Fintech Valuations: Navigating a changing landscape

| 5 minutes

Sky-high valuations are so 2021. Faced with soaring interest rates and cautious investors, the overnight Fintech unicorn is back to being a myth.

 Fintech firms are facing a new reality, and with it new valuations that cause headaches, create challenges, and present new opportunities. 

The Decline in Fintech Valuations

According to analysts at Jefferies Group, listed Fintech firms saw their valuations plummet by 70% in 2022. 

Even the biggest names aren’t immune. In early 2021, payments giant Stripe achieved a funding valuation of $95 billion, but its secondary market valuation has since dropped by 73% to $52.5 billion

Cautious investors, cooling valuations

The changing valuations in the Fintech industry reflect the uncertain economic conditions. As interest rates rise and the global economy remains unsteady, investors are becoming more cautious and reevaluating their strategies. 

Combined with the high-profile collapse of Crypto Exchange FTX and the collapse of Silicon Valley Bank in March, investor confidence in Fintech has cooled and so have the valuations. 

Disaster or recalibration? 

At first glance, it seems like bad news for Fintech. If valuations are down, does that mean Fintech’s heyday is over already? 

Industry thought leaders and some investors see it differently, framing today’s lower valuations as a much needed recalibration. 

At the end of September the European Investment Fund (EIF) held a VC event in Luxembourg. They made it clear that they see the valuations of 2020 and 2021 as the issue – anomalies – and today’s valuations have got things back on track. 

New valuations, new opportunities

Decreasing valuations open up opportunities for traditional banks to enter the Fintech space through strategic acquisitions. 

JPMorgan Chase, the largest U.S. lender, jumped on the Fintech acquisition opportunity early, acquiring Renovite Technologies Inc, a cloud-based payments technology company, in September 2022. 

Traditional banking institutions have seen the demand for more innovative financial services. They’ve seen which startups have flourished, and now they have a chance to snap them up at a bargain rate. 

Bucking the trend

Like every good trend, there are some exceptions. HR and payroll-focused firms have seen their valuations hold or even increase. 

Despite the collapse of their banking partner, Rippling’s $11.25 billion 2022 valuation held steady in their recent $500M series E funding round.

HR-tech unicorn Gusto saw their valuation increase by 5% to £10 billion, and remote-working focused Deel remains one to watch as long as they continue to prioritise compliance.  

Their resilience is down to their focus in an area associated with business efficiency. As companies prioritise digital transformation and remote work, the demand for streamlined HR and payroll services has increased. 

For Fintech firms that can identify market trends and position themselves in resilient, growing sectors, overnight success could still be a dream come true. 

Building the team

Building the right team to navigate a changing market, fluctuating valuations, and even possible acquisitions is hard. 

Creating a sustainable revenue pipeline is key to achieving that all-important growth and maintaining valuations. 

We only recruit in one sector, for one type of role: Fintech sales. With our talent network, we know the top fintech talent personally, taking the time to match preferences and personalities as well as job specs. 

To tell us about a sales leader recruitment brief or just to chat to us about the shape of your Sales division, get in touch with the Finiti Search team.

Candidates vs. Companies: Navigating a cautious market

| 5 minutes

The current economic climate is influencing people and businesses the world over, and Fintech is no exception. 

It isn’t just the financial pressures that shape the market, it’s a feeling of uncertainty. Workers are questioning their job security; companies are questioning whether it really is the right time to hire and which roles will add value.

With a decrease in funding and a flurry of high-profile redundancies, on the surface it looks like more candidates competing for a smaller pool of jobs. 

But there’s more to it. Here’s what candidates and hiring companies need to keep in mind in today’s market. 

For Candidates: 

  • Nurture your network

Even if you’re not currently job hunting, think long term and proactively build your network. 

Reach out and connect with peers, leaders, and recruiters. According to LinkedIn, 70% of jobs are never published publicly; new roles are often filled via someone’s network. 

Building those relationships when there’s no “ask” will mean you have a ready-to-go network of people you can turn to and who know you when you are looking for something new. 

  • Explore the level of risk

Everyone has a different risk appetite, particularly when it comes to their job. 

For those who are more cautious, mitigate the risk by focusing your search on the most in-demand areas of Fintech, such as anti-fraud, AI, and ESG. 

It can also pay to look more closely at companies that seem like a “risk”. In Fintech, today’s startup, perhaps offering a smaller package, can be tomorrow’s household name. 

  • Avoid knee-jerk applications 

Avoid playing the numbers game when it comes to applications.

