The fintech winter cuts both ways
The slowdown in fintech investment is not just a result of caution on the part of VCs—it’s also because fewer startups are seeking fresh capital, according to investors.
A wave of pessimism has cascaded down from equity markets to venture capital, impacting fintech startup valuations. Some recent rounds have produced flat—or even lower—valuations than prior rounds, while other companies are seeking bridge facilities through SAFEs and convertible notes until they can close their next rounds on better terms.
“We’re seeing fewer entrepreneurs pitching and that’s a shame,” Bianca Sassoon, managing partner at 17Sigma—a new VC fund founded by Ualá’s Pierpaolo Barbieri—said at a virtual panel hosted by iupana on Tuesday.
It’s a similar story at ALLVP, said Antonia Rojas, who’s a partner at the LatAm fund with US$200m of assets under management. Shareholders are also cautioning founders against raising new capital in the current environment, she said.
Still, it’s not all doom and gloom, in the eyes of Jay Reinemann,
general partner at Silicon Valley-based Propel VC, which manages US$400m of VC investments for BBVA.
“I’m more excited about LatAm than I am the US, especially in fintech, because I think there’s so much that’s not done yet,” he said. The sector has matured, and experienced fintech managers are helping power local businesses forward.
ALLVP’s Rojas shared a similar sentiment. “2022 is a year in which I hope we will have more capital available than we had prior to 2019 but with the right fundamentals. We have more talent. So actually, I’m very optimistic.”