Pumped up valuations mean a growing number of fintechs will increasingly feel the pressure to show some serious revenue streams in 2019, not just user acquisition and hockey stick numbers growth.
For many the only route to achieve this will be through acquisitions.
Earlier this month Wave, an SME accounting platform announced they had acquired Every, a Toronto-based fintech company that provides business accounts and debit cards to small businesses.
Wave is a free accounting platform that targets freelancers and micro businesses, helping them generate professional looking invoices and manage their payments. I use it myself for the odd piece of contract work, and it works brilliantly – for free.
For an extra fee I could technically speed up invoice payments by allowing clients to pay me by credit card, however given I’m not generally too fussed about something taking an extra day or so, I don’t activate that feature, choosing instead to just list my bank account number in the invoice, and have them pay me ‘the old fashioned way’.
Which must be a bit annoying for Wave. I’m not really an ideal customer given I generate $0 revenue. In fact, I’m probably a cost for Wave, as would be the other thousands of free users on the platform who ‘platform squat’ but still demand to be supported.
So what’s to be done? How can they move me up the lifetime value ladder, and get something out of me?
Well, they could own more of my banking relationship – hence the tie up with Every.
It’s smart, and it follows a trend we’ve seen in the likes of Square and other SME neobanks. The difference with the neobanks is they are thinking banking first, then simple invoicing after, not the other way around like Wave.
Every hasn’t launched in its own right, so we’ll see its full functionality once the Wave + Every tie up gets going.
Either way, I think it’s a sign of things to come, as fintech’s realise the true value story isn’t in waiting for banks to acquire them, but generating a few quick wins by bolting on other fintechs to try and drive revenues. Got to feed the vulture capitalists with something new and tasty come board reporting time!
Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.