Pod Insights Equity Podcast It’s been a long time since we’ve seen such positive signals in fintech About this episode Today, Mary Ann and Alex dove deep into encouraging signs from the fintech startup market:
Solid results from Klarna are on top of Alex’s mind. The company’s ability to continue growing while staying profitable is a reminder that one down-round does not a company kill.
Fintech fundraising results were on Mary Ann’s mind as we wait for venture capitalists to re-accelerate their investments in the space. Sure, no one wants to return to 2021-era insanity, but after so long in the valuation doghouse, perhaps fintech has reached its nadir?
And we leaned on data. Here’s the American consumer debt information Alex referenced, Affirm results will drop here, and the CB Insights venture data we cited is here.
More to come in our Friday news roundup! Talk to you then!
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Transcript 0:11 Speaker 00 Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and the nuance behind the headlines. My name is Alex and this is our Wednesday show where we think about a topic and we dive deep. Today, we're talking about Klarna's big Q3, what's going on with BNPL as a whole, the state of fintech investing and how overstretched is the consumer from a credit perspective. It's all on the show today, but I could not do all this fintech without my partner in crime, the Robin to my Batman. It's Mary Ann Azevedo. Actually, you can be Batman. I'll be Robin.
0:43 Speaker 01 Hey, Alex. It's not every day I get to talk for at least 30 minutes on one of my favorite topics. So glad to be here.
0:48 Speaker 00 Absolutely. And I love going through all these numbers. We're going to have a lot of show notes for this one, everybody. Just so you know, if you want to go back and pull the data we're looking at, I'm going to try to give you everything we have. And so you can go find it if we go a little bit fast, but there's a lot to get through. So let's do it. Anyways, Mary Ann and I are here today because we have quite a lot of fintech news we wanted to digest and gist down for you, including things like Klarna's Q3 results, what's going on with BNPL as a whole, state of fintech, state of consumer credit. It's kind of a summary episode because there's a lot to digest as the fintech world changes. Mary Ann, as we said on the show before, back in 2021, fintech was a solid one at every five venture capital dollars during a boom. So there was so many companies built,
1:30 Speaker 00 founded, scaled, and in some cases even sold. But now we are on the other side of that. And that means we have to take a hard look at companies that were former high flyers and today are, I would say, more in a recovery phase.
1:42 Speaker 01 Yeah, I would agree with that. Definitely recovery phase. And those that have managed to stay resilient and hone their business model throughout this downturn, we're starting to see who's, I guess, really had the more viable models and who did not. And that's why today we're talking about Klarna, which kind of is surprising us all, right?
2:01 Speaker 00 Yeah, absolutely. So if you rewind the clock to July of 2022, Klarna took one of the steepest valuation haircuts, I'm going to go ahead and say, in the history of startups, just straight up. It raised an $800 million round. It was valued at $6.7 billion in that transaction. And Mary Ann, that was down from, I think it was like $45, $46 billion at the peak?
2:24 Speaker 01 Right. It was down like over 80%, which is a massive drop. And I remember when that news came out, we were all just like, whoa. I mean, people were raising down rounds, but that gave down round a whole new definition. It was just so much.
2:41 Speaker 00 It was so much. It was almost like you sat back and you tried to ask yourself like, what does this mean? What does this mean for the company? What does it mean for the space? And if you think back to Affirm, another company in the buy now, pay later space or BNPL, it saw its valuation skyrocket during the same period of time and then come down dramatically as well. And then the question becomes, you know, were investors too optimistic to begin with? Or were they too pessimistic on the other side of that coin? And that's why we've been watching Klarna's numbers since that moment. And Klarna, being a Swedish company, does share more than most private companies do that are based here in the US. So we've had actually kind of a window of visibility into it, a bit like Mary Ann, how we've seen NeoBank results from across the UK.
3:22 Speaker 00 And that has helped us understand that market, but we don't have the same stuff here in the US because our regulations are, I'm going to go ahead and say more business friendly.
3:31 Speaker 01 Yeah, it's true. Affirm did go public. So that's how we've had insight into its financials. Klarna is not yet public, but it is great. It is refreshing to be able to see into what's really going on there in the company. And you expertly covered their latest results earlier this week.
3:48 Speaker 00 Well, I did, but
3:50 Speaker 01 They were good.
