Lessons from Rex Salisbury

As a solo General Partner at Cambrian, a venture capital firm focused on pre-seed and seed-stage fintech companies, Rex Salisbury has shared numerous insights on the future of financial technology, venture capital, and building a career in the tech industry. [1][2] Drawing from his experience as a former partner at Andreessen Horowitz (a16z) and his background as a software engineer and investment banker, Salisbury offers a unique perspective on the evolving landscape of fintech. [1][3]

On the Future of Fintech

On the vast opportunity in fintech: "Financial services [are] about 7% of GDP... and if you look at the institutions that are doing most of the revenue, a lot of them... were founded in the 1800s... we've seen very little change in a huge enduring part of the economy. And now it is time for things to start changing." [1]
On fintech's market penetration: "If you look at how much fintech has penetrated financial services to date, it's actually very, very small... something on the order of magnitude of like 2%. So what that means is you've still got 98% of the opportunity remaining." [1]
On the evolution of fintech founders: "In the 10 years since fintech got started, we actually now have a lot more founders who actually understand both finance and technology. And they have better infrastructure to build on top of." [1]
On changing consumer expectations: "You have some underpinning demographic shifts around people just not tolerating terrible products in financial services anymore." [1]
On the current state of the market: "The market is as big as it was 10 or 15 years ago when fintech first started, the founders are better, the infrastructure is better, and the timing is better." [1]
On innovation in fintech: "You want to see product innovation, but you also want to see business model innovation." [1]
On new business models: "One thing I'm seeing a lot of now are people building new bundles that are incredibly hard for banks to compete with because they're bundling things in a way that commoditize their compliment, which means a bank can't offer it because the thing being commoditized might be the core driver of their business." [1]
On the bank's core advantage: "If you think about a bank, their core advantage is cost of capital... you'll hear people say is like my cost of capital beat your product every day." [1]
On the disruption of banking: "Lots of people have high yield accounts that are integrated into a broader product suite and bank deposit betas, their cost of capital are going up... we've actually seen a trillion dollars of outflows of deposits in the last 12 months." [1]
On the convergence of product and business model innovation: "We're seeing product innovation coupled with a shift in business models. And that creates a lot of opportunity, especially when you got better founders with better infrastructure." [1]
On the importance of vertical SaaS and embedded fintech: Salisbury explores the trends of vertical SaaS and embedded fintech, seeing significant potential in these areas. [4]
On the impact of AI: He shares insights on the impact of AI on financial services and the potential for new distribution channels for financial products. [4]
Why now is the best 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." [5]
On the Cambrian explosion in fintech: Salisbury named his firm "Cambrian" after the geological era where complex life emerged, drawing a parallel to the current state of fintech where new "building blocks" are allowing for a proliferation of new companies. [5]

