A new generation of fintech founders — 2021 focus
As usual with each new year, I am thinking about which area of the fintech space I want to focus on for this year mainly. Infrastructure has been a powerful space the last couple of years, there is still a lot to do in Insurance, and capital markets have barely been changed, although the crypto world is finally starting to intersect (over a minimal area still). However, this year, one of my key focuses will not be market thematic but will be founder thematic.
Looking back at fintech, historically founder of fintech startups, the vast majority had some background in the financial services space (Stripe being a notable exception). This background was not necessarily relevant to what they were doing, but they had some affinity to the banking system. (In the insurtech space, this is to these days even more prevalent.)
However, the infrastructure to build financial services startups has vastly changed over the last couple of years. With the support from investors (such as Anthemis and many others), founders are continuing to build BaaS services that are easier to access from a regulatory standpoint. They have their roots in being a tech platform for financial services vs. being a financial services platform with some tech capabilities. Said differently, your ability to understand API documentation is as or more important than your ability to understand the TOS of a payment institution.
Additionally, we see a generational renewal in founders tackling the financial services space. Not only are we seeing the natural acceleration of employees from fintech companies leaving to start their businesses, empowered by their experience of building financial services product from a tech standpoint culturally. We are also seeing young founders, who have lived most of their lives with fintech products around them, approach these problem spaces like any, with no particular notion that they are more problematic to develop from a complexity or capital standpoint. It also means cross-over spaces (i.e., embedding finance in other services) are also much more willingly explored.
So, what am I going to be focusing on in 2021? A big part of my focus will be on working with this next generation of fintech founders, especially young founders going into the fintech space from a different problem space, whether it is social networks, emerging online behaviors, or gaming, to give various examples. As I have said many times, when people tell me that they are focusing on Infra and less so on direct to consumers plays: my conviction for investing in the infrastructure is the belief it will drive an explosion of exciting services and solutions built on top. Now is the time.
Gen Z is coming for your fintech industry, and it's going to be amazing!