The Risks of Investing in Fintech That No One Talks About

After a banner year in 2020 and 2021, fintech companies and startups are now feeling the pressure of macroeconomic problems, as many organizations have seen their funding shrink and employee headcount decrease over the last few months. Challenging economic conditions, including skyrocketing inflation, aggressive monetary tightening by central banks, and a slowing economy, have led investors and venture capitalists to withdraw their excitement from the market, for now at least. Much like the once-booming tech sector, financial technology has seen its fair share of public and announced staff layoffs throughout the year. During the first half of the year, 4,189 fintech employees were laid off, representing around 11.2% of the more than 46,700 startup employees who were let go during this time. Fintech, which still managed to enjoy significant growth in 2022, has seen some pushback from portfolio founders and venture capitalists in recent months, as many are now encouraging startups and related establishments to prepare for the worst as a recession looms on the horizon.