TheStateofFintechAReviewoftheHealthandTrendsoftheFintechIndustry2022TheStateofFintech20224TheMacro:ChangingFintechLandscape7InvestmentandBenchmarking:FoundersFocusonFundamentals13OnExits:Hold,BacklogBuilds16Web3Spotlight:BuildingforaCryptoFutureTheStateofFintech:2022 2ExecutiveSummaryWhiplash!Thistimelastyear,Iwaswritingamuchdifferentcoverletter.Theinnovationeconomywasatthepeakofitsbestfundingyearever,andfintechwasatthecenterofthatsuccess.Ourclientswereraisingmoneyatabreakneckpaceforstaggeringvaluations.Fast-forwardtonowandmarketconditionshavechangeddramatically.Clientsaretellingusaboutplansto“trimfat”andextendrunwayasconsumerdemandsoftens.Whilethepublicmarketsgrapplewithacorrection,morepeoplewanttoknow:“Hasthefintechbubblepopped?”Fromavaluationsstandpoint,youmightseeaneasyanswer.High-profilecompaniesinourspacehaveseentheirpublicvaluationsfallsharplyoverthelast12months.Andwhiledownroundsarestillrare,it’sclearthatvaluationsareresettingintheprivatemarkets,too.Butthat’sonlypartofthestory.Toughmarketconditionsprovidethebestconditionstogrowresilientstartups.That’swhatwe’reseeingnow.Ahealthypipelineofpromisingnewfintechcompaniesisrisingtotheoccasion,whilemoreestablishedcompaniesareseekingnewgrowthopportunitiestocapturemarketshare.Inthisyear’sTheStateofFintechreport,wediveintothesetrendsandleverageSVB’sunmatchedproprietarydatatoofferauniqueperspectiveonthefintechindustry.Investmentmaybecoolingfromtherecordhighin2021,butnotbymuch.VentureCapital(VC)investorsareonpacetodeploy$38BintoUSfintechthisyear,thesecond-highestannualtotalfortheUS.Inourbenchmarkingsection,wedetailwhichsubsectorsarefaringbest,indexingkeyperformanceindicators(KPIs)likecashrunwayandrevenuegrowth.OurexitssectiondetailsthebacklogofIPO-readyfintechcompaniesandthegrowingstableoffintechunicorns.WeexploretheregulatorychallengesfacingWeb3companies,consumerlendersandneobanks.Thisyear,we’vealsoincludedaspotlightonWeb3,takingacloserlookatdecentralizedfinance(DeFi)andtheintersectionbetweencorporationsandcrypto.There’snodenyingit’sbeenachallengingyear,butmarketmomentslikethesecanalsopresentagoldenopportunityfordifferentiation.Fintechinfrastructure,commerciallendingandregtechareareaswithstronggrowthpotentialinthenearterm.Lookingaheadinto2023,theeconomicpictureremainsfoggy,butourconfidenceinthelong-termresilienceofthefintechsectorisunwavering.DanAllredSeniorMarketManager,FintechSiliconValleyBankTheStateofFintech:2022 3Macro:TheChangingFintechLandscapeTheFutureStateofFintech:Climate2022Tech44Here’sLookingatYou,FedAfteryearsofconsistentgrowth,aneconomicslowdowniswellunderway.USinflationreacheda40-yearhighinNovember2021andhasstayedstubbornlyputeversince,unmovedbyfiveconsecutiveratehikesfromtheFederalReserve.ThehikespushedthebenchmarklendingratefromnearzeroinFebruaryto3.83%inNovember,thefastestincreasesince1980.Concernsoverinflation,risingratesandgeopoliticaltensionhavecausedpublicmarketstoenterbear-marketterritory.BoththeS&P500andNasdaqCompositeindicesareonpacefortheirworstannualreturnssince2008.Oneofthemostexposedsectorstothesemacroforcesisfintech.VC-backedcompaniesthatleveragedthefreecashenvironmenttoofferproductssuchasbuynow,paylater

ChangeinUSInterestRates1PersonalLoans(24Mos.)CreditCardsFedFundsRateAutoLoans(60Mos.)Mortgage(30Yrs.)SinceFeb’22Fedcutsrates3%Mortgagerates+313bpsatthestartofdoublefromthepandemiclowto6.90%2%Mortgagerates+171bpshitanall-time+300bpsFedbegins1%lowof2.67%ratehikes0%+98bps+75bps-1%-2%2020 2021 2022

