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Investment crash: Following the Great Recession of 2008, many first-world
nations adopted zero interest rate policy (ZIRP) as a means
Can fintech build back of boosting investment. Economists say that if companies
can borrow at zero or close to zero percent interest, then
they should found profitable businesses, create jobs and
on grit, not growth? stimulate the economy.

In theory, this is a solid strategy apart from the fact that it
doesn't always work. Japan made this mistake, going so far
as having negative interest rates, in the 1990s "lost decade,"
and it didn't work (see https://tinyurl.com/y6htb42y).

But a byproduct was massive investment funds like Soft-
bank Vision Fund, which in turn supported many of the
big names of the ZIRP-era: Doordash, Uber, WeWork,
Revolut, Slack, FTX and Klarna, among others. That being
said, FTX has since collapsed due to fraud, while WeWork
went bankrupt and Uber posted its first profitable quarter
By Scott Dawson last year—despite being founded in 2017 (see https://tinyurl.
DECTA com/4cnxrbns).

he greatest strategists tend to be familiar with However, every crisis is an opportunity, and fintech now
the adage that every crisis is an opportunity. has the chance to get more practical about creating com-
The situation fintech finds itself in, with a huge panies that actually add value, that are of service to the
T drop in investment compared with recent years, community and solve problems instead of jumping from
is certainly considered to be a crisis. So what opportuni- one VC cash infusion to the next.
ties can be found here? One could be found in the popular Reinventing fintech
quote from author G. Michael Hopf: "Hard times create
strong men, strong men create good times, good times cre- Fintech investment in 2023 was just a quarter of what it
ate weak men, and weak men create hard times." was in 2022 and a fifth of its peak in 2021 (see https://ti-
nyurl.com/3ubjvk7w). In the UK, one of the world's great
The quote has become something of a catch-all for deca- fintech hubs, investment is down 57 percent (see https://
dence and was illustrated well by the Great Depression tinyurl.com/56cufcfx). This isn't the same across the board:
in the 1930s. This was a time when economic challenges the percentage of VC funding going to fintech startups is
wreaked havoc on communities and individuals, mak- down 5 percent in 2022 and 7 percent since its high of 20
ing it necessary to adapt, innovate and endure difficult percent in 2021.
times. The result was a tougher generation that under-
stood the value of hard work, saving pennies and support- The creation of new unicorns is also down significantly: 59
ing their wider community. companies had exits of over $1 billion in the second quar-
ter of 2021; one year later, only two companies reached
The conceit works just as effectively if we change the word that milestone. In short, VCs seemingly just aren't that into
"men" to "companies" and even serves to enlighten us on fintech anymore.
the trajectory of business in the past 25 years or so. In good
times, investors, flush with cash, invest in thousands of Compare this to the previous decade: PayPal, Revolut,
weak companies, the businesses fail, and investors are Venmo, Stripe and Klarna became multi-billion-dollar
forced to find more reliable sources of profit. Then, once businesses almost overnight and remain so by giving
again flush with cash, they return to splurging billions of people access to services that traditional financial services
dollars at any startup that has managed to design a logo. companies couldn't offer: instant payments or buy-now-

Funding feast to famine pay-later financing.
With fintech investment rapidly decreasing to a quarter To find these diamonds in the rough the venture capital
of what it was a year ago (see https://tinyurl.com/jdm9s5w6), world had to burn through hundreds of not-so-shiny dia-
the sector is clearly in the hard times part of the cycle. Key monds, often at great cost—those 59 startups with exits
to this has been interest rates: the very same mechanism in the first quarter of 2021 aren't likely to be household
that means that fuel and food is now more expensive than names today, if they even still exist.
ever before also means that it is more expensive to borrow
large sums of money. Anyone who has been at a fintech conference in the last
10 years might have been given a business card and tote
bag by a company with a clever name, slick logo, scads of

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