What Will It Take To Build A Successful Fintech Post-2022?


Capital isn’t cheap anymore. Investors are feeling the pain after the fintech gold rush of 2021, when capital inflows hit $131.5 billion worldwide—nearly three times the $49 billion invested in 2020.

As the capital environment has become more difficult, fintech startups have naturally become more vulnerable. Down rounds are common and painful. Klarna is a dramatic example, forced to accept a valuation in July 2022 of $6.5 billion, down from $45.6 billion just 13 months earlier. The damage is across the board. Andreessen Horowitz (a16z) says valuations of publicly listed fintech companies collapsed from 25 times forward revenues in October 2021 to four times forward earnings in May 2022.

The landscape today looks very different from even a few months back. Vision and growth potential were kings in 2021. Today, investors have changed their demands dramatically. They want to see sound unit economics, ROI-oriented cost discipline and a clear path to profitability. As the a16z authors note, “Every other blog or tweetstorm seems to offer the same general advice: conserve cash, extend runway, shift from focusing on growth to focusing on efficiency.”

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