USLoanDelinquencies2TotalDelinquentConsumerAssetsBusinessLoanDelinquencyRateConsumerLoanDelinquencyRate$40B3.0%+34%$35B2.5%$30B2.0%$25B$20B1.5%$15B1.0%$10B$39B$30B$29B$33B$26B$23B$25B$29B$28B$31B0.5%$5B$B0.0%202020212022(BNPL)loansandnon-interest-bearingcheckingaccountsmaynowfacestiffercompetitionfromtraditionalbanksthathavedeeperdeposits—acheapsourceofcapital.Fintechcompaniescanpivottomeetthesechallenges,butchangestaketime.Andretainingcustomerscouldrequirestartupstospendheavily,andeventakelosses,atatimewhenequitycostsarehighandinvestorsarevaluingprofitabilitymorethangrowth.Theuncertaintyisweighingheavilyonfintechstocks,wipingoutmostgainsfintechcompaniessawduringtherecentbullmarket.TheSTOXXGlobalFintechIndex,forexample,outperformedtheS&P500untilNovember2021buthastradedatadiscounteversince.Trendsthatbenefitedfintechcompaniesduringtherun-upofthepastdecadearenowreversingthemselves.Consumerinterestratesareupacrossallcategories.Householdbudgetsaretighteningasdebtpaymentsgrowandinflation-adjustedwagesdrop.Mortgagerates,forexample,havemorethandoubledinthelastyear.Delinquencyratesforconsumerdebtarealsoincreasingwithdelinquentconsumerassetsup34%sinceQ22021.

ReturnsofS&P500andSTOXXGlobalFederalFundRateHikes4FintechIndexSinceJan202031983-841988-891993-951999-20002004-062015-1920222022Expected(Jan.’20=0)Index(Jan.’20=0)IndextoS&P500Index5%60%Fastest42.6%43.6%4%increase40%since19803%20%13.8%0%2%-14.3%Nov.’21–Sept.’22:-11.3%-20%1%-18.6%S&P500outperformsfintechsector-40%0%202020212022202304812162024283236MonthsSinceStartofRateHikeNotes:1)Onebasispoint(bps)isequivalentto0.01%.Autoratesarefornewvehicles.2)Delinquentloansarepastdue30daysormore.3)Asof9/20/2022.TheSTOXXindexincludes172companies.LogosfromLtoR:Visa,PayPal,Adyen,Robinhood,WorkdayandToast.4)ChangeinmonthlyaverageofthedailyFederalFundsEffectiveRate.ExpectedratebasedonmedianprojectionoftheFederalOpenMarketCommittee.TheStateofFintech:20225Source:St.LouisFed,ClevelandFed,S&PCapitalIQ,PitchBookandSVBanalysis.StillBuffering:RegsLagInnovationThepaceoffintechinnovationssuchasdigitalwallets,peer-to-peerlending,commission-freestocktradingandcryptocurrencyhasstrainedfederalregulators’abilitytopolicethem.WhiletraditionalfinancialinstitutionsgrappledwithamountainofnewregulationsfollowingtheGreatFinancialCrisis,fintechcompanieslargelyavoidedsuchregulationstobuildtechplatformswithlessoversightthanthelargebanksandinstitutionstheyweredisrupting.Theresultisashiftingmeshofrulesthatareexpensiveforfounderstonavigateandcomplicatedforconsumerstounderstand.Fintechstodayareoverseenbydozensoffederalagencieswithbroadmandatestoprotectconsumersfromdatabreaches,unfairlendingandfraud,whilealsoensuringdigitalplatformsdon’tenablecriminalactivitieslikemoneylaunderingoravoidinginternationalsanctions.Twocompaniesthatprovidesimilarservicesmayfacevastlydifferentregulatoryregimes.Coinbase,forexample,isregisteredasamoneyservicesbusinesswiththeTreasuryDepartment(thesameasWesternUnion),whileRobinhood,whichalsoofferscryptotrading,isregisteredasabroker-dealerwiththeSecuritiesandExchangeCommission(SEC).SoFiissuesloansunderitsownUSbankingcharter,whileChimeoffersloansthroughthird-partybanks.Thelegalrisksaresofraughtthatmanyfintechsturntoregulatorytechcompaniestostaycompliant.Nowthateconomicuncertaintyismounting,federaloversightisonlyheatingup.InSeptember,theConsumerFinancialProtectionBureau(CFPB)signaledthatgreaterscrutinyiscomingfortheshort-termconsumerloansknownasBNPL,whicharen’trequiredtogivedatatocreditagencies.PopularityforBNPLskyrocketedduringthepandemic,withoriginationsjumpingfrom17millionloansin2019to180millionin2021—a10.6xincrease.