3:51 Speaker 00 They were, but I want to back us into that. So if you go back to the end of 2022, we looked at the company's disclosed full year results and frankly, it looked like a relatively standard unicorn. So the company had revenue of about 1.84 billion. It had credit losses of around 544 million and it had a net loss of like $992 million. And just to be clear, everything that Klarna does is reported in Swedish krona. Those are USD conversions from our coverage in February of, I think it was 2023, looking back to 2022. And Mary Ann, my point at the time was those numbers look like a high loss making unicorn very much in the 2020s.
4:34 Speaker 00 21 era model. And if you just looked at the aggregates, there wasn't much there that was super appealing. But if you narrowed your focus to just Q4, inside of that annual report, you saw some improvements. And then the question was at the time, can the company keep cutting losses while growing and improving its overall business results? And we've tracked that throughout this year, Q1, Q2, and as you said, now, Q3. And the numbers are, I mean, not to be overly kind to a private company, that's worth billions of dollars, but I would say they're pretty good. Yeah.
5:04 Speaker 01 I mean, you said 992 million dollar net loss. Is that what you said?
5:09 Speaker 00 Yeah, back in 2022.
5:11 Speaker 01 Okay, so in the third quarter, the company actually swung to a profit.
5:15 Speaker 00 Yes, which I think is the key change here. So Klarna's Q3 numbers included revenue of 549.9 million. That was up about 30%. And it had 11.9 million dollars in what they call a positive operating result. And that's an improvement over the 192.6 million it lost in the year ago quarter. GMV, or gross merchandise volume, was up 22%. And their take rate, essentially revenue divided by GMV, improved a little bit from a year ago. Overall costs came down. They had a better rate of credit losses. And so with more GMV, more revenue, lower expenses, and a better take rate and better credit results, the company flipped
5:55 Speaker 00 to actual profit. And so I think we have, in this case, a private BNPL company that had a big setback and has since got back on its feet and is now in fine fettle. It's in good shape. I don't really have a lot of complaints here, looking through all these numbers.
6:10 Speaker 01 Yeah, it's in a lot better shape than I think any of us might have anticipated, you know, credit to the company. And when you were breaking it down, because I was trying to understand, okay, how, why, how did Klarna do this? And I remember I did talk to the CEO in February, when they did announce those results. And one of the things he mentioned at the time, that the US was the company's biggest market by revenue at that time. And and I do think that that is key here. I think that's one of the factors in the company's recent growth. It's doing well here in the US. And there's a lot of demand for what it has to offer. And so I think that's noteworthy.
6:46 Speaker 00 Oh, it's absolutely noteworthy because a lot of companies want to expand to the American market. In fact, we had a guest on just the other week when we talked about expanding into international markets and the importance of the US as a destination for startups. And when you look at the company's results in the US in Q3, Klarna wrote that it, quote, "achieved its fourth consecutive quarter of profit, with GMV increasing 46% year over year." So the US is faster growing than the whole business there and is profitable for it. And that growth is included in the company's improving credit results. So essentially, a greater exposure to the US market and the US consumer hasn't harmed the economics behind Klarna.
7:27 Speaker 00 Now, Mary Ann, I want to say that we have a big private BNPL and we have Affirm, a public BNPL. And sadly, we are recording this November 7th and Affirm's numbers come out on the 8th. But looking back at Affirm's calendar Q2, fiscal Q4, the company had similarly pretty strong results. GMV was up 25%, revenue was up 22%, but the thing that stuck out was revenue less transaction costs was 182 million in calendar Q2 for Affirm, down 1%. And they said that was partially due to them absorbing the impact of higher funding costs. So Affirm seems to say, hey, higher interest rates are making this model a little bit harder.
8:10 Speaker 00 While Klarna is posting kind of the opposite, they're posting more impressive results over time. And so we're seeing perhaps a divergence to some degree in BNPL results, but pending Q3 notes from Affirm. But I was surprised to see Affirm make that kind of like clarification. Well, Klarna just felt stronger as a whole company.
8:28 Speaker 01 Right. Do you think that might have to do with the fact that Klarna has really, over the past year, seemed to better manage its credit losses? I think. There was a pretty significant difference.
8:39 Speaker 00 Yeah.
