At Menlo Ventures, we’ve invested in fintech for a long time and, despite the volatility of the last two years, believe there’s still a lot to be excited about. At the end of last year, we sat down and talked about what’s changed, our predictions for the year ahead, and the reasons we continue to be optimistic about fintech’s future.
The New Fintech Environment
Fintech darlings such as Square, Marqeta, Coinbase, and Robinhood saw their valuations drop 70% to 80% in 2022, while others including Affirm, Root, and Hippo were down as much as 99%.
The Opportunity Ahead in Fintech
We are still in the early innings of digital transformation, and the tailwinds for fintech continue to remain strong. From verticalized banking and financial products (such as our portfolio companies Siteline, CloudTrucks, and Slash) to the office of the CFO (Airbase) and consumer tech (Chime), this sector is still a big area of focus for Menlo.
Companies to Watch: Chime, Finch, Bluevine
Fortunately, the majority of Menlo’s fintech portfolio has been able to weather market fluctuations. When investing in fintech, we look for pure technology companies with high revenue retention that are not overly indexed to asset prices or hype cycles, and we avoid companies that take outsized risks in order to generate revenues. We are very excited about our fintech portfolio, including companies like Chime, Finch, and Bluevine.
Menlo’s Fintech Predictions for 2023
While we can be sure that 2023 will continue to be a challenging environment for the startup ecosystem, we believe that founders who understand capital efficiency, strong unit economics, and good business practices will continue to thrive.
With investments in companies like Chime, Finch, Bluevine, Carta, Betterment, and Airbase, Menlo Ventures is committed to backing the companies that will shape the future of fintech. If you or someone you know are currently working on a promising fintech startup, we would love to hear your thoughts on some of the thinking we’ve shared. We hope you reach out.
Aunkur is a Board Partner at Menlo Ventures focused on fintech. He draws on his deep experience as both an early-stage and public company operator at Braintree, PayPal, and Google to find promising teams and ideas that will become enduring companies. Aunkur is excited to lock arms with founders who…
Croom is a partner at Menlo Ventures focused on financial technology, healthcare IT, and enterprise SaaS. Since joining Menlo in 2017, he led the firm’s Series A investment in Arch, Finch, Prodigal, and Rivet and has also invested in Fieldwire (acquired by Hilti), Fleetsmith (acquired by Apple), HOVER, Particle Health,…
Tyler is a board partner at Menlo Ventures focused on investing in technology-enabled services and products that are positioned to compound their growth efficiently for a very long time, vis-à-vis sticky long-term relationships with customers and partners. He has coined these businesses “layer cakes” (resulting from customer revenues looking like…