USTimeline:TheRiseofFintechCompaniesandKeyRegulatoryActions1USVCDealsinFintechTTMUSFintechUnicornDeals(Pre-MoneyValuations)ValueofUSVC-backedFintechCompaniesTTM2,500CommoditiesFuturesJusticeDepartmentestablishescryptoenforcementteamDodd-FrankActSection1033OfficeoftheComptrollerTradingCommission(CFTC)requiresbankstoprovideoftheCurrency(OCC)$500Bdefinescryptocurrenciesasconsumersdigitalaccessallowsfintechstoapplycommoditiesunderthe$35B2,000totheirfinancialrecords.fornationalbankcharters.CommodityExchangeAct.CFPB$400BSEC,CFTCandFinCENannouncesissuejointstatement1,500greaterSECpublishesDAO2ondigitalassets.on$300B$22B$24BscrutinyReportandissuesTreasuryDepartment$20BBNPL.guidanceonICOs.31,000CFPBisestablished.issuesguidanceonvirtual$200Bcurrencyexchanges.$14B$13B$13B500$9B$11B$11B$100B$6B$8B$7B$8B$7B$7B$4B$4B$4B$3B$4B$3B0$2B$2B$1B$2B$2B$2B$0B20102011201220132014201520162017201820192020202120222023USRegulationsonFinancialServices4USBNPLLoanOriginationsandVolumeNumberofRestrictionsbyAgencyBNPLLoanVolumeBNPLLoanOriginations50kTheDodd-FrankAct16.5k$24Badded20kfederal10.6xrestrictionsonbanking,40kinsuranceandsecurities.12.0kincreaseinBNPLloanoriginations180M30kfrom2019to9.8k202120k6.6k$8B10k$2B68M3.8k0k17M197019801990200020102020201920202021Notes:1)SquarebecameBlockin2021.Notshown:Stripevaluedat$95BinMarch2021.2)DecentralizedAutonomousOrganization3)InitialCoinOffering4)Thenumberofrestrictionsimposedbyfederalagenciesoverseeingthefinancialsector.Restrictionsarethewords“shall,”“must,”“maynot,”“required,”and“prohibited”inregulations.Logosfromtoptobottom:SEC,CFPB,CFTC,FederalDepositInsuranceCorporation(FDIC),NationalCreditUnionAdministration(NCUA).TheStateofFintech:20226Source:Reghub.ai,CFPB,PitchBookandSVBanalysisInvestmentandBenchmarking:FoundersFocusonFundamentalsTheFutureStateofFintech:Climate2022Tech77FlatIstheNewUpFintechwasamongthebest-fundedsectorsinarecordyearfortheinnovationeconomyin2021.Investmentinfintechsjumped2.5xfrom2020to2021,whileinvestmentforallsectorsincreased2x.Intenseinvestorcompetitionfordealscausedvaluationstoballoon.ByOctober2021,themedianSeriesC+valuationwas$965M,up2xfromOctober2020.Yettheenvironmenthaschangedin2022.VC-backedvaluationsatallstageshavestartedtodeclineasinvestorspausedforthesummer,hopingpublicmarketswouldrebound.Withnorallyinsight,realityissettinginandvaluationsareretreating.Thesteepestdeclinesinvaluationhaveoccurredforlate-stagefintechcompanies,whicharemostsusceptibletopublicmarketvolatilityandchangesinthevaluationsoftheirpublicmarketcomps.Enterprisevalue(EV)tonext12months(NTM)revenuemultiplesforpublicfintechcompanieshasdeclined55%

