Over the years this has been a big topic which has been bounced back and forth. In response to this debate, some thoughts…
If you have a fintech start-up do you need a marquee client?
First, let’s define a marquee client. A marquee client is one that is big enough to hold up the business. A marquee client in the asset management world is the like of BlackRock, Vanguard, Capital International, Prudential, Amundi and suchlike. In the investment banking side it’s Morgan Stanley, Goldman Sachs and so on.
The idea of a marquee client is that it provides great answers to several questions that usually come up during any demonstration and pitching cycle:
- Who else uses your product?
- What is your product/market fit?
The answer to both of these is effectively “BigCo uses our product, therefore we have product/market fit and we have been validated as a decent firm, able to pass due-diligence and get over the hurdle of procurement, purchasing and payment”
Who would not be reassured to see that a start-up has been able to persuade one of these global titans of industry to use their product?
Indeed, it’s a very persuasive pitch and one that has a great deal of merit.
And now for the but…
But, the good folks of the firms that exist within the rarified category of “marquee client for a fintech start-up” are bright and industrious people. And certainly not naïve. They know full-well that they have marquee status. And that means that your pricing negotiation is pretty one-sided.
Beyond pricing, the next challenge is the bandwidth consumed by them in terms of product management, business analysis, integration and development. All of which then pulls you away from your challenges of finding and winning the next batch of clients.
Where a marquee client is baked-in to a product roadmap through happy circumstance (winning a consulting client which turns into a product client such as CRD/Putnam or Cazenove/Fidessa) then it’s a wonderful thing. But searching for one is a risky exercise.
TL;DR if you have a marquee client ready-to-go that’s great, if not, be very careful about cost/benefit ratios in trying to find one.