Q&A: Fintech funding has a ‘level set’, says Money20/20’s head of growth and finance

On Money20/20 USAInsider Intelligence caught on Scarlett Sieber, the event’s chief strategy and growth officer, after it America’s Got Access startup pitch competition. Sieber shared his view fintech financing in this economically uncertain time and whether “every company is a fintech” sentiment has peaked yet.

The following has been edited for clarity and brevity

Insider Intelligence (II): How has the fundraising landscape changed for fintechs in recent months?

Scarlett Sieber (SS): So much money has come into fintech, especially in the last five years. The angel investors and previous funds that I got to know when I was an entrepreneur all started getting into it. It felt like almost too much money was invested. People had valuations that I thought were quite inflated. I think this is a level setting.

But while funding isn’t what it used to be, it’s still very strong, and in certain geographies it’s actually increasing. Now it is necessary to ensure that the money lasts. It’s tougher for B2B companies with longer sales cycles that require more upfront investment. VCs look for opportunities with past returns. It’s not just, “Hey, cool, you have hundreds of thousands of customers.” Now they ask: “How does it actually translate into income?”

II: Do you think funding is down mainly because there are fewer mega rounds, but smaller rounds are still happening at the same pace? Or is it across the board?

SS: I think it takes place across the board, but unsurprisingly it weighs more heavily on the big rounds. But I think good companies will still get funding. The capital has dried up a little, but it is not lacking. And one thing like my boss, Tracey [Davies (Byers), president of Money20/20], says all the time is: “Never waste a good chaos.” Some of the biggest companies have emerged from downturns and recessions.

II: How can startups cope with this financial uncertainty?

SS: I think it’s just being very smart with your money, if you have it, and focusing on how you differentiate yourself, and how you make people’s lives better. Even in a downturn, people continue with certain behaviors. How do you use it as an opportunity to make a real impact?

II: Is there a concern that – with embedded finance, for example – everyone is fintech now and trying to include a financial component in what they offer?

SS: When I co-authored a book on embedded economics with Sophie [Guibad], people said it was such a niche thing. But now everyone wants to know how to do it. I think it will be an incredible opportunity for those who have the right strategy, technology and resources in place – but not everyone should be on board. People forget that playing in financial services is very difficult because they see the opportunity, but then, wait, the regulatory thing or the legal thing. You are going to see a slaughter of the herd.

II: Do you think we are approaching a critical mass of financialization?

SS: Not yet. When Sophie and I thought about writing our book, we asked ourselves, “Who is this for?” Our industry had talked about it a lot, so we wanted to make sure we had use cases for them. We looked at the big banks that did well, and fintech that operated efficiently. There is still plenty of opportunity for other brands to get smarter about incorporating financial services into their day-to-day operations, so they know their customers better than they could before.

II: What are these unfulfilled opportunities?

SS: Anywhere up and down the chain, especially on the retail side, from big budget stores to luxury goods. Like your weekly groceries – making that experience better and actually knowing what your customers are doing and when and when not to offer them a coupon. If a customer does something online instead of going into the store, if they don’t track every moment, they don’t connect those dots, and so they always start the process over.

Read the full Q&A, including Sieber’s thoughts on the America’s Got Access Startup Pitch Competition.