USFintechVCInvestmentUSFintechTrailing180-DayPre-moneyCapitalInvestedDealsExtrapolationValuationIndex12,1252,005300SeriesStartPeakEndSeed$7M$15M$13M$38B250A$23M$63M$55M1,1601,1681,2151,476200B$72M$263M$200MC+$499M$965M$733M150100$15B$17B$22B$56B$28B5020182019202020212022202020212022sincethemarketpeakedonJanuary3,2022.Whileearlystagevaluationshavedeclined,thesecompaniesaregenerallymoreshelteredasinvestorsrecognizethattheearlystageisalong-termgameandcanweatheradownmarket—evenbenefitingfromtheavailabilityoftalenteconomicslowdownspresent.However,valuationsdon’ttellthewholestory.Anecdotally,investorsareofferingtoughertermswith1-2xliquidationpreferences.Suchacompromisecanbeacceptableforfounderswhowanttoavoidadownroundandinvestorswhoprotectthemselvesfromdownsiderisk.Whiledownroundsarenotgenerallyreportedindata,analysisofSVB’sproprietarycalllogsindicatesthatdownrounds,flatrounds,insideroundsandextensionroundsarebeingdiscussedmorefrequently,asignthatmorecompaniesareconsideringthesemeasures.

MedianUSValuationStep-upbySeriesSeedtoA SeriesAtoB SeriesBtoC400%350%300%250%200%150%100%50%0%2019 2020 2021 2022

DownRoundSentimentonPrivateUSCompanyCallLogIndex2FintechFrontierTechEnterpriseSoftwareConsumerInternet500400Indexed300to1002001000Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3202020212022Notes:1)AsofMedianpre-moneyvaluationforthetrailing180days,smoothedwitha30-daymovingaverage.2)UsingSVBdatafromcallswithprivatecompanies.Trailing6-months:Mentionsofdownrounds,flatrounds,insideroundsorroundextensionsTheStateofFintech:20228Source:PitchBook,SVBproprietarydata,andSVBanalysis.ShineFadesforConsumerAppsWhenitcomestofunding,certainfintechsubsectorshavefaredbetterthanothers.Blockchain,CryptoandWeb3companieshaveremainedmostresilientatattractingdealflowin2022.Thesecompaniesexperiencedtheslightestdropinyear-over-year(YoY)dealactivityofanysubsectorbuthavegainedbillionsinnewinvestments,benefitingfromcrypto-specificVCfundsthatwereraisedin2021.However,cracksbegantoshowinQ3followingdeclinesincryptoassetprices.Web3postedlargequarter-over-quarter(QoQ)declinesindealflow.Thehardesthitsubsectorsin2022arethosemostexposedtothenegativemacroconditionsimpactingconsumerdemand.Consumeralternativelendingandpersonalwealthmanagementhavebothseendealcountscutinhalfin2022,withinvestmentvolumedownbyoverathird.Consumerpaymentappssawinvestmentdropby73%from

USVCInvestmentandChangeinDealCountbyFintechSubsector2ChangeinDealCountQ42021toQ32022CapitalInvestedYTDasofQ32022|ABCChange:CapitalInvestedChangeinDealCountQoQ2022FullYearOutlook2021to2022Outlook-36%-4%BlockchainandCrypto$7B$10B|33%-36%-12%Web3withFintechApplications$9B$12B|30%-20%-14%Payments:Commercial$2B$3B|-39%-17%-17%Insuretech:Commercial$2B$3B|-4%Notes:SignificantoverlapbetweenWeb3and-38%-20%FintechInfrastructure$3B$4B|-7%BlockchainandCrypto-39%-25%RealEstateFintech$3B$3B|-39%-27%-10%Insuretech:Consumer$1B$2B|-55%-29%10%AlternativeLending:Commercial$2B$2B|48%-39%-36%FinancialBusinessProcessSoftware$3B$4B|32%-38%-24%PaymentsConsumer$782M$1B|-73%-53%-39%PersonalFinanceWealthManagement$3B$4B|-37%-54%-25%AlternativeLending:Consumer$647M$863M|-35%2021totheextrapolatedtotalfor2022.Thesesectorsarebeinghamperedbyrisinginterestrates,tighteninghouseholdbudgetsanddownpublicmarkets.Robinhood,forexample,lost6.6millionusersin2022,droppingfrom22.5millionin2021to15.9millionthisyear.1Whileconsumer-facingappsarestrugglingtoattractfunding,B2Bfintechcompanieshaveremainedrelativelyrobust.Commercialpayments,commercialinsuretech,andfintechinfrastructurehavebenefitedfromincreasedinterestinbuildingtherailsandinfrastructureforenterprisefintechapplications.Wecanseethesetrendsplayoutinrevenuegrowthratesforconsumerandcommercialfintechplatforms.Consumerfintechsawsubstantiallyhighergrowthratesin2019and2020asconsumersmovedtheirspending,bankingandinvestingtofintechplatforms.However,startinginmid-2021,revenuegrowthratesforbothconsumerandcommercialsectorsbegantotrendtogetherasconsumeradoptionoffintechhasplateaued.

