A Snapshot of Fintech Innovation

Financial Venture Studio
4 min readJan 22, 2021

By Theodore Katsoulis

Observations from the Financial Venture Studio Application Process

The pandemic’s progression has made it even more evident how much consumers and businesses need access to digital-first financial products and services. At Financial Venture Studio, we partner with the fintech companies of both tomorrow and today. As part of our efforts, we run a multi-week application for our six-month Studio Program. Our goal is to meet founders from all parts of the country, building all kinds of fintech businesses. We have been fortunate to evaluate several hundred applicants over the past 18 months, with this fall’s applicant pool setting the record for total applications received. We continue to be impressed with the increasing quality of companies every time we do this, so we wanted to outline some of the trends we saw in this most recent group.

The COVID-19 Effect

For those of us who are lucky enough to work from home, many of whom are in the technology sector, there is a unique opportunity to quickly build and ship products. One fascinating aspect of our applicant pool is that 25% of the businesses were formed after work restrictions began in March 2020 (we’ll refer to these as “post-COVID businesses”). This is a significant increase (+50%) relative to the companies formed in the six months prior to March 2020. New efforts, such as Galileo’s instant issuing program, are enabling founders to bring products to market with less time and capital than ever before. We also suspect that more time working from home is giving potential founders the opportunity to begin experimenting with ideas before making the leap into building a business full-time.

One other interesting shift in the early stage market is the decreasing importance of the warm intro. Typically, most of the companies who apply to our program are familiar with our team. This time, however, we saw a record proportion of applications (60%) who had not had any prior interactions with our team. While there was a decreasing reliance on warm intros even before COVID-19, we were very excited to come across so many new faces in almost every corner of the country.

Funding (the) Remote

Unsurprisingly, our applicant pool has always skewed heavily towards the Northeastern US and Silicon Valley markets. While both markets dropped slightly (-2%) as a proportion of the total relative to our last application process, we actually saw the largest proportionate decrease of entrepreneurs from the Midwestern market (-6%). Domestically, it seems entrepreneurial activity shifted to the South (specifically Texas and Florida) and Colorado.

Still, the largest increase in applications came from the international market (+4%) and fully remote teams (+3%), the latter of which is a new category for us. Overall, it seems that teams are comfortable building remotely at the earliest stages. That may not change anytime soon, so not only do investors need to be comfortable with the distributed workforce, but founders must also quickly learn how to instill culture and build a cohesive organization as they scale.


Lastly, we noted a shift in entrepreneurial focus to different industries. Given the government’s pandemic forbearance program, student loan businesses comprised a very small proportion of the applicant pool, decreasing 50% from last year; we don’t expect this to change significantly in the near-term given the uncertainty of the Biden administration’s approach to student debt.

We saw many new companies in the payments, real estate, and investing sectors. For example, when comparing pre- and post-COVID industry composition, we noted a massive (>100%) increase in payments companies as a proportion of the total. Interestingly, we saw a decrease in the percentage of companies that are focused on banking as a service (“BaaS”) or consumer tools (budgeting, saving, etc.); conversely, there was an increase in real estate and asset management/investment companies.

The recent early-stage successes of Payroll API and BaaS providers is proving the value of this new layer that makes it easier for startups to innovate on existing infrastructure. Clearly, incumbents still have a lot of power in their respective markets, and it remains to be seen whether the next “AWS of fintech” will be a wrapper around incumbents (see Stripe Treasury) or whether a new foundational layer will emerge.

Speaking of new paradigms, we were surprised that not a single post-COVID applicant was innovating in the crypto space. There likely is some selection bias, but crypto businesses overall accounted for less than 5% of our total. If you are reading this, and you are innovating in crypto, please reach out as we are actively seeking to invest in the sector!


Ultimately, there has been a significant shift in the early stage fintech market. While it remains to be seen which of these changes are temporary or structural, it’s evident that, for now, teams are able to work remotely, effectively build products, and quickly iterate as they get user feedback. While the past year has been devastating to the world, our hope is that this period has accelerated decades worth of innovation, ultimately setting the stage for a brighter future once we emerge from the current crisis.



Financial Venture Studio

Building the future of financial services. Want to join us? Get in touch: finventurestudio.com