8 fintech investors discuss the changing investment landscape and how to pitch them in Q3 2022 – TechCrunch

Last year, more than 20% of venture dollars went to fintech startups globally, according to CB Insights. Equally noteworthy:
A third of all unicorns created in 2021 were fintech companies.

This year, market conditions are dramatically different in each sector, including fintech. But while this year’s funding pace in the fintech area is noticeably slower – and falling – the fact remains that the sector still accounts for a significant share of risk funding globally. In the second quarter, for example, around 18% of global venture dollars went to fintech startups.

To give TechCrunch+ readers specific knowledge of what fintech investors are looking for right now and what you should understand before approaching them, we’ve interviewed eight active venture capitalists in the sector over the past couple of weeks. Their responses have been edited for brevity and clarity.

Here’s who we surveyed:

• Paul Stamas, Managing Partner and Co-Head of Financial Services, General Atlantic
• Alda Leu Dennis, General Partner, Initialized Capital
• Michael Gilroy, general partner and co-head of fintech, Coatue
• Justin Overdorff, Partner, Lightspeed Venture Partners
• Addie Lerner, Founder and Managing Partner, Avid Ventures
• David Jegen, managing partner, F-Prime Capital
• Nik Milanovic, General Partner, The Fintech Fund
• Jay Ganatra, Co-Founder and Managing Partner, Infinity Ventures

Paul Stamas, Managing Partner and Co-Head of Financial Services, General Atlantic

Globally, fintech startups raised $131.5 billion in venture funding in 2021. As a firm that has been investing in the space for a while, what differences in the landscape have you seen since this time last year? Were the deals much more competitive last year?

There is no doubt that the deal environment is slower now than it was this time last year, especially with regard to late-stage growth. Many companies are rightly focused internally on optimizing their business and waiting to test the market. There still appears to be a bid-ask spread in expectations for the private market in relation to, for example, public market values.

Deals feel a little less competitive, but there are still plenty of capital providers – General Atlantic being one of them – who are happy to continue investing in great opportunities and supporting great entrepreneurs. The environment has slowed the pace of a deal, which, frankly, is probably a good thing. It gives companies and investors more time to get to know each other and perform due diligence, in both directions.

Many call this a downturn. How has your investment mission changed in recent months and are you still closing deals at the same rate?

Our task has largely remained the same. We remain excited to invest in long-standing themes related to the transition to the digital economy and the globalization of entrepreneurship, and we actively seek opportunities to support visionary entrepreneurs with proven business models. What has always been the case is that we gravitate towards situations where we believe, and where the company believes, that we can be a reliable partner and add significant value. As we move into a more challenging macro environment, perhaps the promise resonates even more. We would like to believe that our more than 40-year track record through some complex operating environments puts us in a position to help.

Fintech companies often have multiple revenue levers – adding new product lines, embedding payments, etc. How viable will these levers be for fintech companies in 2022 looking to defend their 2020-2021 growth rates?