The fintech valuation hangover

After COVID-19, the fintech sector was in hypergrowth mode, fuelled by pandemic driven demand and an era of cheap capital. In 2021 alone, global investment in fintech soared to nearly $140 billion, almost triple the amount seen a year earlier. But when the tide turned, it turned fast and central banks hiked rates, inflation hit the real economy and capital markets quickly tightened. By 2022, funding had more than halved, public fintech valuations fell and many private companies were forced into either layoffs, down rounds or quiet closures. Behind the buzzwords and billion dollar raises, cracks in business fundamentals were laid bare.

This correction has been painful, but necessary. The focus moved from top-line growth to long-term resilience. Investors now back teams that can demonstrate real traction and clear paths to profitability.

The rise of founder-led resilience

The current environment favours one type of team; lean, product obsessed and founder led startups. Founder CEOs bring a level of obsession and ownership that institutional managers rarely match. They’re close to customers and build for impact, not just headlines. Their incentives and accountability are aligned, so scars from past downturns help them make sharper, more adaptable decisions.

It’s not unlike Apple when Steve Jobs returned, a shift from bloated product lines and vague strategy was directed into absolute focus. That same founder dynamic is playing out in fintech and teams with cleaner structures and faster iteration cycles are shipping better products, attracting smarter capital and navigating the reset with greater control.

Investors now reward this approach. They’re still backing fintechs, but differently than in 2019. Capital today favours teams demonstrating early traction, lean operations and a business that makes sense without assuming another bull run.

Business models with staying power and why the Nordics are leading the way

Teams gaining ground now are quietly building the infrastructure and workflows financial services will rely on for the next decade. A clear shift is underway, from consumer interfaces to deep financial infrastructure. Startups focused on foundational layers like identity and payment rails are emerging as the real winners.

Embedded finance is showing real traction, especially in regions like the Nordics. Financial tools are now natively integrated into commerce, mobility and even gaming. Once theoretical, it’s now live and delivering strong results, whether it’s lending baked into eCommerce checkouts or insurance tied into service platforms like phone insurance. These solutions create convenience and remove friction in ways standalone apps couldn’t.

B2B fintech, especially automation driven tools, is another growth driver. Platforms streamlining procurement, accounts receivable, payroll or treasury functions unlock immediate efficiency. These sticky products with measurable ROI are increasingly viewed by investors as some of the most reliable plays in fintech.

Corporate innovation units also fuel momentum. In the Nordics, these teams work as partners with startups, pairing agility with the reach and resources of established institutions to scale products. This collaboration gives founders distribution muscle and early regulatory alignment, while corporates gain faster access to innovation and new revenue channels. It’s a symbiotic model far beyond the traditional build‑vs‑buy binary.

Importantly, regulation, which is often a hurdle elsewhere, has become a Nordic strength. Regulators here take a collaborative approach, offering clear frameworks and guidance that support experimentation without compromising oversight. Fintechs in the region are expected to treat compliance, data governance and risk management as core capabilities, not just bolt-ons.

Together, embedded infrastructure, vertical depth, corporate collaboration and regulatory clarity are turning the Nordics into a blueprint for fintech’s next chapter. It’s not about who shouts the loudest, it’s about who quietly builds what lasts.

Building in a post-hype world

Founders today are working in a very different market. Interest rates remain high and regulatory and geopolitical pressures add new layers of complexity. With the hype dying down, fundamentals are in sharper focus, which is a good thing. Building now requires clarity, discipline and a willingness to challenge outdated assumptions about growth.

Capital discipline is non-negotiable and gone are the days of oversized rounds without clear plans. Founders must raise with purpose, just enough to hit meaningful milestones, extend runway and prove traction without inflating burn. Growth isn’t impressive unless paired with margin and efficiency.

At the product level, speed and focus will win. Strong teams should obsess over solving customer pain points, shipping fast and learning quickly. It’s not about overbuilding, it’s about launching lean and getting real-time feedback. Long development cycles and vague roadmaps won’t cut it anymore and proof of product-market fit, strong unit economics and scalable operations are what matter.

Governance and operational maturity are now also strategic assets. Investors dig deeper into how fintechs manage compliance, data and internal controls and boards are more hands-on, a reflection of increased scrutiny in the sector. Founders who welcome oversight and build audit-ready systems from the start, turn what was once a chore into a competitive edge.

Partnership strategy is also key and not every fintech needs to go it alone. For those struggling to broaden their product suite, access new markets or reach profitability, the right M&A move or distribution partnership can help. Especially now, combining strengths often beats stretching resources thin.

The quiet comeback

The reset hasn’t been easy, but it has been healthy. The boom years bred unsustainable expectations, and the sudden correction forced the industry to confront its weaknesses. The sector is now emerging sharper and more focused.

By shifting the focus to capital efficiency, disciplined growth and product innovation, the sector is clearing away the noise of rapid scaling and rewarding startups which are setting the stage for a more sustainable fintech future.

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