Finlay Founder and CEO Huy Nghiem
Finhay is a licensed digital native investment platform that helps users to diversify their investment assets efficiently and seamlessly at their fingertips.
Founded in 2017, Finhay has secured US$30 million via five funding rounds from Openspace Ventures, VIG, Insignia Ventures Partners, TVS, Headline, TNBAura, and IVC. This includes a US$25 million Series B round in June 2022.
In a conversation with e27, Finhay Founder Huy Nghiem talked about how the company addresses multiple market challenges, including the current slowdown in the market.
Excerpts:
How has been the past 2-3 years for Finhay from a business growth perspective? How did it tide over COVID-19 and the economic slowdown?
During the COVID-19 period, our traction increased favourably. It makes sense that during the pandemic, people stayed home and had time to focus on learning or picking up investing. The desire for our online service increased, so our traction improved.
In late 2022, the market had a downturn due to several factors, including macros, domestic bank incidents, run on the funds, and more. Our traction was negatively impacted.
However, the business has used this time effectively to acquire a brokerage company as it needed restructuring. Finhay also spent more time and effort restructuring the brokerage firm.
How does the current global economic slowdown affect the business, and what steps has it taken to mitigate any negative impacts? Has Finhay noticed any changes in customer behaviour or demand, and how has it responded?
Yes, it has negatively impacted our business. However, we have found ways to use the time by improving our product and completing the restructuring of the brokerage firm. Instead of rushing for high growth, we are sustainably investing in product, team, culture, and compliance.
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The customer’s behaviour has also changed, and we have observed that our users have become more conservative in their investment approach. Their total balance was weighted towards fixed-income products.
How has your financial strategy changed in light of the current market conditions, and what measures have you taken to ensure long-term sustainability?
Our financial strategy has been shaped around current realities. In 2020 and 2021, we spent to achieve growth and budgeted higher for marketing and retention. However, those costs were cut in 2023 in line with market conditions and business strategies.
We also reprojected our human resource needs so we don’t over-hire. Our focus instead is to hire smart, hire correctly.
Have you adjusted your growth projections or other key performance indicators in light of the current economic climate?
We have closely watched the economic climate and taken a more conservative approach to 2023 — where growth is deprioritised versus other key business improvements. We believe this will set us in the best shape to capture the rebound and shifting consumer investor sentiments as and when they come.
Can you speak of any market opportunities that have emerged due to the economic downturn and how your company is capitalising on those opportunities?
We observe that our user’s behaviour changed from risk-taking to risk aversion. The most reflective action was the shift of their balance from equity investments to fixed-income investments.
By constantly monitoring the data behind these behaviours, we were able to leverage it to introduce additional fixed-income products on our platform. That has enabled us to capture additional money inflow and retain existing users.
How do you balance the need for short-term financial stability with the long-term goals of your business?
Balance is the right word. Short-term financial stability is as important as long-term goals. If we cannot meet the short-term financial needs, we can’t meet the long-term goal either.
However, we always keep a long eye on the future and operate against our future vision to be the smart investment platform for new and existing Vietnamese investors. We take the necessary decisions today to maximise our chance of delivering that.
Can you discuss Finhay’s plans for diversifying your revenue streams or expanding into new markets in light of the current economic climate?
We have already implemented additional revenue streams on our platform. Given that we are in the investment space, we saw a need for Margin Trading services from our existing users. Given the uncertain market, we looked at 20:80 rules and recognised that our top clients still need leverage. Margin Trading has recently launched on our platform, and the revenue has positively impacted our overall performance.
How has Finhay maintained a strong company culture and motivated your team during these challenging times?
Culture plays an important role in our organisation. We have been building our culture from day one and continue to do so. Our key values are ‘passion, innovation, and trustworthiness’. These values play out in everyone’s day-to-day roles. We recognise that if our employees do not live our brand, our efforts will be undermined. That’s why members are fully oriented with our values from the first day they join our team and are encouraged to consider how they fit into their function. Employees continue to emphasise them daily with their team members.
For example, because we are in financial services, we believe that consistency in everything we do will eventually lead to trustworthiness – which has to be earned.
Do we see an end to the raise-cash-burn-cash growth model and the emergence of the “make profits, sustain & grow” model?
We do see the “make profits, sustain and grow model” prevailing. This will continue to be our strategy from 2022.
What challenges does a late-stage startup face compared to an early-growth-stage startup? What learnings can early or growth-stage companies make from late-stage companies?
The bigger the company, the more compliance, procedures, and processes are in place. We see this as both an advantage and disadvantage for late-stage companies.
The advantages are that the company becomes solid and robust in the eyes of the market due to having procedures and compliance checks. However, our goal has been to implement these from the outset.
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The disadvantages are that things will get slower if not implemented effectively. We work hard to ensure they are in place to enable consistency and not create clogs.
We believe that starting a business with a clear culture in mind is a vital learning point for early or growth-stage companies.
How many rounds of funding has Finhay raised so far? Can you share the details of each round? How has fundraising and business matching changed for you in the last 2-3 years?
We have undergone five funding rounds, but unfortunately, the details can’t be shared. However, we have raised US$30 million in terms of investment size.
In the last two to three years, we have seen a shift in the focus of our investors from high growth to revenue. I see this as crucial, too, given that the market will remain uncertain in the next few quarters.
How is the mindset and cultural shift happening internally since we are in a high-interest rate environment and funding isn’t going to be as easy as before?
Fortunately, the high-interest rate plays a favourable role internally due to our fixed income investment on our balance sheet. The revenue has also improved. This helps to shift our focus and story internally from growth to revenue. Our team members are aware of the importance of a revenue intelligence mindset.
Also, due to the high-interest rate environment, the team is made aware, with total transparency, that cost-cutting is in place, spending reductions will be required, and there is an expectation of revenue increase. It’s not always easy at first, but it is for long-term betterment and accepted as the means to achieve our shared vision of investments in Vietnam.
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