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6 fintech investors sound off on AI, down rounds and what’s ahead on August 17, 2023 at 6:15 pm

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At the height of the funding boom in 2021, no single sector enjoyed as much VC money as fintech startups did. But in 2023, it appears that fintech companies have to work harder to get funding.

Global funding in the space hit a six-year low in the second quarter, according to CB Insights. Specifically, following a spike in funding in the first quarter driven by Stripe’s outlier $6.5 billion round, global fintech funding declined 48% to $7.8 billion in Q2 2023.

Valuations have also taken a hit. With only a few exceptions, once-valuable fintech firms have seen their valuations drop significantly, based on secondary share activity as analyzed by Notice.co, which offers a pricing tool for the private markets.

We’re widening our lens, looking for more investors to participate in TechCrunch+ surveys, where we poll top professionals about challenges in their industry.

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As such, it’s no surprise that artificial intelligence (AI) is a hot topic of conversation in the space, as companies work to incorporate it into their offerings — some more meaningfully than others — in an attempt to stand out.

“We’ve seen many of our portfolio companies adopt AI to increase efficiency, improve automation, and enable faster communication with their customers,” said Lizzie Guynn, a partner at TTV Capital.

But Hans Tung, a managing partner at GGV, warned that just because AI is the hot sector of the moment, investors should not invest in it blindly. “AI is . . . overhyped. AI is central to the core business in some companies, and in others it is simply a supporting character,” he said. “We value domain knowledge and information on how to best apply technical solutions to solve customer pain points, be it consumers or enterprises.”

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Overall, navigating the venture landscape as a fintech startup in today’s market requires resilience, perseverance and a more responsible frame of thinking around growth. It’s clear that investors are taking more time to evaluate deals than they were during the funding boom.

Aditi Maliwal, a partner at Upfront Ventures, explained how investors in the space are thinking: “We’re able to take a little bit more time to get to an investment decision, as processes aren’t happening in 24 hours like they did at some point in 2020!”

To help TechCrunch+ readers understand what fintech investors are thinking these days, as well as what you should know before approaching them, we interviewed six active investors over the last couple of weeks. Plus, they were gracious enough to share some of the advice they’re giving to their portfolio companies.

We spoke with:

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Mark Goldberg, partner, Index Ventures
Aditi Maliwal, partner, Upfront Ventures
Hans Tung, managing partner, GGV Capital
Lizzie Guynn, partner, TTV Capital
Ed Yip, partner, Norwest Venture Partners
Lauren Kolodny, co-founder and partner, Acrew Capital

Mark Goldberg, partner, Index Ventures

Everyone is talking about artificial intelligence. If a company isn’t already using it, they’re looking for ways to incorporate it into their operations. What is getting the thumbs-up and what’s not in the theme of the moment?

What’s been surprising to me about AI in fintech is how much of it seems to be under the hood (automating rote internal tasks) rather than facing externally (flashy new features). This means that many of the most AI-forward companies may not be the most obvious ones.

Over the years, we have seen many startups, especially neobanks, focusing on very niche segments of the population. What are your thoughts on such specific offerings? Is it a good strategy to be so specific and what do you need to do to be successful if so?

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The biggest evolution in consumer finance in the last decade has been for people to see their banks as extensions of their own personal brand, like their clothes, car or music. So, it’s a great strategy and we’ll be surprised by the depth and loyalty of these “niche” communities.

Do you expect to see more down-rounds in 2023? Are you seeing more companies raising extensions or down-rounds compared to 2021 and 2022?

More down-rounds are coming. Supply and demand are still out of equilibrium, and I expect that will change as company balance sheets dwindle.

What are you most excited about in the fintech space? What do you feel might be overhyped? Is anything hyped at this point in the cycle?!

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I think the fintech tourists are gone, and it takes real conviction in this market to build and invest. Banking today is harder than it should be, especially for the tens of millions of people who don’t have access to traditional financial services.

How do you prefer to receive pitches? What’s the most important thing a founder should know before they get on a call with you?

