8 investors discuss fintech’s potential despite the market downturn

The fintech sector has had its ups and downs recently, with Klarna experiencing sharp value cuts, Rask shutting down and Robinhood and Better carrying out mass redundancies. Despite the market turmoil, investors remain optimistic about the potential value that financial technology startups can bring worldwide.

To understand how fintech startups are preparing to deal with the current downturn, we spoke to eight investors who shared their thoughts on the market as a whole – both today and in the future.

Most investors agreed that there are opportunities in a downturn, and that some sort of correction is actually not a bad thing.

“Despite today’s market sentiment, our bias at Lightspeed points in the direction of optimism. That doesn’t mean we’re sugarcoating things for our founders – to be clear, the road ahead will be difficult,” said Justin Overdorff, partner at Lightspeed Venture Partners. But we see the bottom of companies that don’t let a good crisis go to waste, revising their assumptions about talent, cutting non-essential activities, refining their business model and consolidating management. Those who survive the next will come out stronger.”

The group also agreed that favorable unit economics and operating with capital efficiency are more important than ever.

“Now, in an environment of rising interest rates, investors across stages are valuing companies based on fundamentals and prioritizing capital-efficient growth, while looking more closely at public market values ​​for valuation,” said Addie Lerner, founder and managing partner of Avid Ventures.

Many of the investors say the downturn has not affected their investment mission, while acknowledging that their investment pace has slowed as they seek to invest more discriminately.

“We avoided a lot of the FOMO-based investing in unproven models, markets and products over the past two years, so the decline (so far) has been mixed to positive in that we’re able to keep our strategy while investing in a more fund-friendly environment, says Nik Milanovic, general partner in The Fintech Fund.

Read the full survey for an insight into what fintech investors think about the sector, why they encourage portfolio companies to pursue expansion and how to best approach them for pitches.

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