A pitch for early-stage fintech with Cambrian
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What
Cambrian is a fintech-focused community led by Rex Salisbury. After serving as Partner at Andreessen Horowitz, Salisbury launched Cambrian’s inaugural US-focused $20 million fund for fintech founders at angel, pre-seed and seed stages. The fund’s goal is to leverage Cambrian’s 20,000+ member community—including more than 1,700 fintech founders—to provide founders with access to promising fintech networks.
Why
According to Salisbury, capital and labor conditions make it a particularly promising time to invest in early-stage fintech startups.
“There are no headwinds: There are only tailwinds for fintech venture right now at the pre-seed and seed stages,” he asserted. “These are net new companies that are recently capitalized at reasonable valuations.”
Founders at the pre-seed stage have as much capital available to them now as at any point in time, Salisbury elaborated; a16z has its own $500 million seed fund, notably, symbolizing serious investor interest in early-stage missions. Fintech has also matured as a sector, minting a cohort of repeat founders who can take the helm at new startups.
Finally, early-stage fintechs can hire top talent in a way they couldn’t just months ago. With the value of employee stock options and other forms of equity declining, workers at later-stage fintechs are looking for jobs with more positive prospects in terms of mission and wealth-generating potential.
“Facebook isn't hiring; Google isn't hiring; Amazon isn't hiring,” Salisbury said. “Going and working for a pre-seed or seed stage company is a much better option than it used to be.”
How
With those market conditions in mind, Salisbury said certain fintechs are more likely to generate investor interest than others. Where all types of revenue used to be valued equally by investors, they’re now more selective about the quality of revenue generated. Salisbury mentioned Uplinq, a global credit assessment platform for SMB lenders, as an example of an early-stage fintech with high-quality revenue streams. Uplinq received a strategic investment from Cambrian last month.
“Data-oriented services tend to trade at the highest multiples, and that's because they usually have some degree of proprietary data and connectivity and are high-gross-margin,” Salisbury said.
Salisbury also anticipates greater investor interest in vertical SaaS; the ability to embed financial services in vertical software has opened up that market, creating an opportunity for notable revenue growth and LTV.
“There are going to be more amazing pre-seed and seed companies founded in fintech this year than in almost any other year,” he concluded, emphasizing talent within fintechs, and not just their ideas or products, as a key differentiating factor that will make 2023 a promising year.