8:40 Speaker 01 In this quarter, right?
8:41 Speaker 00 Very much so. And a firm did note that they are seeing improved credit results as well. But the number they shared was excluding Peloton and Pay in For. So it was an adjusted credit result number, but they were seeing some improvements there as well. And that's the interesting thing because when we think about the state of the global consumer, Marion, I don't think that we go, this is their all time best point. They seem a little over leveraged from my perspective. And you think that would hurt BNPL companies as a source of consumer credit?
9:11 Speaker 01 You would think so. So again, I think that's what makes Klarna's results even more surprising, but it's clearly doing something right. And I think the number was a 56% drop in its credit losses. I don't remember the time period, Alex, apologies. Do you remember what that was? Was it year over year?
9:28 Speaker 00 I closed the big window of tabs that I had open that had all of the firm's numbers pulled up because I tried to not have too many tabs up during recording.
9:37 Speaker 01 I think it was year over year, though. I'm pretty sure it was like a 56% drop. And I think that's actually really good because that means it's lending more responsibly. And that's extremely important, not just for the company in terms of achieving better financial results and having better economics, but just for everyone, right? I mean, one of the biggest issues with buy now, pay later has been this concern of consumers getting overextended. And as we talked about in equity last week, it can be considered really as just another form of debt. And so if a buy now, pay later player is lending more responsibly, I think that's a good thing for everybody.
10:12 Speaker 00 Right. Not letting consumers get in over their heads. I have seen some funny screenshots around the internet of people pulling up like, why am I getting offered BNPL for groceries or for gas? Or for, you know, what we might consider to be very much everyday expenses versus, I'm buying a couch, I would like to pay in eight increments, for example. The old layaway model. I mean, like some things here are not really new new, but they're new with the technology wrapper attached to them. On the consumer front, though, on the accumulation of debt, on the health of them. I pulled some information from the American government and I'm going to put these charts in the show notes. So if you want to see what I'm looking at, you can see it directly. There's an enormous difference between how much debt American consumers have that's related to housing and not.
10:55 Speaker 00 So if we take away housing related debt and just look at non-housing debts, the American consumer is roughly four and a half to five trillion dollars in the hawk. And that's up from two trillion in 2004. So in a couple of decades, we've seen this number more than double. And a big chunk of that is student loans, as you would expect. Auto loans are also huge, but credit cards have also expanded quite a lot in the last year or two. And, you know, I really thought that this was going to be a net negative for companies like Klarna and Affirm. You know, big mass market consumer credit offerings. And, you know, shockingly enough, they're doing quite well. So I view this as an affirmation of certain investments made in the fintech space during the last couple of years. They may have had the wrong valuation mark,
11:39 Speaker 00 but did have a good handle on where the businesses themselves were going.
11:43 Speaker 01 Yeah, I would say that. I think that buy now, pay later may have some flaws. And there's a lot of concerns around it that are legitimate. But there are arguments that it can help boost financial inclusion by giving people who, who have more restricted access to credit, the ability to make more purchases. And then, of course, there's the concern of are they getting in over their heads? And then not able to make payments on like, say, credit cards, right? You could argue really about either side. Is this really boosting inclusion? Or is this just getting people who are already vulnerable into deeper debt? But anyway, I digress.
12:17 Speaker 00 Well, I, I think, I think you make a good point there at the end. And I would say it's a multifactorial issue, not just a single cause point. And so BNPL, you could say, adds to possibility for consumer debt load. But given consumer appetite for debt in general, I think the demand's already, already there, you know?
12:36 Speaker 01 Right.
12:36 Speaker 00 People's car payments blow my mind. Have you seen those TikToks about people sharing what their monthly car payments are?
12:41 Speaker 01 I haven't, but I know. I mean, it's in the like, close to a thousand dollars for some people, which is insane.
12:46 Speaker 00 More in many cases.
12:47 Speaker 01 Crazy. That's crazy.
12:49 Speaker 00 Bonkers. And so I think people are just more accustomed to just having a higher kind of running debt load than I would be comfortable with.
