Wharton FinTech Podcast
00:15:57 · Sabrina Fathi
[00:15:57] S0: Awesome. My next question to you is we... We've talked about Medinet FinTech. There's a lot of different sectors within... Or subsectors within the FinTech space. Are there any particular areas of FinTech that have excited you previously or currently very exciting to you? And what are you interested in exploring further moving forward?
00:16:16 · Yoonkee Sull
[00:16:16] S2: I feel like I'm almost gonna give you a broad answer here because I think it is reflective of our interests. They are very broad. And I think being, you know, a little bit to the earlier question you had asked, I do think it's important to be thesis driven, but I also think it's really important to keep an open mind and understand what the best founders are working on and why. And so I think if we think about the investments that we've made, we've done a lot in payments, We've done a lot in wealth, in digital banking, financial software, spend management, vertical software, and vertical of payments. And we'll continue to we'll continue to go deeper in those areas, and I think there's a lot. I think we're still early innings across all those different opportunities, but there's also a number of other areas that we're exploring with a lot of interest. And so real time payments, anything that can streamline commerce. I... We still think there's a lot of friction in commerce, particularly in the b to b context, and so I think there's still a lot of innovation to be had around streamline I... Streamlining identity, risk, fraud. Embedded financial services, we talked a fair bit about. I also think there's a huge gap in FinTech infrastructure still. You know, of course, over the last couple years, there's been some fallout as it relates to, you know, different different, you know, player, different constituents of the ecosystem for compliance reasons and things of that nature. And I do think there's a huge gap in the market for companies that can really do a nice job of balancing technology with compliance, with innovation to become really, really great modern infrastructure to support the growth of the overall FinTech market. And maybe maybe one last thing that I think a lot about, that we think a lot about, is there's still a lot to do in optimizing, you know, money movements, both cross border and domestically, around speed, efficiency, automated reconciliation. I think there's just a lot still there that we can be doing to help make make make the process of money movements, you know, much more efficient. I think the overlay on top of all this, I I think you'll... I didn't say AI or blockchain for for a reason. I do think that both are really interesting, but we think of them as more technology...
00:18:38 · Yoonkee Sull, Sabrina Fathi
Technologies that can enable these capabilities further, and so, of course, there's a big overlay on top of this in terms of what can AI do, what can some of the promising use cases coming out of blockchain do to help really power some of these some of these solutions as well. So those are those are those are some and also the many other things that we're actively talking about and thinking through internally. [00:19:03] S0: As you're looking at these different subsectors, are there any companies that you've previously invested in or just recently invested in that you're particularly excited about the mission or the vision that they have for the world of FinTech?
00:19:18 · Yoonkee Sull
[00:19:18] S2: There's there's quite a few. I mean, you know, I think most recently, actually, my my partners in Europe, you know, announced an investment that we made in Monzo, which is one of the leading digital banks in The UK, and increasingly, think they're expanding internationally, and I think that they've just been on a fantastic path and, you know, continue to innovate both on the consumer facing side, but also on the SMB banking side, and we've been, you know, really excited about that. I think the other more recent... The the other most recent investment that we announced on the FinTech side is a business called Coast, which is a fleet payments and fuel card company. You know, very, very amazing product, great founder with great FinTech experience, and they are providing a, you know, they're tackling a historically very low NPS category that's very, very deep and very large with an incredible product that is incredibly easy to use with great integrations, great reconciliation, and things of that nature. And I think the other interesting thing about Coast is that, you know, we can, of course, directly sell to, you know, fleets, but there, I believe, that there will also be kind of partnership or embedded opportunities in the future, you know, similar to some of the conversation we've had around embedded financial services. So those are a couple, like, most recent FinTech investments that we've announced that I that I might might highlight.
00:20:57 · Wesley Aster, Yoonkee Sull
[00:20:57] S1: You mentioned a moment ago blockchain and AI. A bit later in the... In our conversation, we have a few questions around your perspectives on those two. [00:21:04] S2: Yes. [00:21:04] S1: For now, I'd love to pivot to the current state of FinTech funding. You've seen a fintech funding slowdown over the past couple of years. In your view, what is driving this shift, and how do you see the funding environment evolving in 2025?
00:21:21 · Yoonkee Sull
[00:21:21] S2: I will just start with that. Outside of 2022, where we made very few investments given given the market environment, I think over the history of our kind of investment track record, our investing activity into FinTech companies has always actually been quite meaningful and quite constant, and so there's... We haven't seen a major spike up or spike down relative to other investments that we've made, and, you know, in general, over the last couple years, I... We we kind of like the fact that many of our peers at other firms were so negative on FinTech despite our belief that nothing really has fundamentally changed about the secular kinda long term trends supporting this category while valuations were also normalizing. And I think we saw this particularly to be the case with market leaders around the world. But I think context is also important. And sorry sorry sorry I'm going a little bit longer on this, but I I think I think from a context perspective, fin... FinTech and financial services in general is a more cyclically exposed industry than than some other areas, right, like b two b software. And, you know, we have to... I think we have to remember that in 2021, we were coming off a no interest... Sorry, zero interest period with stimulus payments, high valuations, and the market generally, you know, in retrospect, overestimating the growth curves of a lot of different companies to then sharply entering 2022 where, we were lapping stimulus payments. And we went through... We we started to go through a really, really rapid rate hike cycle. And so as a as a FinTech industry, especially if you're touching and, you know, have a direct relationship with consumers, you're gonna directly directly feel that. But at the same time, I think our observation was FinTech businesses were still taking share on the metrics that mattered. So still taking share on users, on assets, on wallet share, and ultimately on market share. And there were certainly other industries where, you know, like global payments, where I think there were moments in time when people... When the market started to feel like suddenly it was completely commoditized overnight.