Hey, it's Will.

Last year separated the chess players from the checkers players.

When fintech funding cratered from $118.2 billion in 2023 to $51.8 billion, every founder I talked to was cutting everything from office snacks to engineers, but while most hunkered down waiting for venture winter to end, a small group used the downturn to build moats so deep that when capital returned in 2025, they emerged as category leaders. The difference comes down to timing and foresight; understanding that rather than destroying companies, bear markets just reveal which founders think strategically about systematic execution.

Welcome to Catalyst—your bi-weekly insights on emerging fintech and Web3 trends, a behind-the-scenes look at some of the top players in the space, and actionable strategies you can implement today. No fluff. No basic takes. Just clear insights on what's actually happening in fintech. 💻

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Will’s Picks

A few things I’ve loved reading this week—

• 10 fintech trends that define the industry's future

• McKinsey Technology Trends Outlook 2025

• Convergence, emergence & resurgence - 2025 fintech report

• The $1.5M Content Engine That Runs on Zero Ad Spend

• Pulse of Fintech ‘25

The Great Fintech Shakeout: What We Learned

The 2024 funding crash was fintech's Goggins-esque, weighted vest workout year.

F-Prime's 2024 State of Fintech Report warned of "a high probability of significant shutdowns in 2024 and 2025," highlighting the importance of allocating resources and budgets effectively.

That prediction came true. We've spent the last year watching companies that looked unstoppable in 2023 quietly shut down or get acqui-hired for parts.

That said, the obituary writers forgot about the companies that are dominating in 2025 either didn’t exist or had the most minimal funding in 2023. They are the ones that used 2024's constraints to build systematic advantages.

McKinsey expected fintech revenue to grow "almost three times faster than those in the traditional banking sector between 2023 and 2028." That growth is happening right now, but it's concentrating among the founders who learned to execute systematically when capital was scarce.

This week we’re diving into the lesson that the crash taught us and recognizing that systematic execution during constraints creates permanent competitive advantages that compound during recovery periods.

The $347K Confidence Tax (And How to Stop Paying It)

While everyone was talking about runway optimization, I calculated something more interesting: the actual cost of founder insecurity during downturns.

The Confidence Gap Economics:

Cap Table Impact: 

During funding contractions, investors scrutinize founder credibility more intensely. Strong personal brands commanded 15-20% valuation premiums even in tough markets.

Talent Acquisition Advantage: 

While competitors laid off teams, confident founders with clear market positioning hired displaced talent at significant discounts.

Customer Acquisition Efficiency: 

Companies with systematic content strategies maintained lower customer acquisition costs while competitors increased ad spend to compensate for reduced organic reach.

The founders who understood this ended up building systematic advantages that compounded during recovery periods.

The Strategic Rule-Breaking Framework

Most founders think rule-breaking means chaos. It doesn't.

The best rule-breakers are the most systematic about which rules to break and when.

Rule-Breaking Dimension 1: Market Positioning During Contractions

Instead of competing for shrinking budgets, create new categories.

Example: While payment companies fought over declining transaction volumes, the winners positioned themselves as "financial infrastructure" or "embedded finance platforms;" categories with expanding budgets.

Rule-Breaking Dimension 2: Counter-Cyclical Investment

PitchBook data shows founders who proactively reach out close rounds 2.4x faster. While competitors cut marketing spend, systematic founders doubled down on content. Their voices became the category voices by default because everyone else went quiet.

Rule-Breaking Dimension 3: Compliance as Competitive Advantage

Reports indicate that 80% of fintech firms are increasing their compliance budgets. Smart founders saw this coming and built compliance systems as products. When regulations tightened, they had solutions while competitors scrambled for resources.

Bear Market Execution Tactics That Actually Work

Tactic 1: The Attribution Advantage During Downturns

Marketing attribution (aka multi-touch attribution) should be used to measure every touchpoint in the customer journey and accurately credit them for driving revenue.

While competitors cut marketing blindly, systematic founders used attribution data to cut only what doesn't drive revenue. This created sustainable competitive advantages when budgets were constrained.

Tactic 2: The Profitability Pivot

Investors are prioritizing high-performance fintech ventures, particularly those with high gross margins. The shift from growth-at-all-costs to sustainable profitability became permanent.

Smart founders optimized for:

• Average revenue per user (ARPU) improvements

• Customer lifetime value (LTV) optimization

• Gross margin per transaction enhancement

• Monthly recurring revenue (MRR) quality over quantity

• Churn rate reduction through systematic engagement

Tactic 3: The Technical Debt Advantage

While growth slowed, smart founders used the breathing room to build infrastructure that scales during recovery. Technical debt became technical advantage when markets accelerated again.

Think of it like renovating your house during winter. Everyone else is waiting for spring to start building, but you're ready to move when the weather changes.

Case Study: The 28% Spending Increase During Market Contraction

Mastercard helped a digital bank in Latin America achieve sustainable growth beyond customer acquisition. The fintech company wanted to increase revenue through targeted acquisition and profitable engagement metrics. As a result, Mastercard's advisors helped this fintech company acquire 10 million new customers in two years. More importantly, they increased customer spending by 28% while reducing acquisition costs by 13%, creating a more sustainable and profitable growth model.

This demonstrates something crucial: the best bear market strategies build systematic advantages that compound during recovery.

Their approach:

Phase 1: Attribution Infrastructure

• Multi-touch attribution setup across all channels

• Customer journey mapping and optimization

• Revenue-per-touchpoint calculation

• Channel ROI measurement and systematic optimization

Phase 2: Profitable Engagement Focus

• Customer segmentation based on lifetime value potential

• Personalized engagement campaigns for high-value segments

• Automated retention systems for at-risk customers

• Cross-sell and upsell optimization during economic uncertainty

Phase 3: Sustainable Growth Systems

• Predictable revenue forecasting models

• Customer acquisition cost optimization

• Lifetime value maximization strategies

• Profitable growth rate maintenance during market volatility

The Recovery Preparation Playbook

Market Position Optimization:

• Document your contrarian industry thesis while competitors stay quiet

• Build thought leadership content around your unique position

• Establish category-defining terminology before the market heats up

• Create educational content that positions alternatives to status quo

Operational Excellence During Downturns:

• Implement full attribution tracking across all channels

• Optimize for profitability metrics over vanity growth metrics

• Build compliance systems as competitive advantages

• Pay down technical debt during slower growth periods

Competitive Intelligence and Positioning:

• Monitor competitor cutbacks and systematically capitalize on gaps

• Hire talent released by struggling competitors (at better rates)

• Acquire market share in segments competitors abandoned

• Build relationships with distressed partnership opportunities

Capital Efficiency and Investor Relations:

• Extend runway through systematic operational improvements

• Build investor confidence through measurable execution progress

• Prepare for recovery funding with demonstrated unit economics

• Document systematic improvements for compelling investor updates

The Bear Market Mindset That Wins

Fintech marketers need to abandon the growth-at-all-costs mindset and switch to a data-driven optimization, growth and revenue system.

Going back to the weighted vest metaphor from earlier, bear markets are essentially CrossFit for startups. Everyone complains about the workout, but the founders who embrace the challenge come out stronger, faster, and more resilient than when they started. Your competitors are still doing bicep curls while you've been training for decathlons.

Every bear market creates the next generation of category leaders.