What’s a fintech even worth these days?

It’s not news that times have changed in the world of fintech. After financial technology startups saw their fortunes rise during the venture capital boom that loosely wrapped as 2021 came to a close, they’re now suffering from a slump of a similar scale.

The damage is not unidimensional. Instead, pain around the fintech sphere is varied and multifactorial. Today, I want to run through some key data points that are jostling around my head. These include the latest from Coinbase and Klarna, where neobanks sit in the current valuation climate, and what the changing market means for venture capital dollars that poured into the sector globally during the last few years of heady private-market investment.

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The gist, as you can work out from the above, is that fintech was the hottest thing around last year, a fact that may now turn into a venture capital and startup headache.

TechCrunch reported earlier this year, citing CB Insights data, that as global venture capital funding rose to $621 billion in 2021 from a comparatively modest $294 billion in 2020, fintech investment itself rose to $131.5 billion from 4,969 deals, up from $49 billion invested into 3,491 deals in 2020.

So the money at stake here is in the hundreds of billions in terms of invested capital, and likely trillions when we consider the value of startups that raised while times were good. (Recall that Crunchbase estimates the total value of all global unicorns at $4.6 trillion, though that number likely includes some zombie valuations no longer pertinent in a more conservative investing market.)

Refreshed about the capital that went into fintech, let’s now digest the less-than-winsome news blowing off the high seas of startups building financial technology.

What’s fintech revenue worth?

As software valuations rose during the 2020-2021 venture capital peak, every company out there wanted to be a tech company at least and a software company at best. That’s because the value of software revenue, measured on a per-dollar basis, rose sharply. Every dollar of software revenue that a company could lay claim to could yield as much as $30 or $50 or even $100 in value.

So, folks worked to either build software incomes or rebrand their other revenues as such. This is an issue for many fintech companies because it has been noted recently that much of their income was not software, but instead something else that software facilitated. The two substances, however, are not the same.