The fintech sector has had its ups and downs recently, with Klarna facing steep valuation cuts, rapid closures, and massive layoffs from Robinhood and Better Conducting. Despite the turmoil in the market, investors remain optimistic on the potential value that fintech startups can bring around the world.
To understand how fintech startups are preparing to face the current downturn, we spoke to eight investors who shared their views on the market as a whole today and in the future.
Most investors agreed that there is opportunity in a recession and that a correction of sorts isn’t really a bad thing.
“Despite current market sentiment, our bias on Lightspeed points in the direction of optimism. This does not mean that we are putting sugar on things for our founders – to be clear, the road ahead will be tough,” Lightspeed Justin Overdorf, Partner at Venture Partners, said: “But we see a silver lining for companies that don’t let a good crisis go to waste, rethink their assumptions on talent, cut back on non-essential activities , hone their business model and strengthen their lead. Those who come forward survive and emerge stronger.”
The group also agreed that operating with favorable unit economics and capital efficiency is more important than ever.
Eddie Lerner, founder and managing partner of Avid Ventures, said, “Now, in a rising interest rate environment, investors are valuing companies based on fundamentals and prioritizing capital-efficient growth, while seeking valuation guidance.” Looking more closely than the public market.” ,
Many investors say the recession has not affected their investment thesis, while acknowledging that their investment momentum has slowed as they seek to make more discriminatory investments.
“We have largely avoided FOMO-based investing in unproven models, markets and products for the past two years, so the slowdown (so far) has been mixed-to-positive that we have been able to maintain our strategy while investing. A more fund-friendly environment,” said Nick Milanovic, General Partner at The Fintech Fund.
Read the full survey for more information on what fintech investors think about the sector, why they’re encouraging portfolio companies to expand, and how best to approach them for pitches.
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