Rizqi Isnurhadi

Rizqi Isnurhadi

July 11, 2022

Complete Guide to Survive the Tech Winter

“If your plan is to raise money in the next 6-12 months, you might be raising at the peak of the downturn. Remember that your chances of success are extremely low even if your company is doing well. We recommend you change your plan”

Above is an excerpt from the letter titled ‘Economic Downturn’ that the Silicon Vally kingmaker, Y Combinator shared to its portfolio founder. This message addresses the forecasted bear market, a sharp reversal after a 13-year bull run. The investment firm also advises its portfolio companies to cut their expenses and extend their runway.

In nature, startup are designed to scale fast enough to carve a top-of-mind brand and capture a portion of market share in their niche. Hence, startup often burn cash to achieve this goal. However, a lot of examples has proven that this strategy doesn’t work. For instance, just a few months ago, Fast, the one-click checkout startup, shuts down after burning through investors’ money.

With the tech winter upcoming, most startup may no longer be able to afford such luxuries. We have seen this impacts the Asia market, as illustrated by the chart presented by TechInAsia below.

Capital raised in Southeast Asia had dropped significantly over the past three to four months, only reaching US$ 1,8B in June 2022, half of the capital raised in March 2022. Number of funding remains relatively high with 74 startup receiving a funding round in June 2022.

What this means is that even though startups may be able to raise capital, the amount will be minimum, which may affect their valuation. Klarna, the Swedish buy now, pay later startup has raised a down round in June 2021, slashing their valuation by 1/7.

What to do now?

As the YC letter suggested, startup may need to cut their expenses and focus on extending their runway. To do this, startup founders need to assess their current burn rate, where is the money going and if there’s a way to make it more efficient. We have identified two steps to help you extend your runway.

Manouvering from Manual Processes to Automation

In a downturn, one of the most straightforward way to extend runway is cut operational cost. However, this doesn’t always mean you have to scale-back your growth. One of the key step to achieve this balance is to reevaluate your current processes and to make it cost efficient.

One of the biggest operating expenses inefficiencies is on manpower. Most companies ties their manpower planning to their growth. For example, if the fintech lending startup forecasted to acquire 10,000 users next month, they would have to hire 10 additional KYC officer to onboard these users. Additionally, the startup may need to recruit an additional of 10 collection staff to ensure smooth repayment from these additional users. Aside from that, the startup also need to hire some additional manpower in their finance team tasked with disbursing funds and verifying repayments manually. The three teams manpower plan will then be tied to their recruitment team planning. If there’s a need to onboard 20 additional people, then the recruitment team may need to recruit an additional team member. The chain goes on and on.

That is true when the processes are manual. When thinking of automation, teams often only consider the impact to their processes alone. In reality, automating one business processes could have a chained impact to other business processes as well.

When a company decided to automate its onboarding processes, it doesn’t just mean it can reduce operating cost on their KYC team. It has a chained reaction to other business functions, reducing the load on finance team and even recruitment.

Tackle Frauds

Marketing budget is almost always one of the biggest bucket in many companies. A portion of this budget are often used for promo or cashback on gamification and gimmicks to acquire users or increase user retention. This trend drives irresponsible parties to take advantage and gain actual money from it.

For instance, a marketplace app rewards its users with cashback promo for certain purchases. Without proper e-KYC, users can set up one buyer account and one seller account. They would purchase stuff from themselves, and claim the cashback reward for themselves.

Pay later providers are also suffering from scammers. By design, pay laters are intended to channel loans for users to purchase stuff, not obtain cash loans. Irresponsible parties are running scams called gesek tunai, or swipe for cash. Its modus operandi is quite simple. A merchant would offer users to withdraw cash by purchasing items on their store using pay later options. The item is fake, and would not actually be delivered. The merchant will then give out the cash to the users. This type of fraud was initially popular with credit cards, but with stricter requirements for merchants to offer credit card options, it has since moved to pay laters, which are more vulnerable due to loosened KYC processes.

Last but not least, huge chunks of money are often lost due to sales agents frauds. Companies often hire field sales agents to acquire more users or merchants. These agents are rewarded with bonus payments for being able to achieve certain set of targets. Unfortunately, relying on integrity alone is not enough. There are often cases when the sales agents themselves conduct frauds to gain their rewards. I have heard cases of sales agents who are tasked to acquire and onboard merchants to an app platform but then committed fraud where they create fake merchants and conduct fake transactions themselves so that they can reach their quota and get bonus.

How Brick can help



Brick can help startups automate their business process. Brick’s verification product verifies end-users identity by cross checking them with official sources with a simple API request. It checks if the information provided matches the data stored in the official sources as well as providing percentage match for selfies submitted with the official ID photos. This removes the necessities of maintaining a KYC team to check the authenticity of the data manually.

In addition to that, Brick’s data connection also helps fintech startup companies to conduct an automated and efficient credit scoring process. Brick allows end-users to connect and authenticate connection with their financial accounts, allowing clients to retrieve their transaction data, income data, employment data and many more. This removes the manual processes of collecting the documents and data input.

Last but not least, Brick offers an automated disbursement system which can be integrated to your app via APIs. With our disbursement tool, an end-user can request a disbursement with a single button on your app. Our API will response with a disbursement request, sending the funds to end-users in real-time. No need for a finance team to manually read and transfer manually based on the request.

Fraud Prevention

In addition to automation, Brick products help your business protect yourself from irresponsible parties. With a proper e-KYC processes you can prevent the possible frauds and abuses mentioned above.

Since Brick pull data straight from the sources, irresponsible parties would not be able to submit forged document, preventing frauds that will otherwise happens when document submission is done manually.

Brick can also helps you combat more complicated type of frauds such as order frauds. With Brick’s address verification tools, your app would be able to match if the location submitted matches the actual location of the phone number activities. This prevents the cases of sales agent fraud who registers and make transactions from a burner phone.

Brick is a financial infrastructure layer that provides fintech developers with the API keys they need to create easy and accessible experiences for their users. By delivering access to the financial system, we aim to empower innovators to build amazing products solving big problems thereby democratising financial services in Southeast Asia.
PT Brick Keuangan Inklusif © 2022