Investors are seeking more mature fintech firms
Investors are focussing on more mature fintechs rather than early stage firms, according to analysts.
A webinar from CBI Insights explored trends from its latest report, including how fintechs are faring and responding to the pandemic.
The first quarter of 2020 was difficult with fintech funding stalling as investors largely pulled back. However, the second quarter saw some major financing rounds for companies like Stripe and Robinhood.
CBI Insights said that fintechs are drawing on all available financing options, including extension rounds such as Stripe’s Series G. It also found that investors want to remain liquid and are more hesitant to lock funds up in earlier-stage opportunities.
Read more: Covid-19 contributes to contraction in fintech funding
Read more: Global fintech lending worth £230bn by end of year
“Therefore, investors are putting money in later-stage, more mature companies (like Robinhood) with clear unit economics and paths to profitability,” CBI Insights said in a blog on its website.
“In general, we expect continued uncertainty and funding pullbacks.”
Read more: Majority of fintechs not receiving government help
The firm expects financial services networks and infrastructure and e-commerce functionality to continue to see lots of investment and early-stage activity.
CBI Insights also highlighted the regulations that will shape the future of fintech.
The analyst said regulators in the US are becoming more open and responsive to fintech companies acquiring bank charters and it is watching global digital currency and stable cryptocurrency regulations to see how crypto plays out, as well as global open banking regulations and their impact.
Read more: European Fintech Association launches
CBI Insights said there is an opportunity in commercial insurance products because traditional commercial insurance products do not cover data breaches, network interruptions, or other cyber risks.
“While companies are heavily investing directly in cybersecurity technologies to prevent these attacks, they’re also increasingly purchasing cyber insurance policies to protect themselves in case of an attack,” the analyst said in the blog.
