Head of RBCx Sid Paquette and NorthOne CEO Eytan Bensoussan on how startups can thrive despite “mind-boggling” economic change

It’s never been easy to lead early-stage startups through the ups and downs of the business journey, but a tough economic climate has only made the task more difficult. Many entrepreneurs and senior leaders are experiencing tighter monetary policy and the uncertainty that comes with it for the first time. Investors seem more nervous, tech giants are initiating mass layoffs, and even the best-laid plans come with more risk.

How to make sense of it all and not just survive, but thrive? Sid Paquette, Head of RBCx, has seen it all. In April, he joined Eytan Bensoussan, CEO and Co-Founder of NorthOne, at the Canadian Fintech Summit (CFS) for a fireside chat on how to adjust to this turbulent economic environment. The duo touched on a variety of hot topics, from AI and the new rules for fundraising, to what disruption really means.

The conversation was one of many sponsored by RBCx over two days between fintech’s most influential founders, CEOs, and industry leaders at the MaRS Discovery District in Toronto. If you missed Sid and Eytan’s essential discussion, here are the key takeaways for early-stage startups.

The times they are a-changin’… and your startup should, too

Sid opened with Bob Dylan’s famous lyric, which effectively sums up the current state of affairs for startups. Peter Misek, Founder and Managing Partner at Framework, predicts as many as one-third of Canadian startups may face bankruptcy.

“Some of us in this room have been through 2000, 2008, and now 2022 is probably another indicator. Some of the most successful companies that come out of those impact situations are ones that redefined the market. They redefined the category, they attacked something differently, and they redefined the business as a result,” says Sid.

“Some of the most successful companies that come out of impact situations are ones that redefined the market.”

As the CEO of a challenger bank, this is an imperative Eytan knows well. “[Challenger bank] is an evolving term. When we started NorthOne years ago, challenger banking was something that you said to people and they looked at you like you’re from the moon,” he says.

RBCx and NorthOne are similar in that they both set out to redefine banking. While NorthOne focuses on business banking, RBCx is laser-focused on tech companies of all sizes and stages.

But calling oneself a challenger bank, or any other disruptor title, isn’t enough to represent real change in the minds of customers. A major lightbulb moment for NorthOne was realizing customers don’t care about being part of a challenger bank, which is more of an industry term. What they care about is “does it do what I need it to do?”

“Getting out of the fintech bubble and really grounding ourselves in the language of the market was a big eye opener for us,” says Eytan. The solution: “We realized that if we started describing what we do in terms of things people already budget for, pay for, or think about — payables, receivables, team spending — then all we had to do was connect the banking piece.”

Growing your business is all about value

Echoing Eytan’s recommendations for customer-centric approaches, Sid says, “It’s ultimately about value. And you typically get value in places you don’t expect. If I plugged in my hair dryer and all of a sudden it spit out breakfast, that’s value. It’s over and above something you expect.”

“It’s ultimately about value. And you typically get value in places you don’t expect.”

That value may not be exactly the same for every customer, which is why it’s important to offer a variety of routes to your core product. “Once you start offering different parts of the back office, it gives you a new way to bring people to the rest of the offering. So every time you have a new spoke, you can always bring them back to the hub,” says Eytan.

Don’t fear artificial intelligence— use it purposefully

“We’ve all been experiencing the impact of large language models and generative AI. We’re seeing the potential, positive and negative. How are you, as an organization, taking advantage of that?,” Sid asked Eytan.

“ChatGPT and all its cousins and siblings have been incredibly valuable. The biggest thing was being intentional about using it,” he says. Eytan points to how NorthOne’s finance team uses it to turn ideas they come across in their daily work and customer interactions into articles and content series that help clients.
This type of purposeful use helps tech startups compete harder and grow faster. “We always felt we had a David and Goliath dynamic with competitors, but now we can use these tools to do so much more and put on Goliath’s shoes.”

“We always felt we had a David and Goliath dynamic with competitors, but now we can use AI tools to do so much more and put on Goliath’s shoes.”

That all said, because AI is still very much in a “Wild West” state, Eytan emphasizes the need for businesses to implement guardrails to stay compliant and safe when it comes to safety and privacy.

While some worry about the impact AI use will have on employment, Sid resists the narrative that employees will be replaced outright by new technology. Rather, AI enhances the value of good talent. “There’s always the perception that a company will use AI and suddenly 10 people lose their jobs,” says Sid. “But in reality, it’s not doing the jobs of 10 different people, it’s more like components of 10 people’s daily routines are now optimized. Ultimately, that allows those 10 people to do something different.”

“We don’t see it as how many jobs are we eliminating; we see it as how these tools free up time for our team and get them to focus on what they’re really good at,” agrees Eytan. “We spent a lot of time hiring the right people, how do we let them have superpowers?”

Get yourself a new playbook for fundraising success

Many startups’ fundraising playbooks need to be reimagined to succeed in this economic moment. “There are a lot of investment dollars in the market that aren’t being deployed for a bunch of reasons. Ultimately, I think we’re going to see more capital being deployed to a smaller number of companies, which does put a lot of pressure on companies and, in particular, fintech companies,” says Sid.

This is because most fintech companies were founded post-2008, in a low-interest rate environment and with easy access to capital. Many have no experience with the flip side of a business cycle.

“The speed of change has been absolutely mind boggling.”

“The speed of change has been absolutely mind boggling,” says Eytan. He points to how, for years, fundraising was more or less based on how quickly a company could grow. Now, everything is different. “We saw this in real-time last year when we were in the middle of a fundraising process… you could see the body language of the people you were talking to change if you started the narrative on a growth one. They would get nervous. They need to know what’s inside the box.”

Eytan says he went through five to 10 fundraising decks in the course of a month as he realized what wasn’t working anymore. “When you throw margins upfront and start talking about sustainable economics, that got you the 80-20 buy-in, then the rest of the questions about growth were more of an afterthought.”

Change in tech is here to stay awhile

“The real unexpected piece is that this new environment isn’t going away,” says Eytan. “I think we all got, in an odd way, fooled by how quickly COVID changed things and then changed back. People felt a new path of normalcy and thought everything would return to normal for tech after six months, or in 2023, or in Q3. When that didn’t come, it had a very emotional impact on people. They’re actually starting to realize that this is now how it is.”

The path forward for fintech companies is to, perhaps counterintuitively, focus less on what’s broken and more on what’s going right. “For me, the definition of disruption isn’t fixing what’s broken— that’s really easy to do. It’s actually taking the stuff that works really, really well and reinventing that,” says Sid. “That’s where a lot of organizations fail. They don’t do that.”

RBCx backs some of Canada’s most daring tech companies and idea generators. We turn our experience, networks, and capital into your competitive advantage to help drive lasting change. Speak with a RBCx Technology Advisor to learn more about how we can help your business grow.

This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.


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