Embedded finance, FinOps, and treasury management are grabbing VC attention right now despite a collapse in fintech funding, investors say

  • Global VC fintech funding has been cut in half to $23 billion so far this year, per S&P data.
  • Fintech startups focused on solving business issues have remained somewhat resilient.
  • Insider spoke to four investors who identified three emerging key themes in B2B fintech.

Fintech, once the largest market in private technology, is currently struggling.

According to S&P data, global venture capital funding to fintech companies fell 49% year on year to $23 billion in the first half of 2023. Investment in consumer-facing fintech startups, such as banking and trading apps, has had an even worse year, falling 73.8% to $1.9 billion in Q2.

The drop is part of a gloomier macroeconomic mood characterized by plunging stock markets, reduced consumer spending, and higher interest rates that have encouraged saving over speculation.

Consumer-facing fintechs have long relied on large sums of venture capital funding to market and promote their products to customers, often at a high cost with no guarantee of long-term or consistent revenue. Over the last year, high-profile companies such as Klarna, Stripe, and Ramp have all reduced their valuations.

Consumer fintech, according to Khalil Hefaf, a fintech investor at Target Global, has “always proven difficult” due to high acquisition costs, which serve as a drag on profitability.

“That said, it would be foolish to completely disregard opportunities in the space because, one, they seek to address financial problems that everyday people face, and two, if they make it, they make it big,” he said.

Hefaf also stated that business-to-business (B2B) fintech startups were “equally compelling” because they sought to solve the problems of businesses rather than individuals, “conferring higher revenues per customer.”

This year, B2B fintech has grown in popularity in Europe. According to Dealroom data, B2B startups raised 53% of all venture capital fintech funding in the six months to the end of June, the highest proportion ever.

Spoke with four fintech investors who identified the areas of B2B fintech that are currently capturing their attention.

Embedded finance and banking-as-a-service

Embedded finance allows non-financial service providers to offer banking products to customers in addition to online payments, such as bank accounts, wallets, and loans. For example, Uber, a ride-hailing company rather than a bank, allows customers to pay for their trip without leaving the app by using services such as Uber Cash. Similarly, other businesses can incorporate buy now, pay later products into their offerings.

Startups that enable financial services companies to provide banking services beyond what they already provide have gained popularity among investors. Startups, some of which have already obtained banking licenses, enable legacy players such as regional banks and larger corporations to modernize their banking offerings.Banks have been compelled to digitize to a greater extent than ever before, making new providers critical to the expansion of their offerings.

According to Alix Brunet, a partner at Mass Mutual Ventures, Europe’s so-called “banking-as-a-service” sector is in a “transformational phase,” and those that already tout licenses will dominate.

“Crucially, newer players in the sector are better equipped with better core infrastructure, making them less likely to face compliance issues like legacy players,” she explained.

In the last year, notable deals for banking-as-a-service startup Griffin, London-based embedded finance player Weavr, and Monite have shown that investors are interested in the complex sector.


Businesses are migrating their operational expenditure processes to the cloud in order to digitize and better manage their payments. Startups in the space provide APIs to finance and engineering teams that can act as payment processors or marketplaces to improve cash flow visibility and accountability.

“Platforms that help businesses manage payments and financial operations are very interesting to us,” said Dan Chaplin, a partner at London-based fund Dawn Capital. “Not least in these times when cash and working capital controls have come into even sharper focus.”

Startups in Europe have been vying to replicate the success of Modern Treasury, a $2 billion-dollar company in the space. Recent transactions for Sequence, a London-based company in the space, and two transactions for Payrails in Germany have demonstrated continued investor interest in businesses that seek to make corporate payments more visible.

“The spaghetti of payments is hard to figure out, and you need someone who has deep expertise because you can’t move fast and break things in this space,” said Kaushik Subramanian, an EQT Ventures partner who invested in Payrails.

Office of the CFO and treasury management

Another recent development in the B2B landscape has been a focus on the office of the CFO at businesses.

“We see a lot of opportunity to further refine treasury management, where much of the work remains manual and error-prone,” Hefaf continued. “Because these solutions are software-based, they are highly scalable and have high margins.”

CFOs are expected to have a fine-grained understanding and visibility of a company’s finances, but few tools exist to provide this in a seamless manner, resulting in investor interest in startups serving the sector. Treasury management is of particular interest because it involves effectively managing and planning for an organization’s financial needs, often by putting available cash to work in other revenue-generating ways.

Recent transactions include a raise for London-based Translucent and a deal with UBS for Swiss startup Numarics.

“We see a variety of opportunities in this space as well.” “Payables, receivables, and treasury processes, as well as the financial ecosystems in which businesses operate,” Chaplin added.

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