There’s often one chart or slide that defines a pitch. Cut the noise (and the 30-slide deck) and focus on the one thing that matters most to your story.

Aditi Maliwal, partner, Upfront Ventures

Everyone is talking about artificial intelligence. If a company isn’t already using it, they’re looking for ways to incorporate it into their operations. What are your thoughts on this? What is getting the thumbs up and what’s not in the theme of the moment?

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Every company will adopt AI as another technology that enhances their existing offering. I don’t think of investing in AI companies as any different from people saying in the mid-2000s that they were investing in the internet or investing in mobile. AI is now a new paradigm that everyone is going to adopt. We know that most companies have already been using data to make decisions, so now they are going to be using open source models to help make faster and more efficient decisions.

That said, a couple of categories are getting a lot of attention in and around the fintech ecosystem:

Copilot solutions for everyone in financial services: While I’m not sure a lot of them are getting funded, I still think the biggest companies will come after this category and provide solutions.
Creating synthetic users for fraud detection: This is a really big use case that can provide a lot of value. We basically have generative fraud at this point, so you need the right type of generative software to combat the constantly changing fraudulent activities/players.

Over the years, we have seen many startups, especially neobanks, focusing on very niche segments of the population. What are your thoughts on such specific offerings? Is it a good strategy to be so specific and what do you need to do to be successful if so?

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​ To help TechCrunch+ readers understand what fintech investors are thinking these days, we interviewed six active investors over the last couple of weeks. 

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Epstein Files to Be Declassified After Trump Order

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Former President Donald Trump has signed an executive order directing federal agencies to declassify all government files related to Jeffrey Epstein, the disgraced financier whose death in 2019 continues to fuel controversy and speculation.

The order, signed Wednesday at Trump’s Mar-a-Lago estate, instructs the FBI, Department of Justice, and intelligence agencies to release documents detailing Epstein’s network, finances, and alleged connections to high-profile figures. Trump described the move as “a step toward transparency and public trust,” promising that no names would be shielded from scrutiny.

“This information belongs to the American people,” Trump said in a televised statement. “For too long, powerful interests have tried to bury the truth. That ends now.”

U.S. intelligence officials confirmed that preparations for the release are already underway. According to sources familiar with the process, the first batch of documents is expected to be made public within the next 30 days, with additional releases scheduled over several months.

Reactions poured in across the political spectrum. Supporters praised the decision as a bold act of accountability, while critics alleged it was politically motivated, timed to draw attention during a volatile election season. Civil rights advocates, meanwhile, emphasized caution, warning that some records could expose private victims or ongoing legal matters.

The Epstein case, which implicated figures in politics, business, and entertainment, remains one of the most talked-about scandals of the past decade. Epstein’s connections to influential individuals—including politicians, royals, and executives—have long sparked speculation about the extent of his operations and who may have been involved.

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Former federal prosecutor Lauren Fields said the release could mark a turning point in public discourse surrounding government transparency. “Regardless of political stance, this declassification has the potential to reshape how Americans view power and accountability,” Fields noted.

Officials say redactions may still occur to protect sensitive intelligence or personal information, but the intent is a near-complete disclosure. For years, critics of the government’s handling of Epstein’s case have accused agencies of concealing evidence or shielding elites from exposure. Trump’s order promises to change that narrative.

As anticipation builds, journalists, legal analysts, and online commentators are preparing for what could be one of the most consequential information releases in recent history.

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Politics

Netanyahu’s UN Speech Triggers Diplomatic Walkouts and Mass Protests

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What Happened at the United Nations

On Friday, Israeli Prime Minister Benjamin Netanyahu addressed the United Nations General Assembly in New York City, defending Israel’s ongoing military operations in Gaza. As he spoke, more than 100 delegates from over 50 countries stood up and left the chamber—a rare and significant diplomatic walkout. Outside the UN, thousands of protesters gathered to voice opposition to Netanyahu’s policies and call for accountability, including some who labeled him a war criminal. The protest included activists from Palestinian and Jewish groups, along with international allies.