USVCInvestmentbyCustomerTypeCommercialFintech ConsumerFintech450400350300 Indexedto100150100500Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q32019202020212022

MedianYoYUSRevenueGrowthbyCustomerTypeCommercialFintech ConsumerFintech160%140%120%100%80%60%40%20%0%Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q32019202020212022Notes:1)EstimatefromBusinessofA2)Web3companiesoverlapwithothersubsectors;ChangeindealcountcomparesQ42021dealcounttoQ32022.TheStateofFintech:20229Source:PitchBook,BusinessofA,SVBProprietarydataandSVBanalysis.MoreMoney,LessProblemsAsCOVID-19hitinearly2020,companieswereadvisedtocutburnandraise18-24monthsofrunway.Manycompaniesdidsosuccessfully,andasaresult,thenumberofcompaniesthatneededtoraisecapitalwithin12monthsdroppedsignificantlyacrossallstages.Whentheworst-casescenariodidn’tplayout,operationsreturnedtonormal,butcompanieshadstockpilesofcashinthebank.Notonlyhadstartupssaved,manyhadalsoraisednewrounds.Theinvestmentclimatewasgoinggangbusters.Companiescouldraisecheapequity(giventhehighvaluations)andsignificantsumsofcapital.Forexample,SeriesBvaluationspeakedatalevel265%higherthanthestartof2020.ThisledtoasurgeincashbalancesforUSVC-backedcompanies.Theyputthemoneytowork,andburnratesclimbed.Subsequently,remainingmonthsliquidity(RML)begantofall—substantially.Paymentscompanies,forexample,hadamedianof40monthsrunwayattheheightofthepandemicasdemandforcashlesstechnologyskyrocketedandinvestorsfilledtheircoffers.Asspendingincreased,cashrunwayforpaymentscompaniesfellto12monthsbyQ32022.Today,44%offintechcompanieswithunder$10Minrevenueneedtoraisecapitalinthenext12months.Withtop-tierinvestorssuchasSequoiarecommending18-24monthsofrunway,thesecompaniesmayfaceatoughfundraisingenvironmentastheylooktoextendrunwaywithoutbeinglabeledasdistressedbyVCs.Wehavealsoseenanincreasedinterestincompaniesseekingnon-dilutivefinancing,suchasventuredebt,toincreasetheircashrunway.It’sbecomingmorecommontostackaventureloanontopofafundingroundasawaytomaximizerunway.

VC-backedFintechCashBalances1CashandCashEquivalentsIndexedto100inQ42019TTMUSVCInvestmentInFintech190$60B180$50B170160$40B150Indexed140$30Bto100130$20B120110$10B10090$BQ4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q32019202020212022MedianMonthsofCashRunwaybyRevenueBand2Q42019Q42020Q42021Q32022402921191718241615141614151412110-Early$10M $10MMid-$25M $25MLate-$50M $Corp50M+

ShareofUSVC-backedFintechwithLessthan12MonthsofRunwaybyRevenue2$0-$10M $10M-$25M $25M-$50M $50M+50%40%30%20%10%0%Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q320182019202020212022MedianMonthsofCashRunwaybySubsectorQ42019Q42020Q42021Q3202240271819231515181312128InsuranceTech Payments RealEstateNotes:1)MedianvalueofcashandcashequivalentsheldbyUSVC-backedfintechcompanies,indexedto100inQ42019;usingtrailingtwoquartersoffinancialdata.2)Annualrevenuecalculatedbymultiplyingtherunrateforthetimeperiodbythenumberofperiodsinayear.TheStateofFintech:202210Source:SVBproprietarydataandSVBanalysis.SlowYourGrowThetougheconomicenvironmentistakingitstoll.Aswithothersectors,fintechcompaniesaregrowingmoreslowlyin2022.Anincreasingsharearenotgrowingatall.SVBproprietarydatashowsthat38%offintechcompanieslostrevenuefromQ22022toQ32022,upfrom26%thepriorquarter.Publiccompanieshavemirroredthislacklustergrowth.AmongformerlyVC-backedfintechcompanieswentpublicsince2018,theaveragerevenuegrowthweightedbycompanysizefellfrom16%inQ42021to-3%inQ32022.Theheadwindsfacingthesecompaniesareprimarilydrivenbythepaceofinterest-ratehikes.Fintechsfacelesscompetitionfromtraditionalbankswheninterestratesarenearzeroandequityischeap.Mostneobanks,forexample,don’tofferinterestoncheckingaccounts,andmanyrelyonthird-partycharteredbankstoissue

