Fintech has been in the dumps for a while now, and with companies like Brex once again cutting staff as they try to rein in costs, you’d be forgiven for assuming that the market for financial technology products is struggling.

Well, not really.

Brex might not be having a good couple of quarters, but there’s sufficient positive news from the world of fintech to offset all the negativity around the sector. Bilt Rewards’ new massive round is a good example of the other side of the coin: The rewards-focused startup just raised nine figures at a significantly higher unicorn valuation.

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Elsewhere, BNPL giant Klarna has been busy retooling its business for more profit and continued growth. So, yeah, while there has been a stark lack of fintech companies going public recently, capital is flowing into the sector because venture investors are still cautiously optimistic about it.

So, which startups are drawing the most praise from investors? We can answer that question relatively easily today thanks to a new list compiled by GGV US that highlights 50 fintech startups venture capitalists think are hot stuff. We also spoke to GGV managing partner Hans Tung about what he’s seeing in the sector today.

We’ll dig into the subsectors shortly, but if you want to cut to the chase: Lending, treasury management, and the CFO stack are pieces of the fintech puzzle well worth researching.

The problem with (2021) fintech

Before we dig into the good news, let’s talk narratives. Why does fintech look like it’s stuck in first gear today? A good portion of the current angst likely arises from a number of generally strong startups that raised too much at very high valuations several years ago. Those massive fundraises often led to overhiring and equity prices that don’t align with today’s norms.

Brex is a success story. It has managed to build a business that is reportedly closer to $300 million in annual revenue than $200 million, all while staying private. It’s an accomplishment! Yet, it’s being forced to cut staff to extend its runway. That’s the capital inflow part of the fintech equation we often hear about these days. The issue with capital outflow is related, since inflows were priced according to 2021 norms. Now a valuable company like Brex is sitting on a price that it can’t defend.

In fewer words: Some fintech winners look like they’re struggling today due to what happened in the past few years. But that doesn’t mean the future won’t be a bit brighter for other fintechs.

GGV makes a good case for fintech. In a presentation that TechCrunch+ viewed, the venture firm argued that with total gross profit of about $6.5 trillion (2021 data), the financial services market is (still) ripe for disruption. The same chart shows that financial services companies have better gross profits than healthcare ($4.8 trillion) or e-commerce ($1.5 trillion). It is clear from this that financial services companies are raking in lots of gross profit, but when it comes to market cap, fintech companies are worth a single-digit percentage of the broader financial services sector, the presentation argued.

Those data points are bullish, because while it’s useful to gauge a market’s size by revenue, doing so can be misleading. What we really care about is how much business that revenue can support, which hinges greatly on gross margins and, therefore, gross profits. Tung told TechCrunch+ that looking at gross profit instead of revenues helps normalize corporate profiles — allowing for more useful comparisons — and it’s a good way to compare fintech’s potential to that of other sectors, and different companies inside fintech itself.

So with lots of incumbent gross profit to attack and so much market cap to earn, fintech has a lot of ceiling above it. So which fintech groups are standing tall today?

The next hot spots

The list of trending categories in the GGV list is as interesting as the names of the shortlisted companies, if not more. Some of these companies are pretty obvious candidates, so pardon us if we don’t spend too much time discussing the rise of AI in finserv, but a few sectors caught us off guard, indicating that there’s hope and opportunities for fintech in this post-ZIRP world, too.

Two of these categories best reflect the new climate we are in: lending, and treasury/deposits, which refers to “solutions that offer high-interest banking accounts to businesses in a high-interest rate environment, enabling companies to put idle cash to work.”

The Silicon Valley Bank collapse gave companies good reason to think twice about where they store their cash, but we think higher interest rates are likely giving businesses a strong incentive to act sooner than later. Some fintechs are stepping up to the task.

It will be interesting to see if this trend crystalizes into companies focused on this particular space. For instance, Zamp Finance (not on the Fintech 50 list) makes it easier for businesses to invest in U.S. Treasury bills and to manage their cash. But such a service could also be an add-on to existing offerings, such as banking.

Incidentally, we’re seeing a similar trend at the B2C level, with Robinhood starting to pay pretty aggressive yields on uninvested cash. But in B2B, CFOs can put their money to work themselves, so the main benefit to an enterprise may be to make the CFO Office’s work easier.

That connects to another trend that GGV noted: the rise of the CFO stack. GGV seems particularly enamored by this trend and predicts that it is “time for the next-gen SAP, NetSuite, Salesforce of Finance.” The firm expects that AI could be the catalyst to truly bring this trend to life.

That said, companies have made money by empowering CFOs for a long time. Still, the fact is, companies in this particular niche are fairly capital-light businesses that should enjoy the tailwinds of the current environment, just like their counterparts that are building financial infrastructure — another sector GGV identified as a hot category.

Geographical hubs

Tung noted that 80% of the companies on the list are based in New York or the Bay Area, which surprised us a bit since venture activity in the U.S. has been fairly more distributed around the country in recent years. But Tung explained that the concentration of technical talent and proximity to financial services companies really matters in fintech, which has led to two major fintech hubs — at least in the U.S.

Still, we’re hoping that given the scope of finserv, a few more metro areas will rise up as fintech hubs in the coming years. There’s certainly enough space for more winners.