Six fintech investment ideas she wants you to throw out in 2023

Investors Keep telling Sieve This is the time to build. Some of the world’s largest tech companies — think Airbnb and WhatsApp — were born During the last recession, after all.

And even if late-stage funding slows, there’s still tons of cash for early-stage projects. Investors poured $1.5 billion into European seed-stage fintechs in 2022 — just short of the record $1.6 billion raised during the funding frenzy in 2021.

So what kind of fintech ideas would venture capitalists want to see more of in 2023? What market opportunities might rock microclimate create?

Sifted asked some of the continent’s top fintech investors for their thoughts.

Potential founders: Take note!

Embedded financing for enterprises

Sophie Winwood, Director of Anthemis and Co-Founder of WVCE

I would like to see more financial solutions and financial operations software targeting companies. Given the increasing product complexity and longer and more challenging sales cycle, I would assume that companies will take a more sector-specific approach than the generic options currently on the market. For example, a company that targets the travel industry and enables it to offer insurance products that are built in and buy now, pay later plans.

There is a market gap here because existing solutions are mostly aimed at small and medium businesses – and with good reason, because it’s a huge, underserved market; The need is usually simpler; They often adopt technical solutions. But the SME market is likely to be hit worse by the recession, which combined with the already rising customer acquisition costs of going after SMEs, means they become less attractive.

However, medium and large companies are likely to be recession-resistant and will be looking to diversify their revenue streams for the time being. I believe that innovation at the SME level has now laid the foundation for fintech companies to move upstream.

This opportunity is also “2023” in private The idea, due to the growing consumer need for both credit products such as BNPL and protection (i.e. insurance) in the current economic climate.

And extra points if she’s a woman or an organization from a diverse background!

Solutions for capital markets pain points

Rana Yard, General Partner at Balderton

Rana Yard, General Partner at Balderton

We tend to think of fintechs as the big, consumer-facing brands that are known to the general public. But we forget the huge, behind-the-scenes, highly profitable fintech companies that were created to address the major challenges of the pipes and plumbing that are essential to powering financial services.

For me, the biggest opportunity is in this last bucket. I’m particularly interested in companies trying to solve capital markets’ most pressing problems: efficient capital management, cost-effective servicing of products for non-institutional clients (such as retirement or replacements), and massive workflows on legacy systems. Having spent 14 years at Goldman Sachs, with a front row seat to its capital markets division, I’ve seen firsthand how important these operations are to driving value for everyone from the individual investor to the big banks, and how much room there is to improve the way things are currently done.

Successful companies in the capital markets do not necessarily need to break new ground in engineering. But what they need to do is materially reduce operating costs, improve data quality, and gain a deep understanding of the regulations affecting their customers—the traditional financial service providers.

One example that has already resulted in a large successful company in the United States is I capital. It built a technology stack that made the cumbersome and operationally costly process of reaching out to investment alternatives (think hedge funds, trusts, venture capital and private equity) to advisor clients (that is, clients of financial advisors) more efficient. Over the course of a decade, the feeder fund businesses of several major incumbents were taken over.

Open banking for financial services

Luca Bocchio, partner at Accel

Luca Bocchio, partner at Accel

One area I’m particularly excited about is the evolution of open banking into open finance and eventually open data.

We have already seen a proliferation of open banking aggregators, with a focus on developing and maintaining linkages with banks across Europe. This explosion was largely driven by EU PSD2 (Payment Services Directive II) legislation and the UK’s CMA (Competition and Markets Authority) order which set standards around banking APIs in Europe and obligated banks to provide access to the API to third parties. third organization.

What is currently missing is the ability for open banking providers to easily access non-bank data, including insurance, loans, mortgages, payroll and pension data. I think this will change given the success of open banking, and governing bodies will accelerate open access to new data sources beyond bank data. As a result, we will see a wave of new and exciting players in the field of open finance and financial products.

Looking to the future, we will see the creation of open data platforms where financial and non-financial technology can access licensed consumer or business data that expands beyond financial data. Think utilities, cars, smartphones, and smart home/internet of things data. We will begin to see a world where data created and owned by individuals and businesses will be used – with permission – to launch better products and services driven by emerging open data platforms.

More super financial apps

Jeppy Zink, Partner, Northzone

Jeppy Zink, Partner, Northzone

A key value driver for fintech has been the convenience of customers, with the likes of Stripe (B2B) and Klarna (B2C), simplifying cumbersome processes into a gorgeously simple user interface for the customer.

I think customer convenience continues to be the North Star of traction and the market needs more “super apps”, where they can handle a range of related but complex services within a single UI/platform.

wealth management; ERP software that businesses can use to manage day-to-day activities such as accounting – think SAP but for small businesses; And B2B payments are prime examples of sectors ripe for these ideas.

Due diligence platform

Julia Andre, partner at Index Ventures

Julia Andre, Partner, Index Ventures
Photo: Daniel Jones

With the increasing global pressure on counterparty screening, companies must spend significant time and resources on frequent, manual, and repetitive checks.

But what if there was a way to simplify financial risk and compliance? If there is a single platform, where each company can hold down passport?

This will solve a major bottleneck and allow easier access to financial services by increasing B2B trade, global partnerships and boosting the SME economy.

We are in a world with unlimited access to data and amazing advances in artificial intelligence, which creates an opportunity for new entrants to disrupt how entities are screened for risk. I’d like to speak with entrepreneurs who are rethinking the due diligence market.

Companies with large economic units

Khalil Hafaf, Chief Investment Officer, Target Global

Khalil Hafaf, Chief Investment Officer, Target Global

I think many early-stage investors were happy to insure seed deals before revenue in 2021. And that’s starting to change.

We are looking for unit economics that give a positive gross margin right from the start. Scaling a loss-making business for growth at the expense of profitability will no longer attract investors.

Market fit of a product can be determined by many different parameters. In the absence of monetization, compelling engagement metrics will go a long way, for example. Repeat users, retention, limited mobility, and cohort growth (newer cohorts grow in size and existing cohorts increase activity).

Amy O’Brien is a Sifted fintech reporter. she tweets from @tweet And Writes our FinTech newsletter You can register here.

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