12:55 Speaker 01 There is something else. When I talked to Klarna's CEO in February, I talked about the difference between Klarna and Affirm. Because, you know, while they seem like they're very, very similar companies, he thinks that they're very different because he said that. Affirm's customers are usually higher, making higher price purchases. Whereas with Klarna, they're like smaller, very short term installment based. And so like the average purchase is about a hundred dollars. So they're shorter, they're smaller. So there's probably more transactions. Whereas Affirm, they're larger, they're spread out over a longer period of time, like 18 months or two years. I think that is an interesting distinction between the two companies.
13:38 Speaker 01 And I wonder if that has anything to do with with their current results, like why Klarna's managed to hit profitability. I don't know. What do you think?
13:46 Speaker 00 Well, putting on my Max Levchin hat and going to bat here for Affirm. If you do read their recent earnings reports, you'll see that they talk a lot about the Affirm card and how that's driving more frequent transactions. And so perhaps you are correctly describing the way things have been. But I do think that Klarna wouldn't mind going up market, just as Affirm wouldn't mind the transaction volume from smaller purchases. So I think much like we often see in the world of startups, even as they get to be large public companies, they kind of all end up doing everything. And so they end up kind of overlapping more and more.
14:17 Speaker 01 Right.
14:17 Speaker 00 So even if they did have a different starting point, you know, Robin Hood does crypto now, and I'm sure Coinbase will eventually do stocks, you know?
14:25 Speaker 01 Yeah, it's true, and that makes sense. You're right. And I think, yeah, so maybe whereas Klarna was more focused on the smaller purchases and more volume, and Affirm on the higher, less volume, they're they're starting to get closer.
14:37 Speaker 00 I have one more thing that I want to get to on Affirm's account. And it does show strength in the company and perhaps BNPL as a whole. But first, a very short break.
14:51 Speaker 00 I wanted to throw in a couple of other things before we broaden our conversation to fintech more generally. But the thing that's sticking out to me in the Affirm news is a recent Amazon deal that boosted their stock price quite a lot in the recent days. And so we are seeing still appetite on the platform side. And this, I think it's an S and B focused tie up. But we're still seeing BNPL find more places to fit into the larger economy, which could imply future growth in excess of just what we're seeing in terms of consumer spend and consumer. Debt loads going up. So I view that as one more kind of note in favor of the model. And then finally, we touched on this a little bit ago, so we're not going to talk about it much now. But Tabby was a Middle East focused BNPL that recently raised $200 million.
15:32 Speaker 00 So another nine figure round in fintech, rare these days and very rare in the BNPL side of things. So that's the state of play there. Make sure to read a firm's earnings when they come out because that's going to be very interesting. But Mary Ann, you know, my question is, can these positive results that we're seeing from BNPL companies that raise venture capital and have exited or not yet, turn the tide a little bit and bring back some mojo, if you will, to fintech startups in general, and perhaps even bolster the amount of venture capital that is flowing into them, which has dramatically come down in recent quarters.
16:03 Speaker 01 That's a good question, Alex. I don't know. I think as we also talked about last week, we saw a few nine figure funding round deals in the fintech space, which had been a while since I'd seen so many in a one week period. But I do think that Klarna's improved results, Affirm's improved results, Affirm's landing, continuing its relationship with Amazon and expanding it was definitely very positive for that company. It does, it is a bit of positive light because there was so much kind of negativity around BNPL. And there was all this like, oh, man, you know, this just sucks. It's disguised as this, but it's that. So I feel like now it's, these results are starting to show that, okay, it's really not that bad.
16:45 Speaker 01 It's really, it really can be a good business to operate in if you know what you're doing, if you, if you do it right.
16:52 Speaker 00 Absolutely. And, you know, another sector that I've been tracking as carefully as I can, and I did mention it earlier on, is that the neo banking sector, as we can see it through the lens of a number of European and UK based neo banks, is in many cases generating profit and looking much better than it did a couple of, well, quarters or years ago. And then also we've seen a pretty dramatic rise in the value of interest based incomes at companies that formerly made no money off of that and perhaps ate off of trading fees. You're thinking about Robin Hoods and Coinbase's now public, but they do have startup analogues that are looking much stronger than they might have been if interest rates had stayed low. So there's a couple of tailwinds that seem to be at play here to make fintech just seem less out of fashion almost.
17:36 Speaker 00 It's weird to describe it that way, given where we were a few years ago. But it seems like the results are now better than the narrative. And that's an inverse of where we were a couple of years ago.
