Rex Salisbury, Cambrian — Why now is the best time to start a fintech
In today’s episode, Andrew Janssens hosts returning guest, Rex Salisbury, in his second appearance on the Wharton Fintech podcast. Rex Salisbury has had a busy few years since his last appearance in 2019:
- Rebranded the “Fintech Devs & PMs Meetup” community to Cambrian (named after the Cambrian explosion when life began to proliferate).
- Established Andreesen Horowitz’s Fintech vertical as their first external partner hire
- Parted ways with a16z to establish his own solo-GP fund under the Cambrian name, investing $500K non-lead checks in Fintechs at the pre-seed and seed level
Rex’s key message is simple: “It’s never been a better time to start a fintech company! The market is huge, still capital available at pre-seed & seed and, this is huge, it is WAY easier than ever before to hire.
Talent is a more important scarce resource than capital and the availability of capital in <=2022 made it way harder for new companies to hire. the opposite is true today. So many company’s I’ve backed are having a field day pulling in incredibly talented folks!”
This conversation covers:
- The evolution of Fintech Devs & PMs into the Cambrian community
- Rex’s investing philosophy
- Rex’s fintech predictions for 2023
- And much, much more!
We probe into why Rex decided to rebrand Fintech Devs & PMs meetup to the punchier Cambrian:
“The old name was unwieldy but descriptive, whereas I like this name. So, the Cambrian is a geological era, 542 million years ago, when you can see complex life start to emerge in the fossil record. And it’s called the Cambrian explosion, because you go from seeing like a few kinds of organisms to many kinds of organisms. And so , why did this happen? Well, there are these building blocks within biology that emerge, that can be recombined in new ways to create new kinds of life. And so there’s this explosion of diversity of the kinds of life you see.
And I think the analogy used in the tech ecosystem, or in the FinTech ecosystem, is that you now have all these primitives that can be combined to build new things faster and better than ever before. If you look at one of arguably the first neobanks, Simple, which a lot of people are probably familiar with, it took them over two years to find their first banking partner to launch a prepaid card to function as a debit card. And that didn’t work out. So they had to find another bit after this Herculean effort to find the partner getting that stood up, I think six months later, they realized that wouldn’t work and they had to go and do it differently.
Again, today, if you’re a FinTech founder, and you want a banking partner, your challenge is not finding and getting one, although it could be if you’re based in Canada, or Latin America or somewhere else. But in the US, your challenge is there are now 20 banking as a service platforms. There are now maybe 60 banks who are interested in doing partnerships. How do you decide which one to work with? And why? So that’s a challenge. But the great thing as you now have, these building blocks, right, this layer of financial services you have access to, and then so there’s time, the technology side of it, that makes it really exciting for like, why now and why is FinTech still a thing?”
We discuss the highlights of Rex’s predictions for Fintech in 2023:
“Firstly, you never actually make predictions. You just state things about the current world that maybe aren’t as broadly circulated. And maybe they’re , already circulated and kind of aware of within the venture the FinTech ecosystem, but I think sometimes they can still that doesn’t make them necessarily unusable, because even just understanding the current state can be hard to do when there’s such a reporting lag in terms of a lot of activity that’s going on.
So I mean, my biggest, biggest one is really one of the ones I always harp on. And so this was just another opportunity to harp on that same idea, which is that there is more talent in the ecosystem than ever before. And so the prediction was that there’ll be basically more companies started by repeat FinTech founders in 2023 than any other year. And that’s just because they’re more repeat founders that there used to be but like that’s important to understand, right. And then the second one is kind of very related to that. But it has to do with all the layoffs going on later stage.
And that’s if, if you are starting a company, maybe as a repeat founder, maybe not, you’re actually going to have an easier time hiring the pre-seed than you ever were in probably the last 10 years. 10 years ago, the job market for software engineers maybe wasn’t as competitive. But the number of kind of tech native software engineers was super, super low. The biggest pools of tech talent, or at least software engineers were actually inside of financial services. But they didn’t necessarily make great free seed employees. Right now, you’ve got this huge pool of talented people who have probably at some point in their career, been at least a mid sized company as it’s gone through growth and had a lot of ownership of the kinds of things we’re building and how to do it.”
Why Cambrian Ventures is focusing on non-lead checks at the pre-seed and seed level in the US
One of the big things I decided early on was I, I could have raised like 100 million or more fund, but at that point, you’re a lead investor. And what that means is you’re very competitive with everyone at a16z. So if I want to invest in a company, I now have to beat a16z, QED, Ribbit, all these other folks, in order for the right to write a $2 million check, I think I can be helpful, but like, let’s be honest, I’m not going to win over those names almost all of the time.
And then if you think about the value that I bring to the table, it’s a lot of the networks that I bring. And if I raise a smaller fund, where I write a non lead check, then I can collaborate with those and other lead investors. But I can also that keeps them more ingrained and match them in the networks, in financial services or in the FinTech ecosystem, so that I can be actually more supportive to my companies, in some ways, as a non lead investor that I could if I was a lead investo. It also lets me have a slightly bigger portfolio.
And then why US only? I think there are re great opportunities around the world. I am one person. I also think the US is a great market. It’s a large unified market with good rule of law, which is very hard to say about almost anywhere else. With developed capital markets, deep pools of talent, it is just a really good market. Everything I do is network driven. And if I’m getting on planes to fly to Joburg, or Dubai or Singapore, that’s a huge cost of time. And each of those ecosystem has their own networks that don’t necessarily reinforce the network that I’m building within the US. And so it’s a time in network strategy as much as it is like, I think this is a good market strategy.
About Rex
Rex Salisbury, General Partner at Cambrian Ventures. Rex is recently launched Cambrian, a solo-GP fund, after three years at Andreesen Horowitz establishing their Fintech team. In his last appearance on the podcast he talked about setting up the Cambrian fintech community (formerly Fintech Devs & PMs meetup). Prior to Cambrian, Rex worked in Merrill’s Lynch’s Real-Estate Syndicated Capital Markets team and at Syndio, a mortgage-focused fintech.
About Cambrian
Cambrian is a U.S fintech fund investing $500K non-lead checks in Fintechs at the pre-seed and seed level. The Cambrian community allows Fintech founders and operators to connect via their slack channel and regular activities such as bi-annual founder matching.
About the Author
Andrew Janssens is a second-year MBA Candidate at The Wharton School, where he is part of the Wharton FinTech Podcast team. He has a passion for the nerdy corners of financial services, venture capital, and all things FinTech. Don’t hesitate to reach out with questions, comments, feedback, and opportunities at ajanss@wharton.upenn.edu.
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