Fintech Show 2022: Fintech Seasons

The theme for this year’s Fintech Show was Fintech Seasons, which compared all of our collective years of experience passing through differing economic cycles.

For instance, during the economic summer, it is a time to nourish your garden of projects, and we at Holt Xchange were doing just that:

• We nurtured our 600 Advisors, for which we’ve facilitated over 100 deals with our portfolio companies, yielding over $30M in direct exchanges.
• Additionally, we rolled up our sleeves, through the 5 special purpose investment vehicles we had cultivated as lead investor for our portfolio companies, in which they are all flourishing, leveraging momentum to drive $38M in additional funding for them.
• Our scouting and data science team continues to thrive, analyzing 10K potential seed investments yearly, in which we rank and then target companies at scale through 20K e-mails or LinkedIn messages. Our systems further enable us to filter the top seed investments, and engage each of those top scouted deals with up to 100 of our Advisor army to sift out the best companies that we can best help to grow.

During this year’s economic fall, we’ve seen a slowdown in economic activity. Global venture funding for the third quarter of 2022 totalled $81 billion, down by $90 billion, which is over a 50% drop. While global fintech funding in Q3 still accounts for the lion share at $12.9B, or 16%, this quarter has recalibrated back to 2019 and 2020 levels. Lack of supply of capital has in turn caused company valuation downward pressure, in which 10 to 20 valuation multiples or higher on yearly revenues has dropped in some cases as low as 5x multiples.

Furthermore, most recent counts show that programs to support startups, like corporate accelerators, have only a 40% survival rate after 2 years, not to mention the well known Barclays Accelerator that has since closed down. But for the savvy early-stage investor, we know that the greatest number of entrepreneurs are created in economic seasonal downturns, with Canada already on a great trajectory with over 2,300 fintechs now, more than doubling the previous number in 2019. And we know that the best companies continue to grow in the harshest conditions.

This is why we were recognized as Canada’s most active investor this year by leading intelligence company CB Insights, given our follow-on investments into price rounds, as well as 4 new portfolio companies this year that continue to grow within these economic conditions. This is why our portfolio has now raised over $130M combined from over 40 institutional investors.

As we complete our 5th year of investing in top fintechs from around the world, we show no signs of slowing down, illustrated by our Advisor only fundraise being over 50% oversubscribed. 

But just like the season before, this economic season will pass. Leveraging years of legacy and experience, we knew the economic winter was coming…

As winter is coming, so is a recession. However, at Holt Xchange, we are reframing our perception of economic winters by embracing the heat of our inner Hygge.

Winter can be a time to rejuvenate by spending time with family and to reflect, to take stock, and to plan. For us, this includes our extended family of partners including our Fairstone Bank, our corporate champion, RBCx and MNP, our gold sponsors, and our silver sponsors, Renno & Co, Fintech Cadence, Bain Public and Take It Easy. 

It’s also a time to prepare for a great spring, the catalyst for another season run. We do this by cozying up with portfolio companies that are ready to emerge from the ground from the investments we planted in the fall. So are you ready to hear from the best opportunities for you to feel the Hygge warmth?

Check out our Fintech Show Livestream to learn more about how our portfolio companies are making the most of this economic winter.

With 350+ guests in the room, you could feel the good vibrations. Thank you to everyone who took part and we hope you enjoyed the experience!

© Mathieu B. Morin / http://mathieubmorin.com