Is fintech’s Series A market hot, or just overhyped?

Tech Crunch | Ryan Falvey, Theo Katsoulis | Nov 1, 2020

getty 1 - Is fintech’s Series A market hot, or just overhyped?According to industry reports, venture capital deal-making has notably rebounded since dropping off briefly in March as shelter-in-place orders gripped much of the country.

As seed-stage fintech investors, this has certainly been our experience: “Hot” deals are getting funded faster than ever, and we increasingly see the large multistage global funds competing for the earliest access to companies.

See: Fintech Startups Broke Apart Financial Services. Now The Sector Is Rebundling

However, in our experience and anecdotal conversations with other early-stage investors, that excitement has not been translating to the Series A stage.

We’ve increasingly wondered if the Series A market in fintech is really as hot as it seems. As pre-seed and seed-stage investors, we know that the health of the Series A market is of critical importance.

In early October 2020, the Financial Venture Studio put together a brief survey of the Series A market in fintech and shared it with more than 100 investors with whom we work closely. Despite the high-level numbers indicating a healthy market, our research indicates a market that remains in flux, with significant ramifications for early-stage founders.

Although the seed and pre-seed fintech market continues to attract substantial entrepreneurial and investor interest, it is also in some ways one of the easiest parts of the market to fund.

The check size is smaller, the velocity of new deals is highest, and while the potential returns are also the highest, this is also the part of the market where information is most scarce.

Perhaps counterintuitively, the fact that there is so little information on a business — aside from a plan, a team and maybe some early anecdotal evidence to support the vision — actually makes it easier to “pull the trigger” on deals where those data points align. There just often isn’t a lot more to dig into.

See: Fintechs to play an “even more important” role coming out of lockdown, says British Business Bank

Similarly, by the time a company is raising Series B capital, they typically have some objective evidence that the idea is working. Companies are typically generating revenue, small teams have grown and become more sophisticated in how they operate, and importantly, the governance functions of a company have (hopefully) begun to take shape.

The simple existence of a board member with invested capital at stake means that some of the more existential risks of the earliest stage have been mitigated.

 

Continue to the full article --> here

 

 


NCFA Jan 2018 resize - Is fintech’s Series A market hot, or just overhyped? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Is fintech’s Series A market hot, or just overhyped?FF Logo 400 v3 - Is fintech’s Series A market hot, or just overhyped?community social impact - Is fintech’s Series A market hot, or just overhyped?

CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS!



FFCON20 Pitching and Demo Winners - Is fintech’s Series A market hot, or just overhyped?



NCFA COVID 19 letter to government to support Fintechs and SMEs - Is fintech’s Series A market hot, or just overhyped?

NCFA Newsletter subscribe600 - Is fintech’s Series A market hot, or just overhyped?