DistributionofUSVC-backedFintechCompaniesbyQoQRevenueGrowthNegativeGrowth0%-50%50%+61%60%60%59%51%12%morecompaniesareexperiencingnegativegrowthratesinQ3 38%2022comparedtoQ2202221% 24% 22% 26%12%18% 16% 17% 15%Q32021 Q42021 Q12022 Q22022 Q32022

ShareofCompaniesbyRevenueGrowthandRevenueBand1PositiveQoQRevenueGrowthNegativeRevenueGrowth66%offintechcompaniesare77%76%86%79%84%growingslower71%73%74%inQ32022ascomparedtoQ2.20212022202120222021202220212022$0-$10M $10M-$25M$25M-$50M $50M+loans.Theirvaluetendstobeintheconvenienceandflexibilityoftheirtechinterface.Astraditionalbanksofferhigherinterestondeposits,customerretentionmaybecomeaproblemforplatformslikewalletapps.Thefastpaceoftheratehikesmaybeespeciallychallenging,becausecustomersaremoreawareoftherisingratesthantheymightbeiftherateswereslowlyincreasingovermanymonths.Whilefintechgrowthislackluster,thereisnoescapingthefactthatfintechisincreasinglyembeddedinallourfinancialdealings.Forexample,somecompaniesintheinsuretechindustrybenefitfromgrowingchallengesintheregulatoryenvironment,whichcreatetailwindsforcompaniesofferingcomplianceandrisk-managementsolutions.Soshort-rungrowthmaybehampered,butlong-termgrowthofthesectorisallbutassured.

MedianQoQRevenueGrowth:USFormerlyQoQRevenueGrowth:USFormerlyVC-backedFintechIPOsSince20182VC-backedFintechIPOsSince20183Middle50%ofCompaniesMedianAverageRevenueGrowthWeightedbyCompanySize16%500%400%300%200%100%2%0%20192020202120222019202020212022201920212022-100%2020Q42021Q12022Q22022Q32022-3%-3%InsuranceTechPaymentsRealEstateNotes:1)Annualrevenuecalculatedbymultiplyingtherunrateforthetimeperiodbythenumberofperiodsinayear.2)Analysisusestrailingtwoquarterstocalculatepercentile.3)FintechcompaniesthathavebeenlistedonamajorUSexchangesince2018.TheStateofFintech:202211Source:SVBProprietarydataandSVBanalysis.TimeforaHaircutJustasyoucan’tstopatrainonadime,itturnsoutyoucan’tcutcompanyspendinginasinglequarter.FivemonthsafterprominentinvestorssuchasLightspeedandCraftVenturesfirstwarnedfounderstobegintighteningtheirbelts,companiesarefinallycurtailingtheirspending.AccordingtoSVBproprietarydata,thereweremorefintechcompanieswithdecreasingnetburninQ32022thanatanypointsincethepeakofCOVID-19lockdownsinQ22020.Thecutsgiveusoptimismthatcompaniesareright-sizingtheirexpensestomatchdecreasedexpectationsforspendingandslowerrevenuegrowth.Adspendwasthefirsttogo,withcutsfirstspikinginQ32021.ByQ22022,59%ofcompanieswereslashingmarketingspend.Computingspendwasnextwith35%ofcompaniesmakingcutsinQ32021,increasingto50%byQ22022.CompaniesappearedtoholdoffonpayrollcutsuntilQ22022,whentheyspikedto41%ofcompanies.

