“We had portfolio companies that lost 30, 40, 50 percent of their revenue basically overnight, cataclysmic,” says Nigel Morris, the co-Founder of Capital One and Founder and current Managing Partner of QED Investors, as he reflects on the initial impacts of COVID-19 on his portfolio. In an energetic fourth episode of VentureKast: Rebuild, Nigel provides invaluable insights into the challenges that startups are now facing, as well as on the opportunities emerging in light of the COVID-19 pandemic. The theses around “investing in consumer-centric, value-creating, [and] digitally oriented” fintech models have remained largely unchanged, explains Nigel, and he believes that “a great company going into COVID is invariably a great company coming out.” Although CEOs are having to make “the most traumatically difficult decisions” to ensure their survival through the crisis, many fintechs in QED’s portfolio have seen an exponential increase in customer acquisition as face-to-face interactions through traditional banking avenues have evaporated. This phenomenon will go on to define the post-COVID-19 world, says Nigel, as “consumers that make the switch from analog to digital are unlikely to return.”
Drawing on his experiences at Capital One, Nigel illustrates how traditional banks will have to do more than simply “batten down the hatches” to meet the demand for digital financial services. Nigel welcomes a future of close relationships between fintechs and traditional banks as this provides an opportunity to serve the “half of America [that] is not being served by mainstream banks.” This bright spot, along with the “huge amount of pent-up demand” that will follow the crisis, offers an encouraging message that markets, particularly underserved markets, could emerge with more fair and transparent practices.