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The fintech sector has experienced ups and downs of late, with Klarna experiencing significant valuation cuts, rapid shutdowns, and Robinhood and Betterment making wholesale cuts. Despite the market turmoil, investors remain bullish on the potential value that financial technology startups can bring globally.
To understand how fintech startups are preparing to weather the current downturn, we spoke to eight investors who share their thoughts on the market as a whole – today and in the future.
Most investors agree that there is an opportunity in the fall and that a correction is not really a bad thing.
“Despite the current market sentiment, our bias on Lightspeed points in the direction of optimism. That doesn’t mean we’re dodging things for our founders—the road ahead is going to be tough to be clear,” said Justin Overdorf, partner at Lightspeed Venture Partners. But they don’t let a good crisis go to waste. We see a silver lining, as companies reassess their assumptions about talent, reduce non-essential activities, improve their business models and strengthen their leadership. Those who survive whatever comes will be stronger.
The group also agreed that favorable unit economics and capital efficiency are more important than ever.
“In today’s rising interest rate environment, investors at all levels are focusing on building companies on fundamentals and prioritizing capital-efficient growth,” said Addie Lerner, founder and managing partner of Avid Ventures. .
Many of the investors say that their investment speed has slowed down when they want to invest with bias, but they say that the slowdown has not changed their investment research.
“Over the last couple of years, we’ve avoided much of the FOMO investing in unproven models, markets and products, so the decline (so far) has been mixed-to-positive as we’ve been able to maintain our strategy while investing in a more fund-friendly environment,” said Nick Milanovich, general partner of fintech funds.
Read the full survey to get the inside scoop on what fintech investors think about the sector, why they’re encouraging portfolio companies to grow extensions, and how to best approach pitches.
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