This time last year, I was writing a much different cover letter. The innovation economy was at the peak of its best funding year ever, and fintech was at the center of that success. Our clients were raising money at a breakneck pace for staggering valuations. Fast-forward to now and market conditions have changed dramatically. Clients are telling us about plans to “trim fat” and extend runway as consumer demand softens. While the public markets grapple with a correction, more people want to know: “Has the fintech bubble popped?”

From a valuations standpoint, you might see an easy answer. High-profile companies in our space have seen their public valuations fall sharply over the last 12 months. And while down rounds are still rare, it’s clear that valuations are resetting in the private markets, too. But that’s only part of the story. Tough market conditions provide the best conditions to grow resilient startups. That’s what we’re seeing now. A healthy pipeline of promising new fintech companies is rising to the occasion, while more established companies are seeking new growth opportunities to capture market share.

In this year’s The State of Fintech report, we dive into these trends and leverage SVB’s unmatched proprietary data to offer a unique perspective on the fintech industry. Investment may be cooling from the record high in 2021, but not by much. Venture Capital (VC) investors are on pace to deploy $38B into US fintech this year, the second-highest annual total for the US. In our benchmarking section, we detail which subsectors are faring best, indexing key performance indicators (KPIs) like cash runway and revenue growth. Our exits section details the backlog of IPO-ready fintech companies and the growing stable of fintech unicorns. We explore the regulatory challenges facing Web3 companies, consumer lenders and neobanks. This year, we’ve also included a spotlight on Web3, taking a closer look at decentralized finance (DeFi) and the intersection between corporations and crypto.

There’s no denying it’s been a challenging year, but market moments like these can also present a golden opportunity for differentiation. Fintech infrastructure, commercial lending and regtech are areas with strong growth potential in the near term. Looking ahead into 2023, the economic picture remains foggy, but our confidence in the long-term resilience of the fintech sector is unwavering.