Silicon Valley Bank Report Explores the Future of Fintech The Future of Fintech 2023 report uncovers how fintech companies are finding opportunity regardless of obstacles challenging their growth.

A new report from Silicon Valley Bank – a division of First Citizens Bank – reveals how the fintech ecosystem has shown resilience among the VC slowdown. According to the Future of Fintech 2023, certain metrics show fintech outperforming tech as a whole, hinting at its lasting viability.

Key takeaways from the report include:

• Fintechs have fared slightly better than other tech companies at extending runway during the VC slowdown, thanks to ample fundraising during the 2021 runup and significant cost-cutting measures. SVB's data shows that 57% of VC-backed fintechs are sitting on more than a year's worth of reserves, compared to 52% of tech companies overall.
• Despite headwinds, higher valuation for Series A fintech deals demonstrates that investors remain optimistic about the long-term promise of the fintech space. Series A fintech deals were valued 43% higher than Series A deals across all tech sectors in 2023.
• Payments remains the top-valued subsector in fintech. The $42M median disclosed deal size for payments startups is 32% higher than that of blockchain, fintech's second-highest-valued subsector.

Cash reserves are dropping

Although cash reserves are dwindling across the US innovation economy, on average, fintechs have extended their available runway more than the tech sector as a whole. Still, at current burn rates, most will need to raise cash by this time next year, based on our proprietary data.

Early-stage fintechs are more vulnerable than their later-stage counterparts, which tend to burn less on a relative basis. Most later-stage fintechs also added to their reserves with substantial fundraising in the boom times of 2021.

Valuations rise as funding volume drops

While VC investment in blockchain is decelerating, valuations have spiked, especially at the early stage. The median pre-money valuation for a Series A blockchain deal jumped 56% in 2023 to $95M.

An ongoing slowdown in the blockchain investment cycle isn't diminishing the promise investors see in individual deals. A rise in digital asset prices and a move toward more regulatory clarity is boosting that confidence, as momentum builds for the next wave of blockchain's development.

To explore these trends in more detail and gain additional insights on the fintech sector, get the full report here.