17:45 Speaker 01 Right. It's actually, you know, just companies proving themselves basically was trying to, to show, to show that they were worthy of all that funding and maybe not necessarily the very lofty valuations that were being thrown out, but still doing well. And I think that's a great thing. I do think though, that for all this kind of positivity or hype that we're sort of seeing around buy now, pay later, with all this good news around the space, it still have to be mindful of the dangers around it. You know, it's still something that can be dangerous, quite frankly.
18:16 Speaker 00 Yeah.
18:17 Speaker 01 Now, as I understand it, and correct me if I'm wrong, Alex, but when people are making purchases through a Klarna or a firm or Afterpay, that's not being reported to the credit bureaus. So when there are credit checks, and believe me, I'm not trying to defend our credit model because I know we both feel that it's outdated, but.
18:35 Speaker 00 We have thoughts about that.
18:36 Speaker 01 We have thoughts about it, but it's just the way that it is. So if credit's being checked, these buy now, pay later installment payments are not being included as debt. And that, that's kind of worrisome, right? Because then that means a person can just keep accumulating more debt. It's risky.
18:53 Speaker 00 I, because I do not take part in the American consumer credit economy. I don't know the exact soft check, hard check on credit scores that come up through products like BNPL, but I do know they do lean on that to some degree. And so I would be shocked if there's no impact, but I do think that the more avenues you offer people to identify, which is not a word now that I thought about it, but to identify themselves, they will possibly end up upside down. But that's why, you know, the other side of fintech, on the savings side, where there's, you know, cash involved versus debts, things are also looking pretty good. That's appealing to me almost more so than making money off of extending credit. The thing though, and I'm just, I'm just trying to figure out how I feel about this is,
19:33 Speaker 00 these companies are very valuable, but they're not really as valuable as people thought. So if you look at the value like software revenues in general, a software startup today can probably raise at between six and 10x their next 12 months revenues. But if you look at some trailing price sales multiples for major fintech companies, your PayPal's, your Block. Et cetera. They're between like two X, three X. And so like the companies being built in the fintech space will have to endure, I think, just lower multiples than a lot of other companies. But given the scale that they can reach, they're pretty attractive. And I just, I'm torn between saying, Mary Ann, there were only three new fintech unicorns in Q3. And also saying, hey, Mary Ann, there was three more fintech unicorns in Q3. And I don't know exactly which inflection is the right
20:18 Speaker 00 one to take, because I can kind of see it both ways. Yes, these companies are often better than people perhaps thought at their low Ebb, but also their public comps are relatively lackluster. And so perhaps it makes it harder to achieve unicorn valuation. So I'm trying to decide, like, what's my Q4 and Q1 guess for fintech venture capital funding, given what we see in these numbers? And I don't actually have a good gut take on that, sadly.
20:40 Speaker 01 Yeah, I would say I don't, I don't necessarily either, right? Even covering the space as closely as I do, I'm not sure what to expect in the next few quarters or in next year even. I do think that there's definitely a more, there's more realistic look at companies in the space. We've seen infrastructure stay resilient, as we talked about. But I think the positive things we've seen lately are giving me a little bit more of an optimistic attitude. Okay.
21:06 Speaker 00 Yes.
21:07 Speaker 01 Klarna's results affirm improving, Plaid's hiring a CFO. I mean,
21:11 Speaker 00 Oh, that's right. Yes. Good point.
21:12 Speaker 01 These are positive signals that I hadn't seen in a while. The mega rounds, you know, it's been a long time since we've seen these sort of positive signals. So that's, to me, that makes me a little bit more optimistic about what's ahead in 2024.
21:25 Speaker 00 It's really funny that we're sitting here asking this question, because we're saying, are these real results good enough to warrant more investment? When before we were saying, look at how much money is going into this, it must be going well. I think also, we should kind of turn the lens around in ourself and say, don't forget that big funding rounds at high valuations don't always match up with long-term fundamentals. The problem is, and we've said this before, but when you report on private companies, often you don't have the wealth of data that you would like to be as good a reporter as you can. And often you'll shake loose a number from a source, but you won't get the full package of numbers that you get with an IPO or a public company. So you're Always kind of in the dark, you know?
