The Fintech Industry Faces Predicted Casualties in 2023 and 2024
Augmentum Fintech, the backer of Zopa and Tide, has made predictions regarding the future of the fintech industry. CEO Tim Levene believes that the withdrawal of what he calls ‘tourist capital’ from the sector is a positive development. Levene notes that two years ago, the excitement surrounding fintech led to inflated valuations, creating a distorted impact.
Now, Levene observes that some fintech companies with less promising prospects are returning to the market in search of fresh capital. He predicts that these companies may face difficulties and possibly fall by the wayside in 2023 and 2024. This anticipation of casualties comes amidst a challenging period for fintech, marked by downrounds and job cuts.
Despite these challenges, Augmentum Fintech reported a rise in the value of its portfolio. By the end of March, the company’s net asset value had increased by 2.4% to 158.9p. Augmentum’s top 10 holdings, which make up 80% of its portfolio value, experienced impressive average revenue growth of 117% in the 12 months leading up to the end of March.
Levene commends the quality of many of their portfolio companies and emphasizes the continued advancement of digital transformation in the financial services sector. He highlights the increased focus from venture investors on companies that display clear paths to profitability and reduced cash burn.