FinTech insights from the experts: Steve McLaughlin of FT Partners

by James · March 9, 2023

(0:30) – Rise Of FinTech: FT Partners maps the flow of money
(7:40) – Where are the FinTech IPOs?
(14:20) – How do private companies navigate a downturn?
(20:10) – What are VC investors looking for in FinTech?
(30:40) – Crypto speculation vs. long-term fintech investment
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Welcome back to Mind Over Money. I’m Kevin Cook, your field guide and storyteller for the fascinating arena of behavioral economics.

One of the most dramatic stock market movements after the Covid shutdown was in Software. The need for more Zoom calls and external tools and bandwidth led to a surge in SaaS subscriptions in corporate America.

Twilio surveyed hundreds of global IT professionals in 2021 to ask them about the scope of projects they were undertaking, and the results were astounding. The conclusion was that, on average, we had witnessed “10 years of digitization in 10 months”.

To be honest, I never understood why Zoom stock rose to a $100 billion valuation when Skype was always free and worked just as well. But that’s marketing for you, on and off Wall Street.

What I actually found more interesting was the rise of FinTech in a place most investors weren’t looking at. In 2021 I became aware of the research of Steve McLaughlin at FT Partners. He had been following the VC investments in private companies for years, and the scoreboard for that year was record-breaking.

In the third quarter alone, there were $36 billion in deals for over 900 FinTech companies. This was due to private companies like Chime and Bolt raising hundreds of millions and seeing their valuations rise into the multi-billion.

And this frenzy was likely fueled by the flashy FinTech IPOs like Robinhood HOOD, Coinbase COIN, SoFi and Affirm, the “buy now/pay later” (BNPL) company that partnered with Amazon.

And let’s not forget Square — I mean Block — plunking down $29B for its own BNPL bolt-on, Australia’s Afterpay.

In October 2021, I summarized all this “abundance of innovation” – whether rational or not – in the article and video…

Unicorn Stampede: How FinTech Innovation and VC Warchests Fuel Markets

I think most software investors can guess what has happened since the market peaked in late 2021.

Block SQ and PayPal PYPL are now trading at values below 3 times the sale.

And private FinTech valuations and deal flow also peaked and plunged. Looking at FT Partners data, 2021 saw $520 billion in total activity, including $34 billion in IPOs, $141 billion in private financing and $345 billion in M&A. The total in 2022 was $218 billion with zero IPOs.

By the way, you can find this data in various charts and research reports that Steve shares on Twitter @FTPartners and on LinkedIn. You can also go directly to FTPartners.com.

Here are some of the topics I asked this Goldman Sachs alum to learn more about the trends and dynamics of FinTech.

Why didn’t we get the big IPOs we were looking for from Stripe and Plaid?
What’s on the ‘innovation frontier’ for FinTech after fads like BNPL fade?
What happens when a multi-billion dollar “unicorn” is underwater at its highest valuation?
What do you think about companies like MicroStrategy MSTR putting so much of their balance – with leverage – into Bitcoin?

On the podcast, Steve answers these questions and much more, including raising capital for Klarna, the Swedish fintech company that provides online financial services for online retailers, including payment technology and BNPL.

Be sure to listen for a fire hose of knowledge from the most connected man in FinTech!

About FT Partners

Financial Technology Partners (aka “FT Partners”) is the only investment banking firm focused exclusively on the financial technology sector. They broadly define the sector as the dynamic convergence of technology-based solutions and financial services.

The firm was founded by Steve McLaughlin, Managing Partner, formerly a senior investment banker in Goldman Sachs & Co.’s Financial Technology Group and Financial Institutions Group in New York and San Francisco. The firm’s founder and senior bankers are all highly experienced investment bankers previously with the financial technology, M&A and investment banking groups of Goldman Sachs & Co in New York, San Francisco, London and Los Angeles.

FT Partners has built a firm of over 200 professionals with deep expertise to serve clients in the complex FinTech sector, with a full suite of strategic and financial advisory services. And with years of transactional experience on some of the largest transactions in history, they bring their unique research and financial approaches to maximizing shareholder value.

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