After more than two years apart, it was a privilege to reconnect in person at our 7th annual Evolving Economy conference. This year’s Evolving|E featured thought leaders in consumer and fintech from Brex, Checkout.com, Northstar*, Novo*, Stripe, and more. Not only did we leave energized with new insights on consumer and fintech, but we also enjoyed catching up with old friends and making new ones.
Evolving|E continues to reaffirm the importance of community and relationships in helping founders build and realize their visions. Here are some highlights:
Get your startup on the road to profitability now: Public market expectations for the first wave of consumer tech companies were defined by converting eyeballs to revenue. Expectations for the second wave will focus on converting revenue into profitable growth and will be achieved faster than the first, says J.P. Morgan’s Global Head of Equity Capital Markets Achintya Mangla. With this shift, “I actually think you will come out of the cycle with more sustainable, more long-term, or solid companies,” he says.
The greater emphasis on profitability is affecting startups at all stages: “I think what's not being forgiven in the public market is that if you're super large in scale, have a billion-dollar plus of revenue, and are still not profitable, then something is missing in the model—whether it's just that you're spending too much on sales and marketing [or] you're not efficient enough,” says Lucy Wang, Managing Director, Equity Capital Markets at J.P. Morgan.
According to Neil Dalal, J.P. Morgan’s Managing Director, Technology Investment Banking, today’s pre-IPO consumer tech companies can prepare for future IPO by:
According to VC investors like GGV’s Robin Li, it’s critical for fintechs to expand products horizontally and build a strong credit risk team to set foundations for profitable growth.
Experienced consumer and fintech operators from Novo, Stripe, and other leading companies outlined tactical strategies for founders, including:
Founders are addressing major gaps in areas like:
Financial services are inextricable from the flow of commerce—in order to enable better commerce to happen, you need to have fintech right at the source of where transactions are happening. Here at GGV, we’re already seeing that fintechs that embed themselves into commercial platforms to distribute financial services will benefit from lower customer acquisition costs, greater access to proprietary data for superior underwriting, and increased trust with customers through partnerships with larger platform brand names.
Embedded fintechs benefit from platform distribution, but platforms that embed more financial services also increase take rate and ARPU (average revenue per user) and drive customer stickiness. “The more products and services that an end customer is now dependent on you for is a win-win,” says Stripes Partner Saagar Kulkarni.
Stay tuned for more embedded fintech updates!
*Represents a company in GGV’s portfolio