Community
56 % drop in fintech investments...interesting number...
however, the headline doesn't tell it all...
The total amount invested in fintechs fell 56 %, ok. However , the total number of investments in fintech dropped only by 18 %. If it were for rising interests exclusively, the number of investments would have gone down proportionally... Where then does the difference come from?
Simple!
Ratio got back in the game. Investors started looking at reality and at fundamentals as opposed to vain promisses. The article only refers to PE and VC deals...
These typically follow earlier angel, friends and family and/or crowdfunding deals. Those early-stage funding rounds provide the financial basis that start-ups need to launch and scale their enterprises before becoming attractive to the VC and PE investors. Here we may find a more hidden issue : the pre-seed funding gap. Far too many start-ups come short of pre-seed funding because of 2 obvious reasons :
1. the absence of sufficient data for a proper valuation and
2. the complexity of deal making.
Both issues get addressed by Y-Combinators SAFE contract model. Today SAFE-contracting, in Europe, is slowly spreading and being digitalized, thanks to technologies such as Blockchain.
I can only recommend that founders as well as business angels and (pre-)seed investors keep a close eye on the opportunities offered by Simple Agreements for Future Equity.
They form the best possible balance between investor and founder interests.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Sergiy Fitsak Managing Director, Fintech Expert at Softjourn
14 August
Mete Feridun Chair at EMU Centre for Financial Regulation and Risk
Oleksandr Strozhemin Co-founder and CEO at Trinetix
13 August
Elaine Mullan Head of Marketing and Business Development at Corlytics
12 August
Welcome to Finextra. We use cookies to help us to deliver our services. You may change your preferences at our Cookie Centre.
Please read our Privacy Policy.