Early 2023 is a different time for the fintech sector.
Gone are the days at the peak of the growth bubble, in 2021, when there were few areas that were hotter than fintech. Venture capital funds invested an astonishing $132 billion into fintech startups globally during 2021, according to Dealroom.co‘s data.
Digital wallets, buy-now, pay-later offerings, one-click checkout models and crypto trading were all the buzzy fintech trends that captured investors’ imaginations. Even as the growth bubble popped in 2022, VCs invested another $85 billion into the space last year.
In the public markets, the excitement over fintech was palpable as well. PayPal nearly quadrupled from its March 2020 lows to its 2021 peak, taking its market valuation to $360 billion. Another fintech darling, Block (formerly Square), rose sevenfold in the same period, topping $100 billion in market cap at its peak.
In 2023, investors don’t care about buzzwords—or even growth. They care about profits. This is why activist investor Elliott Investment Management invested $2 billion into PayPal in 2022 and pushed the company to cut costs and focus more on profitability.
The moves worked, and the company recently projected a record $4.87 in non-GAAP earnings per share this year, more than making up for last year’s 6% decline.