Is fintech ready to bounce back again? Eugene Plotkin deciphers investment trends

The news that Ribbit Capital has secured its seventh fund with the colossal sum of $1.15 billion is a solid indication that the fintech sector is poised to rebound from a post-pandemic hot streak to the year. next.

The firm, which was an early investor in companies like Robinhood and Coinbase, has one of the highest unicorn batting averages of any venture capital firm. It’s worth watching where he puts his muscles.

The new fund’s high fundraising is a very public hint that the COVID-inspired decline in the fintech market won’t last much longer. Fintech stocks have already hinted at a rebound and confidence is high that, once again, the financial services market will experience strong growth in the coming months.

“Ribbit’s stellar track record is a strong indication that it does two things extremely well,” says a fintech consultant and former investment banker. Eugene Plotkin. “First, they focus on a single area – in this case, fintech. Restricting their investments to just one sector allows them to dig deep into the industry and identify trends early. Second, they bet big When they see something that ticks all the boxes, they don’t hesitate to open their wallet.

Plotkin hinted at the Palo Alto, Calif.-based firm’s recent investment in cryptocurrency risk modeling firm Gauntlet, which recently raised $23.8 million in Series B cash. Ribbit was the main investor in financing the company for 4 years.

Big moves are indicative of Ribbit’s approach. The company has been the lead investor in half of its last 10 investments, including Forma, Aside, Slingshot Finance and Settle.

Ribbit’s return on investment (ROI) with consistently large bets makes him an elite level player in the venture capital game. As in any industry, it is worth looking at what the investment elites are doing.

“When the brightest people all seem to see the future the same way, it’s a good bet as to what’s to come,” Plotkin said.

Ribbit Capital’s seventh fund has set its sights on a target of $750 million. However, eager investors quickly overshot the $400 million target, hoping to capture a little more revenue than they think the fund can bring in.

Importantly, investors went blind: the company did not announce how or where it planned to invest. However, speculators have been eyeing cryptocurrency, particularly companies specializing in business-to-business (B2B) crypto payments, as a potential landing point for much of the change.

As an international fintech company since its inception in 2012, Ribbit Capital is in exactly the right position to understand the benefits of using crypto for B2B payments.

“The use of cryptocurrencies has several advantages for businesses, especially for international trade,” says Eugene Plotkin. “Not only is crypto decentralized, but it also enables faster transaction speeds and lower costs. The big question is not if the benefits are achievable, but when and if it can turn skeptics out of believers.

Fundraising from Ribbit Capital could signal that change is already underway. One of the biggest obstacles preventing international businesses from adopting a pro-crypto attitude towards B2B payments is the same fears that have plagued the industry since the beginning: security and volatility.

These are valid concerns. But as cryptocurrency matures, it looks less scary for individuals and businesses. Recent statistics point out that nearly 300 million people worldwide have used some form of cryptocurrency. This number could climb to 1 billion by the end of 2022.

The other issue, volatility, should also subside as a steady stream of users emerges. Popular acceptance will force some companies to take steps that seem daunting. The use of cryptography as a medium of exchange creates accounting challenges. However, as early adopters become successful, the risks of the transition will begin to seem manageable for risk-averse CEOs.

“It’s not until businesses begin to understand exactly how crypto can facilitate their processes that the tide will begin to turn,” says Eugene Plotkin. “Imagine doing business with companies in 20 countries. If you pay these companies with cryptocurrency, you can just click a button and make all your payments. You don’t have to deal with all the bureaucracy.

Whichever company can make this case first – and best – will be for big paydays. And Ribbit Capital is certainly one of the companies most likely to recognize where the talent lies to make that argument.

It’s also likely that Ribbit learned from his investments in companies like CoinSwitch what needs to happen next to unlock the market. Apparently that’s what investors believe.

If you need further proof, consider that the last time Ribbit Capital opened a fund was in January 2020, when it secured less than half of the $1.15 billion it raised. more recently.

Many investors are expecting big news on the fintech front. Now might be a good time to join.

Eugene Plotkin is the founder and CEO of TechWalleta New York-based fintech company.