Is the fintech bloodbath over?

I find it hard to believe that two years ago I was writing about a fintech bloodbath and, two years later, it continues.

The drying up of funding, the post-pandemic recession, the way in which the markets were moving from funding to divesting. It seemed a bit unreal. So, has it got better? No. In fact, my hope is that we have reached the bottom and times will turn. After all, we have recently seen some good things rising in fintech. Valuations of the big boys are increasing. Stripe, Revolut, NuBank are doing really well. But, like every market, for every winner there are a hundred losers, and we can see that happening right now as the fintech bloodbath continues. Founders run out of funding and companies go bust.

This is illustrated well by the news from Fintech Global that Singapore is suffering:

In the first half of 2024 the Singaporean FinTech sector experienced a drastic drop-in investment activity. With a mere 75 deals being recorded in the first half of the year, in comparison for the same period last year 138 deals were made, marking a 46% decrease in deal activity. Funding saw a steeper drop, with FinTech companies raising just $1.0 billion in H1 2024, a 50% decrease from the $2.0 billion raised in H1 2023. If a similar trend were to continue for deal activity, the projected total for 2024 would be 150 deals only, a notable 32% reduction from last year’s total of 221.

Equally, it is notable that the number of founders posting on LinkedIn about the end of their days is increasing. For example, here are a couple of updates from LinkedIn connections over the weekend.

The first is from Tally:

After nearly nine years of helping people manage and pay off their credit card debt, we have made the difficult and sad decision to shut down Tally. This was not the outcome we had hoped for, but after exploring all options, we were unable to secure the necessary funding to continue our operations.

Tally was a secure app that made it easy to save money, manage credit cards and knock out credit card debt

Then there was the death of Totem Technologies:

It's a strange and sad day. I just returned home from my last speaking event as the Founder & CEO of Totem Technologies, Inc. We've already shared the news with our customers and tribal partners, but this will be the first time many of our stakeholders may be hearing that Totem has come to the end of its road.

Totem Technologies was “creating pathways to financial inclusion for Native Americans through digital banking” by “partnering with sovereign tribal governments to deliver culturally relevant financial products and education, make tribal benefits more accessible, and help the growing number of self-identifying Natives born off-rez connect to culture”.

It made me think about what’s been going on the last year or two, and an awful lot of fintech firms and start-ups have just run out of cash. It made me search for stats and answers, which led me to Thomson Reuters who thought 2024 would be better than 2023, but note that the Wall Street Journal say that 75% of venture-backed fintechs eventually fail no matter what. Wow! And now, given the river of funding moving into a dry creek, that figure is probably even higher.

The real thing is that, as fledgling firms fail, we should be looking at them not with schadenfreude, but with hope. Obviously these start-ups had some good ideas to get funding and, although they have failed, failure is a learning experience. Equally, any established firm that looks at their good ideas can copy them and probably should. In fact, there’s a cheap market for acquisitions out there and, just to be clear, it may not be acquiring a failed company but acquiring a failed entrepreneur.

Anyone with the guts to give this a go is a worthy person to hire. After all, have you ever tried to break out on your own?