22:04 Speaker 01 Right.
22:05 Speaker 00 But I will say, I think now the results are better than the venture capital totals. So I'll go ahead and go out on a limb here. And I'll just say, I think that, and I'm looking at CB Insights data through Q3 for global fintech funding. I think the 7.4 billion we saw in Q3 across 754 deals will be surpassed in every quarter of next year.
22:26 Speaker 01 You think so?
22:27 Speaker 00 I, I do, because I think that things have come down so far. I mean, this last quarter's fintech funding was below every single quarter we saw in 2019 and 2020. So it feels relatively light. And I do think that companies in the fintech space might raise one more round before they go out. Your chimes, the big companies that, you know, plan going back to that company. And I think that'll be accretive to the numbers. And frankly, I think just given the strength we're seeing from other fintech companies where we do have data, I don't see a reason why not. Valuations have come down. Why not buy more of the companies at a lower price?
22:59 Speaker 01 I mean, we, we may have seen the bottom of the fintech, fintech downturn. I mean, I don't know. I, I hope you're right. Honestly, I hope so.
23:09 Speaker 00 Well, for your beat's sake, yes.
23:11 Speaker 01 Yeah, right.
23:13 Speaker 01 For sure. I mean, I think one of the things I, I ran into this year was really struggling to find companies to write about that had anything very unique going on. I'll be honest, of all the hundreds, thousands of pitches I got, they all started to run together. It really was hard for me to like read a pitch and say, oh, wow, that's really different. I've never heard of a company doing that. Or, you know, this is really a technology that could be groundbreaking. So I, I feel like, and some people will argue, yeah, I mean, all the major innovation in fintech may have already happened. And so if that's true, I guess, what is next? What are the fintechs that are going to attract dollars? Because it's going to be, it's really hard in this space to do anything super revolutionary.
23:57 Speaker 01 And our colleague, Mike Butcher, even, I think he tweeted about this recently, was like, He feels like a lot of the stuff that's going on in fintech these days is more convenience than revolutionary. And I think that's, that was an interesting take. I'm not saying I agree with him, but I do think it was an interesting take. Like, how, how many companies in fintech are really doing something that's totally shaking things up as opposed to just maybe making things more convenient for people?
24:23 Speaker 00 Well, where would you put banking as a service in that divide?
24:26 Speaker 01 Hmm, um, I think it just depends.
24:28 Speaker 00 Cause I can see it both ways, actually. Not to be pejorative, but I can kind of, yeah.
24:32 Speaker 01 I think that would depend.
24:34 Speaker 00 I'm going to go ahead and say it's in the middle and so we'll, we'll be neutral about it. But one thing, just to add to our fintech chewing that we're doing here, in August, Christine Hall, one of our Jair friends, wrote about how fintech, you know, looked a little messy, but banking as a service was kind of the outlier. And she was pointing in data saying that, you know, the banking as a service space is going to grow 15% each year until it's worth 66 billion in 2030. And then she was looking at Treasury Prime, Cincera, Onneo and Griffin, all raising capital recently. And so there's another spot of large investment in the 2020, 2021 era that is now post fact doing fine, it seems. I don't know if all the companies that were built to offer trading services to other
25:16 Speaker 00 companies are going to do okay long-term, but it does seem that, you know, looking around fintech, things are fine, you know, fine plus even.
25:23 Speaker 01 It's funny, also earlier this year, I caught up with Index Ventures' Mark, oh, actually it was last year, my goodness, crazy, this was like last October, 2022. And at that time, he was referring to 2021, because we're in 2023 now, mind you.
25:39 Speaker 00 We are?
25:40 Speaker 01 Yeah, just in case, you know, someone's listening to this in 2024. He was referring to 2021. He said, last year was the party, this year is the hangover, right? That, that quote was really a good one. It resonated with a lot of people that 2022 was the hangover. So if 2022 was the hangover, what does that make 2023?
26:00 Speaker 00 There's two ways to combat a hangover. One is clean living and time, and the other is more booze. So I think this is the year of clean living and maybe next year we go back to the bottle.
26:11 Speaker 01 So we had Mark on the show actually earlier this year and he had predicted that 2023 would be fintech's Noah's Ark year.
