Clocktower Ventures’ Post

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The Clocktower Technology Ventures team recently returned from its annual pilgrimage to Money20/20 with a renewed sense of enthusiasm toward the fintech talent set and sheer size of the remaining opportunity in financial services innovation. Despite an arguably ambiguous market, our time in Vegas reinforced the directionality of many trend lines: Certain thematics continue to dominate fintech mindshare: 🔹 Payment orchestration and multi-rail capabilities are top-of-mind for end-users and infrastructure providers alike 🔹 AI-powered KYC, KYB, and fraud detection are becoming ‘need-to-haves’ for fintechs but it’s not a given that point solution providers will reach venture-scale 🔹 Verticalized software plays (e.g. construction software) still look compelling at early stages where prices look cheap enough relative to total addressable markets 🔹 Bank partners' increasing stringency around which fintechs they choose to sponsor will likely benefit better-capitalized fintechs, and more mature fintechs will look to establish back-up partner banks in case their primaries run into trouble 🔹 There are as many opportunities in today’s ‘less-loved’ categories, e.g. consumer and balance-sheet intensive business models as there are in 'currently-loved' categories, e.g. CFO-stack and wealth management Capital markets dynamics continue to evolve: 🔹 Founders seem relatively adjusted to the new order and excited for what's to come; meanwhile, investors seem neither optimistic nor pessimistic 🔹 Comps are structurally lower than they were last year, and yet, breakout rounds are being priced as if no reset has occurred. VCs will revert to paying up unless signs of recession become evident 🔹 A significant portion of growth-stage companies may no longer fit in the core boxes of growth capital providers as YoY growth expectations rerate lower for most. Companies who didn’t attain certain absolute levels of pre-slowdown revenue now have a much steeper hill to climb 🔹 Without foresight into capital availability over the medium term, operators and investors alike will have trouble placing hard numbers on growth projections, and the potential band of growth scenarios will remain wide Overall, we came away with even greater conviction in our tactical approach- to continue backing elite talent who make existing financial services primitives cheaper, better, and faster.

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