On Venture Capital and Investing

On being a solo GP: "I'm a solo GP, I started my own venture firm, I am now running and doing that." [6]
On his investment focus: "I run my own fund, I focus on pre-seed and seed investing. 90% of what I do is US B2B fintech." [1]
On why he focuses on pre-seed and seed: "If you have the right network, the right ability to identify founders, and you've been looking at the ecosystem for a long time... you realize that great founders at the pre-seed stage... will be able to raise a seed round at a much, much higher price." [1]
On the risk at the seed stage: "What's risky is you might not be able to win the deal. So the last company of mine that graduated from pre-seed to seed, they got seven term sheets before they stopped running their process." [1]
On the venture capital process: "If you think about venture, it's source, pick, win, and then also support." [1]
On the challenge of pre-seed investing: "At pre-seed, it can be a little bit hard to see because there's like, they might not even be incorporated. It's literally just like someone's founder's Gmail and maybe their LinkedIn says they're in stealth." [1]
On the decision to be a non-lead investor: "If I raise a smaller fund, where I write a non-lead check, then I can collaborate with those and other lead investors... I can be actually more supportive to my companies, in some ways, as a non-lead investor." [5]
On his fund size: Cambrian's fund is just over $20 million, focusing on pre-seed and seed investments in fintech companies with a U.S. go-to-market strategy. [6]
On the importance of a network-driven strategy: "Everything I do is network driven." [5]
On his U.S.-only focus: "The U.S. is 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." [3][5]
On the stability of pre-seed and seed markets: "Pre-seed and seed has actually been very stable... in terms of number of deals done." [7]
On what has changed in early-stage investing: "What has changed in pre-seed and seed is that large multi-stage firms... have largely pulled out of the market." [7]
On valuations: The withdrawal of multi-stage firms has led to more reasonable valuations at the earliest stages. [7]
On founder execution: "The key thing is just that there is money. If you execute, you will be able to raise." [7]
On what investors care about: "I do not think they care at all [about breakeven]... I think investors will care more about growth." [7]
On the importance of burn ratio: "What Series A investors will care about is burn ratio, which they didn't historically care about as much." [7]
On the three-body problem in venture capital: Salisbury discusses this concept in relation to the future of the VC industry. [3]
On being consensus and winning in VC: He believes it's possible to be consensus and still achieve success in venture capital. [3]

On Building a Career in Tech

On his career path: Salisbury was an investment banker, taught himself to code, worked at a fintech startup, built a community, and then moved into venture capital. [1][3]
Advice for aspiring VCs: "Don't. I think it's much more interesting to actually build companies for most people and they'll find that more rewarding than doing venture." [7]
The timeline to get into venture: "Getting into venture takes like 8 to 10 years. That's how long it took me." [7]
For early-career professionals: "If you're very early in your career... the most important thing you can do is move to the Bay Area... be in a network-dense area." [7]
On joining the right company: "Try and join a midsize company with growth. This should be a company that's roughly a Series B company." [7]
Why a Series B company is a good choice now: "Today, if you hear someone has raised a Series B, your default assumption with a high degree of confidence is they are a high quality company growing 3x year-over-year." [7]
The benefits of joining a growth-stage company: "You're getting good career momentum, you're getting good insights into potential kinds of things you could build, and three, you're building relationships with a bunch of other folks." [7]
On the value of relationships: "Invest in relationships, networks matter." [8]

On Community Building

The origin of Cambrian: "In the early 2010s, I started building a community for folks who were building interesting things in fintech... that community that I started was called Cambrian." [1]
The evolution of the Cambrian community: The community grew from monthly events in San Francisco to include events in New York, bio summits, and quarterly job fairs. [1]
The power of community: "As I built this really large following, set of network relationships, as well as insights in the ecosystem, I got pulled into investing, advising." [1]
How he supports his portfolio companies: He leverages the Cambrian community to help founders find early employees and make other crucial connections. [6]
Community activities: Salisbury continues to bring together founders in the Cambrian network through quarterly gatherings in the Bay Area and New York. [6]
The Cambrian community today: The community boasts over 15,000 subscribers, 4,000 meetup attendees, and a Slack community for over 1,100 founders. [6]
The rebranding of the community: The community was formerly known as "Fintech Devs & PMs meetup." [5]
The community's role in his fund: The Cambrian community is a key part of his venture fund, providing a strong network for sourcing deals and supporting portfolio companies. [8]

Personal Learnings and Philosophy

On leaving a large firm: "I think most partners who are at large funds, if they could go launch their own thing and felt like they had differentiated brand, network, voice, access, they would do it." [1]
On the commitment of starting a fund: "Fund one is going to be north of 12 years... you're really committing to your LPs not to do it just for one fund, but do it for three funds. So you're talking about like a 15-20 year commitment from day zero." [1]

Learn more:

Lessons from Rex Salisbury

On the Future of Fintech

On Venture Capital and Investing

On Building a Career in Tech

On Community Building

Personal Learnings and Philosophy

Written by Antoine Buteau

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