Menlo’s Fintech Outlook for 2023

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.