Building a startup can be difficult, especially during multiple, ongoing economic headwinds like high inflation and record interest rates. But with inflation cooling and the Federal Reserve starting to forecast rate cuts, founders may have hope on the horizon for 2024. Jason Mok, Brex Head of Startups, joins Yahoo Finance to discuss what potential founders need to keep in mind for building their startups.

Mok discusses learning from Silicon Valley Bank collapse: "As we acknowledged in our report, the big thing was, one, capital preservation and so... a lot of founders did not, and it goes ebbs and flows, did not really come prepared to deal with something like this. Especially for early stage founders, many don't have cash management strategies in place. A lot of learning as it came out of that was one, aligning with your board and leading investors on what your cash management strategy might be. Then having, in order, the idea of capital preservation, making sure that you're preserving the dollars invested in you and you have access to that and making sure you're thinking you're aligned with an institution, FDIC insured."

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Video Transcript

JOSH LIPTON: It's been a tough year for startups, burgeoning companies contending with record inflation, high interest rates, and a tough fundraising environment. But our next guest says there's hope on the horizon for the new year. For more, we turn to Jason Mok, head of startups at Brex.

So Jason, thank you so much for joining us. And maybe before we get to your outlook for 2024, certainly plenty of lessons learned in 2023. A few different ways we can start here, Jason, maybe certainly we can look at SVB, the collapse of Silicon Valley Bank. When you think about that drama, I know it seems like 10 years ago. But when you think about it, what are some lessons learned, you think, for founders listening right now?

JASON MOK: Well, first of all, thank you, Julie and Josh for having me. Appreciate it. Yeah, it's crazy to think about it. I mean, yeah, it feels like forever ago, but reality was it was, what, 10 months ago.

And so there were a lot of learnings. But as we acknowledged in our report, the big thing was, one, capital preservation. And so one, a lot of founders did not-- and it goes in ebbs and flows, but did not really come prepared to deal with something like this. And so especially for early-stage founders, many don't have cash management strategies in place.

And so a lot of learnings that came out of that was just, like, one, aligning with your board and your lead investors on what your cash management strategy might be. Then, kind of, having in order, like, the idea of capital preservation, making sure that you're preserving the dollars invested in you and you have access to that. And so making sure that you're thinking you're aligned with an institution. FDIC insured is my capital safe.

And then thinking about one next, liquidity. Is it liquid? Making sure it's not tied up in laddered investments or stuff that's tied up for a bit.

And then also then thinking, like, how do I align everything on one platform for payments and all the bill pay, and the payroll, and everything else and then, kind of, having multiple bank accounts tie into that? That way you really understand where you're pulling from and you can make sure that everything's consolidated in one place when you're thinking about funding and operating your company. And that's a lot of the learnings that founders came away from and where the takeaway is post SVB.

JULIE HYMAN: Jason one of the other things that we were watching this year on the big public side, as we talked about with some guests earlier in the show, is a lot of cost cutting, right? We saw a lot of more austerity coming to large cap tech. But judging from one of your observations on travel, on business travel among startups, they weren't necessarily getting that same kind of discipline.

JASON MOK: Correct. What we acknowledged in the report was that travel is back. And I know we know that. We feel like as many of us travel and we're at the airports and we see it. But we've seen travel come back, teeny come back pretty aggressively since '23. And we'll see in 2024, we're expecting it to get back to pre-COVID levels, 2019 levels.

And what we noticed when we acknowledged is, again, coming out of COVID, a lot of companies obviously still remote and hybrid. And whether that be for offsites get togethers and even attending industry conferences, travel is back. And it's actually one of those line items that we expect and we see continued uptick as you, kind of, see other things like offices and office space and whatnot be a reduction in cost. And so it's something that we definitely saw on a global scale.

And acknowledging global, a lot of companies are hiring internationally, right? Canada, Latin America, Europe, and so a lot of that is better talent, as well as managed cost. And so as you have more of a globally located company, a lot of travel is going to be involved obviously to get people together and to riff on new strategic ideas and whatnot.