Name: In the current economic climate, what fintechs are most at risk?
Uploaded: 2023-08-16T15:24:15.201Z
Duration: 171.08
Description: Fintechs are having to navigate turbulent waters in the current economic climate. We asked three veteran fintech investors, what fintechs will sink or swim?

ADF_2023_08_10_FINTECH_Risky business- Which fintechs are most vulnerable in the current economic climate_V02.mp4

ADF_2023_08_10_FINTECH_Risky business- Which fintechs are most vulnerable in the current economic climate_V02.vtt

English

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The areas that are most at

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risk in this market in our view

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isn't necessarily a specific

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vertical, but it's more a mindset.

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What we saw happen during the past

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cycle is that a lot of people build

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businesses based more on maybe hype

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or just revenue for revenue's sake.

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That mindset needs to shift,

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we think very strongly.

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And the shift has to occur such that

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founders are building businesses,

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not just running after a problem

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for the sake of solving it.

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That means that there has

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to be a holistic approach.

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The problem they're solving is very

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important, yes, but the business itself

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also needs to make money and deliver

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returns and earnings for shareholders.

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And I think that mindset is a big

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shift that needs to happen, and

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in fact is happening right now.

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I think we're definitely going through

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a, cost of living crisis globally.

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So what you're seeing is fintechs

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that previously were getting a

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lot of capital in order to help

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retail customers do things like

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alternative investments or in terms of

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cryptocurrency and things like that,

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you know, those are now seeing a

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dip as we work on, and we focus on

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enabling customers  to manage their

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way through things like the financial

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crisis that we're in the middle of.

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The cost of Living  crisis has made

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it really challenging for individuals

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and for institutions who are solving

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those problems for individuals,

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I think there's a real kind of role to

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play, however, where we were in a boon

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time when it came to retail investment,

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when it came to retail spending

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with low interest rate environments.

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We were seeing a lot of capital

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being plowed into investments

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for ordinary retail customers.

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That's taken a pause as those ordinary

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retail customers are focused more on

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saving, are focused more on enabling

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themselves to have a decent quality

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of life in the middle of rising

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prices, I would say that the the

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vulnerabilities a widespread across

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countries, across sectors, across

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fintechs of all types, and asset classes.

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It is clearly a FinTech winter, the same

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as it is probably still a crypto winter.

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I would say that there is lack of

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equity funding for most fintechs

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in most geographical areas.

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Of course, there are exceptions for the

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good ones and the few exceptions are

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still from the same notable areas like

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the Silicon Valley, like Israel, and like

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also India some parts of Latin America.

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But apart from that, most of the market

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is deserted in terms of equity funding.

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And so effectively a few of the

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business models are being exposed,

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especially when the burn rate is higher.

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So when the marketing expenses and the

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overall fixed cost of those fintechs

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is overwhelming and and creates

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short run runways for those fintechs.

fintechs of all types, and asset classes.

the Silicon Valley, like Israel, and like

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Fintechs are having to navigate turbulent waters in the current economic climate. We asked three veteran fintech investors, what fintechs will sink or swim? 

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Startup

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Yusuf Özdalga

Partner 

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Francesco Filia

CEO 

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Farhan Lalji

Founder, General Partner

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In the current economic climate, what fintechs are most at risk?

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