26:20 Speaker 00 Oh, interesting. Rising waters, who has a ship sort of thing?
26:24 Speaker 01 Yeah, so I feel like that was kind of accurate.
26:27 Speaker 00 Yeah, I'll take that because underneath all of this positivity and you know, I do love occasionally having a show of good news, there are startups in the fintech space that I'm sure are struggling, that are smaller, maybe tertiary or quaternary players in their sector or subsector that aren't going to make it. And your heart always bleeds for an entrepreneur who took a gamble and it didn't work out, but the biggest players at least do seem to be strong, although now I'm very curious, what about the series A and B players who are struggling, maybe didn't get on that arc, if you will. Pick your Neolithic flood base metaphor.
27:00 Speaker 01 Right. I mean, of course, we've talked about this. I'm sure there's a lot of startups that unfortunately have either had to shut down or just on the verge of shutting down and we don't hear about those as often. One thing about this year too, that I feel like didn't necessarily go as predicted though, was the number of M and A deals. I thought in the fintech space, we would see a lot more of them and the year started out a little bit strong in that regard. I think Marqueta had a pretty high profile acquisition. There were a few others, but as the year went on, they started hearing less and less about consolidation.
27:35 Speaker 00 Yeah. Well, if you're with us today and you are a fintech founder and your startup is, I'm going to say not super late stage and you're seeing positive results, we would love to hear from you. But I think for [email protected] , let us know what you're seeing out there because we would always love more numbers, just more information, more data. And this year, I'm not going to have time to do my how fast did startups grow kind of aggregation post that I did a couple of years ago, but we'd love to at least know what you're seeing on the fintech side. So we can keep you on background if we need to. On the record of course is preferred, but [email protected] . And come on the show if you have. Some cool numbers, the chance of us wanting to talk to you and interrogate you for a full 30 minutes goes up as our producer was to point out. So drop some of that math
28:17 Speaker 00 in our docket. Mary Ann, I'm going to close this off for today, but I will just throw in one more note, which is we will have all the affirm numbers on Friday show. I will make sure to do a quick update at the top. So everyone can get caught up on that. But in the meantime, Mary Ann, thank you so much for your time and letting me drag you through my current list of fintech interests. I've come into your beat.
28:37 Speaker 01 No, I love it. I love it. It's always fun just to talk this stuff out with you and also just helps me helps me to talk it out with someone else who's not necessarily so deep into the space. So it gives me that kind of outside perspective because I'm in that fintech bubble.
28:50 Speaker 00 Yes.
28:51 Speaker 01 World, you know?
28:52 Speaker 00 I'll just say this, you are in the fintech bubble and we did spend all today talking about fintech, but I don't think that the positive vibes we're talking about are only constrained to fintech. I think there's a couple of startup areas that are doing okay. And I think that, you know, the narrative is still kind of doomy and gloomy out there, but I'm starting to feel like it's not that bad, you know, like things.
29:11 Speaker 01 Yeah, maybe we're turning a corner.
29:13 Speaker 00 Yeah, just as the seasons fall apart and it gets dark at 5pm and I'm starting to worry about snow, everything's heating up in startup land and that's irony, my friends. All right, we're out of here. Equity is back Friday morning with our news roundup. We have one of our friends on the show with us. It's going to be an absolute corker. And if you need even more equity in between episodes, we are equity pod over on both X and threads. We're no longer on Blue Sky because no one else is on Blue Sky. But if you want to save money on your TechCrunch Plus subscription, well, use the code EQUITY, all caps, and you are set. All right, Mary Ann, we're out of here. Back in two days. Bye, everybody.
29:45 Speaker 01 Bye.
29:48 Speaker 00 Equity is hosted by myself, editor in chief of TechCrunch Plus, Alex Wilhelm, and TechCrunch senior reporter, Mary Ann Azevedo. We are produced by Teresa Locan Solo with editing by Kel. Bryce Durbin is our illustrator and a big thank you to the audience development team and Henry Picavet, who manages TechCrunch Audio Products. Thank you so much for listening and we'll talk to you next time.
Previous Equity Monday: The race to build tomorrow’s AI models, and signs of life in the crypto markets Next OpenAI's DevDay, reinventing the REIT and good actors in crypto Page updated October 12, 2026 · transcript and summary are machine-generated