Why Did Delegates and Protesters Walk Out?

The walkouts and protests were a response to Israel’s continued offensive in Gaza, which has resulted in widespread destruction and a significant humanitarian crisis. Many countries and individuals have accused Israel of excessive use of force, and some international prosecutors have suggested Netanyahu should face investigation by the International Criminal Court for war crimes, including claims that starvation was used as a weapon against civilians. At the same time, a record number of nations—over 150—recently recognized the State of Palestine, leaving the United States as the only permanent UN Security Council member not to join them.

International Reaction and Significance

The diplomatic walkouts and street protests demonstrate increasing global concern over the situation in Gaza and growing support for Palestinian statehood. Several world leaders, including Colombia’s President Gustavo Petro, showed visible solidarity with protesters. Petro called for international intervention and, controversially, for US troops not to follow orders he viewed as supporting ongoing conflict. The US later revoked Petro’s visa over his role in the protests, which he argued was evidence of a declining respect for international law.

BILATERAL MEETING WITH THE PRIME MINISTER OF ISRAEL Photo credit: Matty STERN/U.S. Embassy Jerusalem

Why Is This News Important?

The Gaza conflict is one of the world’s most contentious and closely-watched issues. It has drawn strong feelings and differing opinions from governments, activists, and ordinary people worldwide. The United Nations, as an international organization focused on peace and human rights, is a key arena for these debates. The events surrounding Netanyahu’s speech show that many nations and voices are urging new action—from recognition of Palestinian rights to calls for sanctions against Israel—while discussion and disagreement over the best path forward continue.

This episode at the UN highlights how international diplomacy, public protests, and official policy are all intersecting in real time as the search for solutions to the Israeli-Palestinian conflict remains urgent and unresolved.

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Is a Nuclear-Powered Alien Spacecraft Flying Toward Earth?

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A mysterious interstellar object speeding through our solar system has reignited debates about extraterrestrial technology — and whether Earth might currently be under quiet observation.

The object, known as 3I/ATLAS, is only the third confirmed interstellar visitor ever detected. Unlike ordinary comets, however, this cosmic traveler has baffled astronomers with its unusual brightness, strange trajectory, and lack of a visible cometary tail. While most scientists cautiously describe it as a natural body, one leading astrophysicist believes something much stranger is at play.

Harvard Scientist’s Bold Claim

Professor Avi Loeb of Harvard University, head of the Galileo Project, has suggested that 3I/ATLAS may in fact be a nuclear-powered alien spacecraft designed to test how humanity would respond to an interstellar visitor. He argues that its flight path is improbably precise, bringing it close to Mars, Venus, and Earth — a pattern highly unlikely to occur by chance.

Loeb also points out that telescope images show a glow inconsistent with ordinary dust behavior. Instead of trailing behind like a comet, the halo-like light appears to extend in unusual ways, sparking debate about whether the object could be emitting energy of its own.

Headed Toward Earth’s Neighborhood

3I/ATLAS is expected to make its closest approach in late 2025, passing near Mars before swinging by the inner solar system. Although Earth itself will be on the opposite side of the Sun when it comes closest, the alignment will still enable space-based observatories to capture sharper data.

Loeb has called on NASA and other agencies to use spacecraft already stationed near Mars or Jupiter — including the Juno mission — to take high-resolution photographs. He believes such efforts could reveal whether the interstellar object is truly natural, or the first technological probe humanity has ever encountered.

Should We Be Worried?

While most astronomers argue caution before jumping to alien conclusions, Loeb insists that scientific openness is key. “If it’s just a comet, we learn something new,” he said. “But if it’s a spacecraft, it would be the most important discovery in human history.”

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For now, 3I/ATLAS remains a mysterious speck on astronomers’ charts, drifting closer with each passing day. Whether it proves to be a frozen remnant of another star system or something far more advanced, the interstellar visitor has already succeeded in one mission: reminding us how vast and unpredictable the universe really is.

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