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Fintechs happier to hire B players on small salaries in 2024

Many hoped we'd have been through both the frying pan and the fire of fintech layoffs in 2023. This year, however, the cuts continue, and there a signs things may get a lot worse before they get better.

Mathew Abbot, associate director of recruitment firm Charles Levick, says the venture capital (VC) firms that back fintechs are becoming "a lot more hands on with how they want their money to be spent" due to rising interest rates. There's a lack of "easy money" in the markets, and VCs are giving their portfolio companies stricter deadlines for profitability.

This sentiment was echoed by Venture Capitalists at the LSE Alternative Investment Conference. Shmuel Chafets, general partner at Target Global, said the industry "put too much capital behind the wrong people" and "destroyed the standards of the industry." He said the huge amount of low-interest money firms were working with "tempted [them] to go into all these things that don’t make any sense." 

Fintechs need to survive from one funding round to the next, and Abbot says many have "run themselves into a dead end at series B or C, not because the product wasn't good," but because they weren't as profitable as VCs expect them to be today. Where there have been layoffs, many companies have "been running as cash furnaces for a while and that next check just isn't going to be written."

Because of this, the relentless pursuit of high-value talent may be slowing. Abbot asks, "does every role need an A-Player?" and has noted before that many fintechs are offshoring roles from the major financial hubs they're based in.

There are exceptions, however. He says, "product roles do need to sit in one of those cities," as quality product talent is hard to find in offshore locations right now. As for which fintechs are in more comfortable positions, he says B2B fintechs are more "resilient" and exempt from the "cyclical" nature many B2C startups have. This is evidenced by Dealroom data, where B2B fintechs made up over half of fintech funding in 2023 while B2C dropped from 50% to 20%. Abbot says these fintechs are safer bets because "if you get a product right in B2B, you generally capture a lot of the market."

It could take a year or so to see just how bad the damage is, however. Jack Selby, MD at Thiel Capital, said startups had two years worth of funding left at the 2023 Singapore Fintech Festival (half a year ago), and expects the "vast majority" of unprofitable firms to "go bust." 

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AUTHORAlex McMurray Editor

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