Take the time to reflect on your skills, expertise, and interests. Share those preferences with industry recruiters and tailor your applications to the opportunities you’re most passionate about. 

As the only Fintech sales recruitment specialists, we have the largest network of Fintech talent. We get to know candidates, often placing people multiple times throughout their career. Find out more about joining our talent network. 

For Companies:

  • Communicate the long-term vision 

Uncertainty often stems from a lack of clarity or understanding. Proactively communicate your long-term strategy, including funding, internally and externally; this will help reassure and retain existing sales talent as well as attracting new talent. 

This is especially important if you’ve recently made redundancies; sales leaders and their teams will be looking for reassurance, and staying quiet might encourage otherwise happy employees to look elsewhere. 

  • Dig into motivation 

Though it may seem like there are a lot of candidates around, we’re seeing a rise in the “just-in-case” job hunters who dip their toe in the interview process as a safety net just in case they’re made redundant. 

Many candidates are weighing up a whole range of options, including staying with their current company. 

If a candidate’s main or only reason for leaving their current role is money, they’re unlikely to make the jump and take on the upheaval and risk of a new role. 

Partner with a recruitment firm you trust to make sure candidate motivations are properly explored prior to shortlisting and that you’re only spending time talking to people who are really invested in your business and the role.  

  • Act quickly 

With fewer opportunities around, candidates are often involved in many application processes, and top talent can end up getting snapped up by the competition if you move too slowly. 

According to the Jobvite Employ Quarterly Insights Report, the average time-to-hire is four weeks or less. Be flexible and be prepared to respond quickly when you talk to someone that’s perfect for your firm. 

Finding the right person is hard. Finding the right person at the right time is even harder. It’s why we maintain and nurture a network of top Fintech talent, often drawing passive candidates into the process when we see it’s a great match. 

If you’re getting more quantity than quality applications and want to make sure you’re spending your time on the most promising candidates, get in touch with our team today to tell us about your brief and to start the process of finding your dream candidate. 

 

How to tell if you’ve seen a unicorn

| 5 minutes

Having focused on Fintech for almost 20 years, we’ve seen many ambitious startups grow to become industry-defining leaders and been lucky enough to help them build their teams along the way, including the likes of PayPal

We might not have a crystal ball, but over the years there are a couple of key things that make a startup stand out as having true unicorn potential. 

Killer Concept 

If your first reaction to a new product or service is “how does that not exist already?”, it’s a good sign they’re onto something big. 

Whether it’s something that vastly improves an existing product or service or an innovation that fills a gap in the market, a great concept is the foundational characteristic of any potential unicorn. 

It can’t just be a good idea. To reach household-name status, startups will need a well-defined business model with a clear path to profitability and sustainable revenue generation.

A-Team 

The next thing to look at is the people responsible for turning that great concept into a business: the leadership team

Low turnover at senior levels and a clearly articulated vision are must-haves when spotting future unicorns. 

Dig into the background and experience of those in leadership roles. People with expertise and proven experience in both the sector and a startup environment will be best placed to help businesses navigate challenges and successfully scale. 

Sustained growth

If the idea and the team meet the mark, the next proof of unicorn potential is in the numbers. 

A dazzling balance sheet one financial year might help secure that next funding round, but businesses with true long-term potential will show sustained growth over a number of years

Depending on the product or service, this might be growth in the number of users, the number of markets the business operates in, as well as factors like market share or even an active community on social media. 

Funding 

With sites like PitchBook and Crunchbase, it’s possible to look back and see how much funding a startup has managed to secure and who their backers are. 

Problems with cash flow and funding is one of the main reasons startups fail. 

When a business has managed to secure funding from big-name investors and VCs that know the industry and have a track record of identifying winners, it’s a sign they could be on to something big. 

Reputable funding does more than giving the business a short-term cash boost. Having big-name investors on board acts as a form of social proof, encouraging others to invest and shoring up a startup’s longer-term funding pipeline. 

Time 

It may seem simple, but one of the biggest indications of a startup’s potential is that they’re still around. Surviving year one is a big milestone, but the majority (70%) of businesses fail between years two and five

Passing the five-year mark isn’t a guarantee of long-term success, but it gives you confidence that the business can weather changing conditions and continue to grow. 

Finding your future unicorn

Whether you’re looking for the team to lay the foundations for future unicorn status or you’re on the hunt for the perfect role at the next big name in Fintech, Finiti can help. 

We’re a boutique agency specialising in sales roles within Fintech. Our carefully curated talent network means we match opportunities and people based on much more than CVs and past experience. 

Get in touch with the team today to find out more about Finiti Search, how we work, and the opportunities waiting for you