USVC-BackedFintechEBITDAIndex1USVC-backedFintechChangeinNetBurnQoQChangeIncreasing>25%Decreasing>25%150150Increasing<25%Decreasing<25%AbundantcapitalfuelsCompaniescut100100growthatallcosts.spendingduringAbundant100%COVID-19.capitalfuels5050growthat80%allcosts.00IndexedSpending60%to100-50-50cutsbegintoimprove40%-100-100EBITDA.20%-150-1500%-200-200Q2Q4Q2Q4Q2Q4Q2Q4Q2Q4Q2Q4Q4Q1Q1Q2Q2Q3Q3Q4Q4Q1Q1Q2Q2Q3Q3Q4Q4Q1Q1Q2Q2Q3Q32017201820192020202120222019202020202020202020212021202120212022202220222019202020212022Amongsubsectors,fintechinfrastructure,realestateandalternativelendingcompanieshavethehighestshareofcompaniescuttingpayroll.Paymentsandblockchain/cryptosectorshavethefewestcompaniescuttingpayroll.Intheshortterm,weexpectpayrollcutstocontinue,asnewtechlayoffsareannounced.Thetechemploymenttrackerlayoffs.fyihascounted6,400layoffsintheUSfinanceandcryptosectorssinceJanuary,accountingfor12%ofallUStechlayoffstrackedonthesite.InQ32022,399companiesannouncedlayoffs—themostsinceinitialCOVID-19lockdownsinQ22020,when428companiesannouncedlayoffs.

ShareofCompaniesCuttingSpendQoQbyCategoryPayroll Computing Marketing60%50%40%30%20%10%Q1Q2Q3Q4Q1Q2Q32021 2022Notes:1)Annualizedmedianindexedto100atstartoftheperiod.Source:SVBproprietarydataandSVBanalysis.

ShareofCompaniesCuttingPayrollSpendQoQbyFintechSubsectorQ320222021AverageFintechInfrastructureRealEstateAlternativeLendingPersonalFinanceInsuretechFinancialBusinessProcessSoftwareBlockchainandCryptocurrencyPayments0% 10% 20% 30% 40% 50% 60%TheStateofFintech:202212Exits:OnHold,ButBacklogBuildsTheFutureStateofFintech:Climate2022Tech1313IPOsSlow;BacklogContinuestoBuildFollowingarecordyearofliquidity,theIPOwindowhasundoubtedlyremainedshutin2022.IthasbeennearlyayearsincethelastUSVC-backedfintechIPO,andwhilethisisn’tunprecedented,itislongerthanmostinvestorswouldprefer.WiththeslowdownintraditionalIPOs,SPACsstartedtotakeupagrowingproportionofIPOs,with167SPACshittingthemajorUSpublicmarketsin2022.Currently,thereare60USSPACsactivelyseekingfintechcompaniesasapotentialtarget,withnearly$18Bsittinginaggregatetrustvalue.Withnorthof75%ofthemoverhalfwaytotheirdeadlinedate,thiscouldputupwardpressureonfintechactivity.However,it’snotalldoomandgloom.Agrowingbacklogoffintechcompaniesislookingtoexit.USfintechunicornshavegrownto159andstandatastaggering$656Binaggregatevaluation—a38%and15%increasesincetheendof2021,respectively.Ofthecurrentcohort,blockchain/cryptocurrencyandpaymentsubcategoriesmakeup28%and52%ofUSfintechunicornsbycountandaggregatevaluation,respectively.Furthermore,notonlyisthebacklogincreasing,butthelengthoftimefintechcompanieshavebeenprivateisalsobeginningtoincrease.Followingarecordyearofliquidityin2021,whichsawtheaverageage(definedhereasthetimefromthefirstroundtothelatestprivateround)fallasUSfintechunicornswentpublic,thistrendhasbeguntoreverseaspublicmarketsarenolongersupportive.Shouldthistrendcontinue,itcouldputpressureonstartupstoseekliquidityforinvestorsandkeyemployeesviasecondarysalesonplatformssuchasNasdaqPrivateMarket(NPM).BasedonproprietarydatafromNPM,moreprivatefintechsaresellingsharesonthesecondarymarketatadiscountrelativetothepastthreeyears—signalingthelevelofuncertaintyfeltamongstinvestorsinmarket.

USVC-backedFintech1IPOsbyMonthandDaysSinceLastIPO2,3DaysSinceLastUSVC-backedFintechIPOAggregateUSVC-backedFintechIPOValuationAggregateUSVC-backedNon-fintechIPOValuation53133632132418119520211210310577Dec'14Mar'15Jun'15Sep'15Dec'15Mar'16Jun'16Sep'16Dec'16Mar'17Jun'17Sep'17Dec'17Mar'18Jun'18Sep'18Dec'18Mar'19Jun'19Sep'19Dec'19Mar'20Jun'20