy to tackle. Moreover, when it comes to a crisis, having a plan for different development scenarios is essential as PR is a long-term game, and reputational damage lingers. Addressing risks proactively ensures that resources aren’t wasted on recovery efforts, underscoring the invaluable role of the experienced public relations team in navigating these challenges ahead of time.

 

 


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The Author

Mary Poliakova

Mary Poliakova is a PR consultant, Co-founder & COO of the global PR consulting agency Drofa Comms. She has more than 10 years’ experience executing successful PR campaigns for FinTech companies, and more than 15 years’ experience as a journalist.

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